6. Lack of flexibility in repayment
Business world is dynamic and there are cycles with some being boom others recession. This also applies to startups and small entrepreneurs. A business plan can give you all the sales forecasts that you need to convince a bank to give you the loan, but the forecasts may fail to be realized, are realized earlier than expected or take longer that expected to get realized. Regardless of the outcome, loan repayment terms remain fixed. Flexibility makes it possible for an entrepreneur to be persistent and patient before giving up on an idea. One of the first causes of business failure is starting the business for the wrong motive and starting a business because you want to make money quickly to repay a loan is a wrong reason. Other sources of capital like equity financing or using savings are highly flexible. Although any entrepreneur hopes to get a return on investment, there is need to exercise patience and this is impossible if there is no flexibility.