Although mainstream jobs offer financial security, being stuck doing something you do not like for a while limits your experience and might end up making you feel like a prisoner. With the rise of entrepreneurship and the plethora of success stories we see every day, people are now more inclined to accept the fact that not everyone is cut out for traditional 9-5 positions. If you are rethinking the long-term benefits of your current position and are starting to see the merits of running your own business, you may already be looking into ways of financing your idea. Nonetheless, most entrepreneurs have some kind of starting capital, and if you are short on money, you might think that it is impossible to get your company up and running. This is not necessarily true; you can start a business even if you are strapped for cash. Want to know how you can do this? Just check out the next few tips.
Make Sure Your Business Idea Is Viable
Before you get too carried away and find yourself drowning in debts, it helps to put things in perspective. Every year, thousands of ambitious individuals come up with what they perceive as “winning ideas.” However, a very small percentage of them make it past their first year as business owners. The thing is, most of these “winning ideas” do actually look great on paper, but only because they are not backed with enough research. If entrepreneurs took the time needed to conduct thorough market research, they would probably find out that their ideas are not actually feasible! The bottom line is that we are not saying this to make you give up hope and stick with your current job, but it helps to make sure that your business will flourish given enough capital so that you do not end up bankrupt.
Consider Low-Capital Ventures
The success of product-based businesses is usually hard to predict. On the other hand, service-based ones are pretty much guaranteed to succeed. If the notion of owning your own company itself is what is driving you to start a business, you can look into low-capital ventures that offer high profits. These include content creation, event planning, concierge services, and consulting. Such options are great for those who are not too finicky about achieving their creative vision. They may also be a good way of funding a product-based business down the line in case you have a winning idea that needs higher capital. What is great about this strategy is that it allows you to be self-sufficient and help you avoid relying on loans to get your company off the ground.
Apply for a Loan
Looking for quick liquidity and do not want to start a service-based business? Well, the best course of action in this case is to apply for a loan. Many people are skeptical about loans, and for good reason. If your business does not generate enough income, you will have to deal with a huge deficit and persistent creditors who want their money back. However, some loan types have been created with small business owners in mind, having minimum requirements, and offering flexible payment structures. When we asked a few creditors about what they recommend, one answered, “We’ve made financing simple in the last couple of years; people do not have to stick with a certain option if it does not make sense for their business structure. SBA loans, merchant cash advances, cash flow loans, and microloans all come with different annual percentage rates, catering to the needs of most applicants.” So, as you can deduce, you do not have to go for high-interest-rate loans, as there are many other varieties to pick from.
Get Help from Your Contacts
Not all entrepreneurs are comfortable with the idea of applying for a loan, so the second-best option here is to get help from your contacts. Assuming that you have exchanged contact information with a couple of investors during previous small-business conventions, it is time to reach out to them. Just make sure that you have a killer pitch ready to seal the deal. If you have not already introduced yourself to investors, you may want to hold off starting your business until you get in touch with more influential people, or you can search for angel investors among your friends and family. Angel investors usually give out capital in exchange for equity, so if you have no problem with this, it is certainly one of the most practical strategies you can try!
Find a Partner
Flying solo when you do not have enough money is not often smart or even possible, and while some entrepreneurs like to take all the credit for building their businesses, this mentality will only get you so far. If you are willing to tap into your savings, consider finding a partner to help you start the company. A partner can be a friend, a relative, or even a coworker that is interested in your pitch. It is worth noting that your partner may end up having a bigger share of the company than you, provided that they contribute more money to it. This is a worthwhile compromise if all you care about is seeing your idea come to fruition.
DIY When Possible
If employment expenses, not initial funds are what got you worried, there is an easy way to cut these costs, provided that you are willing to show some grit. Having specialized departments as a small business owner may not be feasible, so the best method of combating this is to take on such responsibilities yourself. For instance, if you do not have enough capital to hire expert HR personnel, you should learn more about onboarding, recruiting, and processing payroll. Similarly, you will have to file your business taxes yourself if you cannot get the help of an accountant due to budget restraints.
Seeing your vision turn into reality is worth all the obstacles you may encounter. Financing options can seem too complex or tricky for most aspiring business owners. However, once you figure out your goals and business model, you will be able to pick the right one. Whether you end up partnering up with someone else, taking out a loan, or convincing an angel investor of pouring capital into your company, it is important to conduct enough research to avoid future financial mishaps.