By Tadiwa Jery
New businesses often face financial challenges during the first years of their operations. To maintain their competitive advantage, most start ups end up settling for immediate funding options without fully weighing the repercussions.
A loan is the money given to another party in exchange of repayment plus interest. This option is normally taken by a firm’s finance team in the case of an emergency after diligently calculating their ability of repayment. However, most startups use it as an investment option for their business, which is a very high risk.
For many small startups, loans have proven to be a very bad idea because of their incapacity to generate high sales. This investment option is mainly a stumbling block because of the pressure they exert on the organisation.
According to the American author of the book “The Art of the impossible”, Steve Potler stated that when we are pressured, we are often stressed. We are unhappy with the rush, which embitters our mood and further restricts our focus. Being limited in time, then, can be kryptonite for creativity.
Although loans offer a quick financial relief, its pressure creates a tense working environment which stifles creativity for most small business owners.
