I never went to college. I never went to University. So what I am going to say here is from what I have learned through trial and error. I don’t have any surefire successful formula that will guarantee you will succeed, but I guess when it comes to doing business, it all boils down to plain common sense.
Starting a Business.
I won’t be going into the paper works required before you start a business. There are professional companies that does that. I too employed the services of such a company when I registered for my business as I don’t want the hassle of rushing here and there getting the papers ready. Those professional management companies are very efficient and normally it takes not more than 2 weeks to do a Business Name search and get your preferred business name registered with the Registrar of Business. Basically, there are 3 kinds of business that you can register. For your information, you can register under a temporary Address if you haven’t decided on your location.
Different Nature of Companies.
The first is the Sole-Proprietorship where you and only you is the owner of the business. Second one is the Partnership, where you have to decide who gets to be the managing partner and how the share of the Company is divided among you and your Partners. Third one is the Sendirian Berhad or Private Limited Company. This involves lots more paperwork as it will involve drawing up the Companies’ Constitution, The Naming of Directors, Printing of Share Certificates and Company seals, Capital Allocation, so on and so forth. Since I have only experience in running a Sole Proprietorship, I will only talk about this nature of business.
Benefits of a Sole Proprietorship.
Being the sole proprietor, you get to control the whole set up. Every decision will be made by you and you only. You get to keep every sen of the profit. You don’t have to answer to anybody but yourself.
The Disadvantage of a Sole Proprietorship.
You are responsible for every decision. If the Company goes down, you will go down with it. There will be no one to discuss your decisions. You must bear all the debts incurred. Unlike a Private Limited Company where the business is a different entity by itself, Sole Proprietors cannot escape the arm of the law if their business goes down of gets sued.
The Initial Stage – Raising Capital to Start the Business.
So you have decided to be a businessman yourself and you have a idea in mind on what business you want to do. Now the first thing is to get the Start Up Capital. Of course if you have rich parents or in-laws, you can delete this from your list. If you don’t then you must rely on your own savings or Bank Borrowings. There are different kinds of loans that you can take to finance your business.
Mortgage your House for a Fixed Term Loan
This will involve some legal fees, and Valuer’s fees. The Banks will want a certified property Valuer to value your house before deciding how much you are eligible. After getting you loans approved, you must take into account the amount that has to be paid monthly.
Get an Overdraft.
With your house as collateral you can also get an overdraft if you don’t want to mortgage it. Overdrafts are more flexible and many businessmen prefer this to Term Loans. There is no fixed amount to be paid monthly. If you are tight you just service the interest and hold back from paying the principle sum. This is especially good for those who have a high turnover monthly, because interests are only charged on what is used for that month. The unused funds only accumulates the minimum interest which is quite negligible.
Let’s say you have an Overdraft or 100,000 and your business turnover monthly is 80,000 and if you do deposit all of your takings monthly, you will be paying interest for the balance 20 thousand. That’s theoretically speaking. Of course it depends largely on when and how you make your deposits.
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