Entrepreneurship: Handling the Financials
Your business plan was a hit with the banks and investors, and now you need to figure out exactly just how you are going to get all the money you’ll need to get your new entrepreneurship endeavor underway. Realistically, banks and investors are probably not going to cover all of the start up costs you’ll run into. So it’s the best bet to have back up reserves to help you get through the first year or so of not making a whole lot of profit. Here are some ways to plan ahead and find the money you need to get going.
- Check out small business loans. The SBA is a great resource for information and for loans. Banks and other companies may be helpful as well. Research your area to find any loans specific to your city or state.
- Tap into savings. Hopefully you have been attempting to save money, even before wanting to open a business. But, making that a reality can be difficult with life’s unexpected turns. Once you decide to become an entrepreneur, immediately start saving whatever you can. It’s best to have some cushion to fall back on.
- Plan to get more than you really need. If it takes $50,000 to get the business started and you get your hands on that, great! So you rent a space, decorate it, buy necessary equipment, get supplies, stock the products, etc. You even hire a few part-time people. But it isn’t likely that you’ll immediately start making a huge profit. So, the first month goes by. Then rent and bills are due, employees need to get paid, and you have to give up because you already created too much debt. Try to have reserves ready for about a year of making no profit, that way you can survive into success.
- Spend intelligently. While you want to do well and impress customers, it isn’t necessary to have new top-of-the-line equipment right away or fancy decorations upon opening. Skimp where you can and save as much as possible. Be sure to keep an eye out for extra unnecessary expenses like large phone bills, expensive office supplies, and product packaging and eliminate them. Use the first little while to focus completely on getting the business out there and making new customers.
- Decide how to get paid. How will customers give you money for your product or service? If you work from home and have a very small business, it could be as easy as accepting checks, money orders, or cash and depositing them in a business account. There are also new ways to accept credit cards without opening a merchant account, although that is still a viable option as well. You’ll need to take into account what the fees will be for accepting payment or using a service and factor that into the overall business costs.
- Talk to family. This may not be the most appealing idea for some people, but it could be a good idea to talk to family members about helping you reach your goals. Maybe they invest or maybe just help cut extra costs by watching the kids after school instead of hiring a nanny or babysitter. Make sure to discuss any payment specifics if they end up giving you a loan and what they can expect to receive in return as investors, if anything. Show them your business plan, projected earnings, and so on like you would for any other investor or loaner.
For more information on starting a new business, keep reading the blog!