Work From Home - Discussion - 2
Should a new home business take on a loan? Does the new work from home activity need a loan? Many people who
start a home business seem to think that if they start it customers or clients will automatically come. If you have
a loan then the pressure on that business and you personally to perform is manifested in stress.
I have always maintained that the beauty of any home working business is the shear fact that the start up costs
are so low and if you simply are unable to gather the few hundred pounds required to get it going then shame on
you. I personally would avoid having a loan to start a home business at all costs. I would even be prepared
to work at Burger King for a year in order to set aside some savings in order to finance my work from home
However, due to the competition for home owner loans the interest repayments are relatively cheap from the major
banks and finance houses. An unsecured loan could be just the initial fuel required to blast that home business into
success but you do need to be sure of your market and pretty certain that the investment in new items of
equipment for example will reap rewards in the near future.
Many new business owners start a home business by simply extending their existing home mortgage. This can
be a great way to finance the initial start up of a home business and the repayments can be insignificant when
absorbed into the mortgage term.
The only adverse risk of extending a mortgage to finance a home based business is if the existing mortgage is
relatively large and already difficult to service on a month by month basis. Unless you have a other money or
savings set aside for emergencies for example, you will be on a very thin tightrope. Unless your business starts
earning money within the first few months, your new home business will be doomed to failure.
There really isn't any need to take on a new cheap mortgage to start a home business unless you are releasing equity from your current
property. Again, this home owner loan or remortgage should be kept to a minimum and only used as and when
required. Simply pulling out several thousand pounds sat inside an easy access account can be very
tempting for non business essentials so don't be tempted.
Compensation claims are an ever increasing hazard for businesses. The public are always seeking blame from
someone else for their own irresponsibilities. Taking responsibilities for your own actions or inactions seems to
be waning as time goes on. Can a new home business be exposed to this sort of attitude and run the risk of
being sued? In theory yes but highly unlikely. You are possibly more at risk of some nutter claiming
compensation for tripping on your drive than suing you for negligence over an ebook you may have sold them.
However, the potential risk of this growing trend for claiming compensation for personal injury claims for example does need to be assessed for
any new work from home business. Most of the risks can be set aside utilising properly worded disclaimers
or confirming things in writing. There is insurance cover available to cover such eventualities based on
your actual risk assessment but likely to be expensive.
Generally speaking if you do not have any savings or assets to protect then the chances of someone taking you to
court for a compensation claim is highly unlikely due to their own expenses involved in pursuing such a
compensation claim. However, if your are of value then completing some form of risk assessment before you start
your home business is vital.
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