Thinking of starting a business, yet not sure how you'll finance it? Today I'm going to add some tips that may help.
Do:
- Check with your financial planner or accountant. Always a good idea to have an idea of how much money you have and come up with a figure to borrow for your business.
- Set up your business legally and open a business account. You'll need to keep expenses and income separate from your personal accounts.
- Work on getting at least some cash flow from your business as soon as possible. Not only will it make you feel one step closer to resigning from your main job, you'll also have a better idea if your business idea is moving toward profitability.
- Keep your day job and use some of your salary to finance your business. Many strong businesses have started slowly and on a part time basis. You also have the added bonus of medical benefits, pay into social security, 401k and other benefits your job provides. Your full time position does take up a good chunk of your time, and you may feel impatient to resign and move on. Think of your position as a means to an end: you do the work required and that energy will flow over to your new endeavor.
- Research and explore loan options. Besides traditional bank loans, there are online funding sites, crowdfunding and more.
- Use credit cards sparingly. It's ok to have a business credit card, however, going into deep debt will delay your profitability and put you and your family at higher risk. This also applies to your personal cards; resist spending on things you don't need so you'll have more funds for your venture.
Don't:
- You won't need to spend a lot of money on a fancy office or other things. Most businesses can be run today with a cell phone and a computer to start. The office concept may make you feel more successful but having more money rolling in than you are spending is much better in the long term.
- Your greatest asset is your house? Don't borrow against equity. It's another form of debt that could put you in dire straits if things don't go well.
- Have a sizable 401k or IRA? Resist touching it.
- It's not necessarily a good idea to rush into taking on a business partner. You may have better cash flow, yet many businesses get stuck or fail because the partnership doesn't work out. It's not only the financial aspect, but your may disagree on the way the business is run, etc. If you do have want to add one make sure all your agreements are in writing.
Here's another article that can help with ways to finance your business. Check out this article from Inc magazine HERE
To your abundance with love, Suzanne
