Your tax free. Advantages of personal saving: ·

Your personal savings is
the money you’ve kept in account within a bank or a similar organization for
finance, and since they have announced tax breaks people have found out now it
makes many personal savings tax free.

 

Advantages of personal saving:

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·        
Personal
saving could be very beneficial when wanting to start up a business. It is easy
to do and much quicker if you are using your own money and savings you’ve gotten.

·        
It
helps you to being financially secure and if an emergency was to occur, which
required money, you would have the money to help to repair the damage.

 

Disadvantages
of personal savings:

 

·        

With saving money it
makes you more of a target. If you were to face a situation of being robbed,
you would be more chaotic as you have a lot more money than people who wouldn’t
have saved.

·        
You
normally have lower interest rates so; if your main aim was to get your money
to grow, then putting your money in a savings account isn’t the best idea.

 

I have chosen to use
personal savings as a source of funding as it is currently what I have got.
I’ve been doing a Saturday job and babysitting, and 2/3s of the money I’ve
gotten goes into personal savings. I have found saving incredibly useful and it
keeps me more weary; therefore I won’t go over the top in spending. It is
really beneficial when you keep your money aside as before, I used to spend it
all on food etc, but now I have made my limits. Of course the only bad thing is
I would be missing out on some experience. For example my friends wanted to go
to a concert but I didn’t attend as I wanted to save money instead so I would
miss out. I probably would never go travelling if I got too fragile with my
money.

 Bank loans are money which
is borrowed from any bank over a certain period of time. This could either be
medium or a long term finance; it also sets the fixed period in which the loan
is provided. Loans from the bank aren’t usually offered to start-ups or even
businesses if they had a poor track record of cash flow and profitability. If
businesses are seen to be high risks by other banks, they can be much more
cautious of the amount being lent to you. Barclays and NatWest are both banks
which give bank loans along with many others.

 

 

 

The advantages of bank loans include:

 

·        
The
only thing you need to be anxious about is making sure that the instalment
payments are made on time.

·        
Also
the cost is much cheaper compared to bank overdrafts and credit cards.

 

 

 

The disadvantages of bank loans:

 

·        

Businesses and
start-ups, which have no strengths, will find it harder to receive their
applications approved and if you are unable to make your payments on time (even
if you are late) they can report you and this will make a massive impact on
your credit score as it will negatively affect it.

·        
Loans
also lack flexibility which means if you were to need more time, you are not
likely to get that time to pay the bank back.

 

I chose to do research on
bank loans as it is something I am confused about myself so, this information
helped me to understand a bit more about it. I never used to know the
difference between loans and overdrafts, now I am able to set them apart; this
will benefit me immensely when it comes to university and when I’m in need of
money. If you look at the image I placed, you can see how much you were to pay
if you took out 30,000 and were willing to pay that back over 3 years.Bank overdrafts are very
flexible when taking money from the bank. It is money in which you borrow but it
is required to be paid back on demand, so whenever the lender wants the money,
you have to pay it back. Overdrafts don’t usually transfer money in and out of
any business. For example, if you were to have a shortage of an amount of money
(such as 10,000) the bank may allow the money to be given to you then ‘the
overdraft facility can be used to temporarily “borrow” the cash from the bank.’

 

Advantages of a bank overdraft

 

·        
It
helps to keep a good track record as payments made through cheques doesn’t just
bounce due to inadequate funds, these may come a few days later.

·        
Overdrafts
also require less paperwork compared to long term loans.

 

Disadvantages of a bank overdraft

 

·        
There
are much higher interest rates. The cost required back is actually higher than
the actual amount taken out.

·        
The
bank can demand their money back whenever they want; so you may not have the
money to pay and they can order you to court.

 They are willing to do so
because as mentioned before they can get a huge return on their investments if
a business was to be a success. Advent ventures is an example of one of
Europe’s most achieving growth and investors in market-leading tech and also
life sciences sorts of businesses’. The invested in the website dailymotion
which is very popular.

 

Advantages of a venture capitalist

 

·        
They
usually have many connections within the business community. So getting into
these connections could have massive benefits.

·        
By
letting someone invest in your business, it could help a lot. As since they are
another person they may have skills you don’t have, many ideas and also
experience.

 

 

Disadvantages of a venture capitalist

 

·        
The
new investor gets a say in how your business is run and gets a share in profits
made.

·        
You
could essentially give up the ownership of the business which rightly belong to
you.

 Between the four sources
of funding I have mentioned, I reckon your personal savings is the best and
safest idea. The reason for it being that, the worst thing that could possibly
happen with your personal savings is someone stealing it. However, this can
easily be prevented in many ways as you could set up a savings account
therefore no one can steal your money, you could not constantly be carrying
your card if not in a savings account and also not accessing your details from
just anywhere. But with overdrafts, you could face serious issues like facing
court if you’re unable to pay the money back when demanded of you. There is no
way around this so you would be highly stressed out. For my business enterprise
project (running a tuck shop in school) using my own personal savings appears
to be the best idea as I won’t need to worry about paying anything back and it
is generally more suitable. This is because I wouldn’t be needing a huge amount
of money just to buy sweets, which are very cheap. The venture capitalist one also
isn’t too bad as, one of the main things is just that the investors get a say, so
you won’t have all the power but the loans isn’t very suitable for my project
as they are not flexible and a huge amount isn’t required to buy cheap items.