You can have various reasons for investing private assets in your company. For example, it may be cheaper than external financing, where you borrow money at an interest rate. It may also be that you have already tried to raise assets from third parties, but this has not been successful. Finally, it may give you a tax benefit.
Save costs by financing with private assets
By investing in your own company, you immediately save costs: the costs of the financing application and annual interest costs. In addition, it gives a nice feeling to not be dependent on the bank. It is also possible to opt for an alternative where you invest a part with your private assets and the rest with a loan. This gives banks more confidence in your plans and you run less risk. By financing with private equity only, you can lose all your capital if your company does not deliver the desired results. Capture the transaction well and clearly, both for yourself and for the tax authorities.
Build up private assets to invest
If you already have a lot of savings in the bank, you can use this to start your own business. If you are not that far yet, but you have a clear saving objective in mind, you can choose to save on various expenses in order to get the required capital. Annually the compare health insurance often results in considerable savings. It is easy to compare health insurance and you can already enjoy a lower rate from 1 January. Also visualize other fixed and variable expenses, for example by keeping your records in Excel. Perhaps there is a lot to save on groceries, eating out, shopping, your energy bill or that daily cup of coffee at the station. Ultimately, your savings can grow considerably so that you can use it for the growth or start of your own business.
Financing from own working capital
Another option to finance your business with your own money is by finance growth from working capital. This is only possible if you already have an ongoing business, not if you still have to start. Working capital is the amount that you have left within your company after you have paid all short-term debts and creditors. This money is extremely suitable for financing business activities. Always keep a margin for unforeseen circumstances so that you do not invest more than you can actually miss. You can increase the working capital by, among other things, wise inventory management. If you provide services, you should take a critical look at your debtors and creditors to see where there is room for improvement. There is almost always something to be gained.