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Limited capital ventures may find it difficult to scale the businesses

by • January 5, 2019 • Personal Loan, SME LoanComments (0)89

The businesses that emerge when entrepreneurs have limited capital and adopt the alternative mindset for new venture creation typically have certain characteristics. They often fall into one or more of the following broad categories: Service, Events, Performance, Brokerage or Education.

By: Hitesh Khan/

Service businesses depend on the skill and time of the person starting the business. Such a person can make their skill available to others with relatively limited capital and little upfront investment.

To start a service business you merely need the tools of your trade.

  • A consultant may require a computer, a handyman some tools and a dressmaker a sewing machine. With these tools on hand you can use your contacts to start selling your service.
  • Events-based businesses are a little more complex but can still be started with limited capital (see the March edition of Entrepreneur for a feature on events-based businesses). Events-based businesses include ventures that put on sports events, expos and concerts. The advantage of such businesses is that with effective marketing, you can sell the tickets before you incur the major costs, limiting the amount of capital required to keep the venture afloat.
  • Performance-based businesses depend on the ability of entrepreneurs to perform and to pull together other people who can enhance the performance.

Performance-based businesses depend on the creative skill of the entrepreneur coupled with an ability to market those skills to a broader audience. Musicians, comedians, motivational speakers and singers all have the potential to create performance-based businesses.

Brokerage businesses are among the most popular kinds of ventures for people with limited capital. They bring buyers and sellers together. You find brokers across multiple industries from real estate (e.g. estate agents), hospitality (e.g. website portals marketing B&Bs), recruitment (e.g. recruitment agents), and sports (e.g, sports agents bringing sportsmen and sponsors together), to speakers and performing artists (e.g. speaking agents marketing speakers to conference coordinators) and the list goes on.

The key to being effective in brokerage businesses is having contacts and fostering relationships and effective marketing on both sides of the equation – to buyers and sellers. Many modern brokerage businesses – such as iCompareLoan.sg – leverage the web to create a broader reach between buyers and sellers.

But the essence of the business is still what it has always been, filling an information gap between buyers and sellers. People with lots of contacts in a particular industry and a flair for marketing and selling should consider a brokerage business as a low capital way to get into business.

More stringent personal loan restrictions to kick in from next year

Education is another area where people find opportunities with limited capital.

Anyone with skills and insights that others wish to learn, and a passion for helping others develop could move into education. From an ex-teacher setting up a business that provides extra lessons to school-going children, or a sports fanatic setting up a coaching business, to a person with training in photography helping others take better pictures, there are multiple low capital opportunities in the education arena.

Although these five categories of businesses – service, events, performance, brokerage or education – may spark some ideas within you, low capital start-up opportunities are not limited to them.

With ongoing development in technology, there are many new opportunities emerging in the software and web services space (e.g. creating apps) and in the media space (e.g. with website and blogging tools there is no longer the need to spend big money to create the foundations of a media company).

The key is to start with what you currently have – the resources you can access, the skills you can leverage and the connections at your disposal – to help you figure out a low cost path to a sustainable and profitable new business.

Although there are many benefits to starting your entrepreneurial journey by asking “what do I have and who do I know?” there are also downsides to this approach which may require remedial action to overcome the negative consequences.

limited capitalThe major one centres on the notion that the business and the owner become inextricably linked – the owner is the business and the business is the owner. Under such circumstances, it becomes difficult to scale the business because the owner only has so many hours a day to keep selling his services.

It also becomes difficult to sell the business because it is worth very little without the owner and there is a risk that the owner may become overworked and burn out. To overcome these challenges, entrepreneurs should consider borrowing money to expand their businesses.

Mr Paul Ho, chief mortgage consultant at iCompareLoan said, “businesses ought to remember that you need to borrow when you do not need money.”

He added: “When your business is struggling and you need additional funding to tide over a tough patch, then you will find that your access to funding is completely cut off and end up with very expensive funding.”

It may be wise to plan 6 to 12 months ahead for any potential funding needs. Even if you do not need funding now, you may want to quickly refinance your home loans for any potential equity and stand-by cash even if you do not need it now.

Remember, banks assess your credit and affordability at the point of application, so you should apply when your status is good, not when you have further deteriorated. At that time, no banks will lend you.

You can read more about the different types of funding here. If your business is profitable and you only need short term funding, but your access to bank’s working capital is temporarily cut off, then you should consider personal loans as a source.

5 tips for boosting your chances of getting personal loans

How to Secure a Personal Loan Quickly

If you have limited capital and are searching for a personal loan to expand your business, the loan consultants at iCompareLoan can set you up on a path that can get you a it in a quick and seamless manner. Our loan consultants have close links with the best lenders in town and can help you compare various loans and settle for a package that best suits your needs. Find out money saving tips here.

Our Affordability Tools help you make better property buying decisions. iCompareLoan Calculators help you ascertain the fair value of a property and find properties below market value in Singapore.

If you are looking for a new home loan or to refinance, our Mortgage brokers can help you get everything right from calculating mortgage repayment, comparing interest rates all through to securing the best home loans in Singapore. And the good thing is that all our services are free of charge. So it’s all worth it to secure a loan through us for your business expansion needs.

Contact us for advice on a new home loan.

Contact us for home loan or refinancing advice.

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