36 Pros & Cons Of Starting A Money Lending Company (2024)

Flexibility

You can put as much time into the business as you'd like. If you like the work and have some initial experience, you can start small and manage all aspects of the business on your own.

Scalable

With businesses and processes changing daily, there will always be demand for new features, products and services for your business. Additionally, there are several different business models and pricing tiers you can implement that will allow you to reach all types of customers.

Meaningful business connections

You never know who you will meet as a money lending company. This could be the start of an incredible business opportunity!

High customer retention rates

Once a customer invests in your product, they've invested their time and energy to utilize your product/service which is highly valuable to them. Typically, your product or service becomes indispensable to your customer.

Pick & choose the clients you work with

Money Lending Companyes have the ability to choose the clients they work with. You have the freedom to work with only a few loyal clients or with hundreds of clients!

Control of workload

With starting a money lending company, you have the unique ability to choose how little or how much you want to work. You also have the freedom to decide which projects you want to work on, and can turn down the ones that do not interest you.

Gain exposure and experience

This career allows you to gain experience working for multiple different businesses - which will benefit your resume and also keep things interesting for you!

Unlimited income potential

With starting a money lending company there is no cap as to how much income you can make. The stronger your business skills and the more energy/time you put into your career, the more you'll make.

Predictable income stream

Your businesses income stream tends to be predictable based on the number of customers you have signed up. This makes financial planning and outlooks much more seamless!

Higher likelihood of getting referrals

This business is all about referrals, which can be a a very impactful way to attract and retain customers. It's critical that you have a great referral program in place that incentivizes your customers to tell their friends about your product.

Simple business model

A money lending company has the advantage of a simple business model, which makes launching and building the business more seamless.

Control your own destiny

Starting A Money Lending Company allows you to control every aspect of your life and make your own dreams come true every day.

Greater Income Potential

With this business, the sky is the limit in regards to your income potential.

You can decide who you work with

Gone are the days of working in a toxic work environment with employees that you may not vibe with. As a small business owner, you get to decide who you work and surround yourself with.

You establish yourself as an expert

With starting a money lending company, you establish yourself as an expert in your niche, which builds your credibility. In return, customers are more likely to trust you and refer you to other friends and family.

Can build solid foundation of clients

It's unlikely you will have one-off customers as a money lending company. Typically, you have a solid foundation of clients that use your product and services regularly.

Make money while you sleep

The advantage of starting a money lending company is that you have the ability to have passive income and make money while you sleep. This is the dream for many entrepreneurs.

Motivation of employees

If you plan to have a sales/content team on board, finding creative ways to motivate them can be a challenge. It's important that you're able to offer great incentives and a good work environment for your employees.

Longer Sales Process

A money lending company can be a big time and money investment for your customer, so it's important you plan and predict a longer conversion funnel and stay in communication with potential customers.

High employee turnover

In the money lending company, employee turnover is often high, which can be quite costly and time consuming for your business. It's important to try and avoid this as much as possible by offering competitive pay, benefits, and a positive work environment.

Taxes

As a money lending company, you typically pay self-employment taxes which can be quite high. It's important to understand what you will be paying in taxes each year so you can determine if the work you're taking on is worth it.

High overhead expenses

With starting a money lending company, there are overhead expenses that come with selling a physical product. You will want to make sure you strategically budget for these overhead costs. We discuss this more in the startup costs section below.

Time commitment

With starting a money lending company, all responsibilities and decisions are in your hands. Although this is not necessarily a negative thing, work life can take over at times. This can place a strain on friends and family and add to the pressure of launching a new business.

Difficult to build trust with your customer

With starting a money lending company, there can be minimal face-to-face interaction, which means it can be a lot more difficult to establish trust with your customers. You'll need to go the extra mile with your customer to grab their attention and business.

Strict regulations

With any money lending company, there are strict rules and regulations as it relates to processing your product. You must follow these regulations specifically, or significant legal issues could occur.

Complex maintenance

Your money lending company will require a long-term investment due to the need for updates, bug fixes, and security vulnerabilities. It's important that you (or someone on your team) stays on top of this at all times.

Impatient customers

You may offer an engaging user experience for your customer, but customers expect a lot and may be impatient if they aren't pleased with your product or service.

Be prepared to get out of your comfort zone!

Although this is exciting for some entrepreneurs, it can be a big challenge for others! You may find yourself in uncomfortable social and business situations, jumping into tasks and responsibilities you aren't familiar with, and pushing yourself as far as you can go!

You might struggle financially (at first)!

If you bootstrap your business or choose not to pay yourself (or pay yourself less than you were making at your corporate job), this can be financially taxing. It's important to adjust your lifestyle and set a plan for yourself so you don't find yourself in a stressful situation.

More of a challenge to run your business from home!

Running your business from the comfort of your own home is a big appeal for many entrepreneurs. With a money lending company, you are more likely to run your business out of your office or storefront space.

Learning Curve

When you start your own business, you no longer have upper management to provide you with a playbook for your roles and responsibilities. You should know the ins and outs of every aspect of your business, as every decision will come down to you.

Equipment Breakdowns

Over the years, your equipment can get damaged, break down, and may need repairs which can be expensive. It's important you prepare for these expenses and try to avoid damages/wear & tear as much as possible.

Recession-Impacted Industry

When the economy is down, money lending company's are one of the first things to be cut.

Takes time to see results & make money

Results and revenue do not come overnight with a money lending company. Often times, it takes weeks, months or even years for your work to monetize.

Technical issues can be frustrating

Technical issues are common in this business. If you struggle with the technical side of things, you may want to consider outsourcing this responsibility to save yourself the time and frustration.

More challenging to earn passive income

It can be more of a challenge to make passive income in this business. Often times, the amount of revenue you bring in is limited by the amount of time you have in the day.