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You have a great idea for a business, but like many things in life, starting a business requires money. While start-up costs vary, many successful entrepreneurs started with just a few hundred dollars or even less. Your start-up costs will depend much on the business you are starting and what materials or supplies you need.
When starting a business, it is important to calculate your living expenses as well as business expenses. A new business can take several months to years before seeing a lifestyle sustaining profit. Anticipate this lean period in your business start-up budget. The following provides various ways to help fund your venture while still supporting yourself.
Moonlight: your business venture part-time during off-hours of your regular job. This lets you ease into all the tasks required to run a business with out the financial pressure. It does take away from your free time but, the sacrifice may be worth it in the long run when in 6 months to a year you have more time to spend with them than before.
Part-time: Consider working part-time and spending the other time building your business. This is a little riskier financially, but it allows you extra regular-day hours to work your business. Be sure to calculate all lost income as well as changes in benefits that often occur with part-time work.
Turn your employer into a client: By becoming an independent contractor, you are working for yourself, you have a client before you even start, and you have a ready made reference. There are many monetary benefits for your company to do this. Just be sure not to compete for your employer’s clients. That could work against you.
Live on one salary: If you are married and can afford it, live on one salary for a period of time. Because of the strain it can cause financially and emotionally, you want to have set goal in terms of a time frame to make a business profit.
Use savings: If you don’t have one, create one by putting away part of your job earnings in an account. If you have one, consider using it to start your venture. If you are successful, it will have been a great investment!
Misc. Money: Use money you receive unexpectedly (inheritance, lottery, gift, stocks, etc) to invest in your business.
Borrow from family or friends: Not all family and friends are as encouraging or supportive, so borrowing money might be difficult. On the other hand, they may be eager to help you reach your goal.
Credit: While the message of every financial planner is to cut up credit cards, it may be a way to help finance your business start-up. Remember, interest rates are high so, use them wisely.
Loan: There are business start-up loans, but they can be difficult to get. Get information on the variety of small business loans from the Small Business Administration. Consider taking out a home equity loan if you own your home instead.
Investors: If you have a great business idea other business people may be willing to invest in your business in exchange for partial ownership (usually stock). Seek professional assistance before recruiting venture capitalists.
Before spending any money on your new business, be sure you are clear on all the details of your business. Create a business plan that includes details on starting and running your business and the costs associated with it.