Articles in the Series:
- Pros and Cons of Using Own Money
- Pros and Cons of Credit Cards
- Pros and Cons of Borrowing from Family and Friends
- Pros and Cons of Bank Loans
- Pros and Cons of SBA Loans
- Pros and Cons of Angel Investors
- Pros and Cons of Venture Capital
- Pros and Cons of Crowdfunding
- Pros and Cons of Business Plan Competitions
- Pros and Cons of Supplier Credit
Pros and Cons of Business Plan Competitions
Business plan competitions allow you to present your business plan and win prize awards. These competitions are sponsored by universities and business schools, as well as government agencies, often geared to graduate and undergraduate students.
Advantages of Business Plan Competitions
- Provides cash prizes and in-kind awards that you can use to launch the business
- Helps develop and validate your business ideas
- Allows you to receive mentoring from experienced business owners and entrepreneurs
- Provides the opportunity to learn how to pitch the business idea to potential investors, venture capitalists and entrepreneurs
- Gives entrepreneur and startup exposure
- Helps in attracting other investors, lenders, and/or customers
Disadvantages of Business Plan Competitions
- Judges and coaches typically do not sign non-disclosure agreements (NDAs). You need to find a way to present your ideas without divulging confidential information that should be protected by patents.
- Opens your business idea to others, who can easily copy and launch their version before you get to launch yours
- Requires you to follow the criteria and requirements of each program.
- Fulfilling the requirements mean time away from building your business. From filling up application forms to attending required meetings to creating pitches, you will spend a lot of time preparing for the competition.
Pros and Cons of Supplier Credit
Supplier credit provides you with goods on credit that you pay over a specified period. You can get 30-days term with a limit on how much you can avail as you develop your relationship with the supplier. As your business transactions grow, the supplier can provide more lenient payment terms, such as three months to pay or discounts for prompt payment.
Advantages of Supplier Credit
- Provides you with short-term financing, allowing you to get goods or services but not pay for them until some specified later date (e.g. 30 days).
- Helps you through lean financial periods.
- Receiving business credit helps improve your cash flow dramatically.
- Reduces the need for short-term loans.
Disadvantages of Supplier Credit
- Not all suppliers give credit
- Often given to established businesses and not easily to new businesses, which are considered unknown credit risk.
- The supplier can stipulate stiff conditions in your contract.
- Supplier can ask you to get a guarantor to back-up your credit line.
- The credit history of your business can be negatively affected if you are unable to pay or you are late with payments. If you are personally guaranteeing the credit, your credit history can also be affected.
- Suppliers might charge you more if you take the product with delayed payment (or give you a discount to pay immediately).
- How to Start a Business with Bad Credit
- How to Find an Angel Investor for Your Business
- How Angel Investors Can Benefit a Small Business
- 5 Strategies to Raise Capital for a Small Business
- 12 Tips for Getting Your Bank Loan Approved