I’m not sure if you’ve noticed, but the economy hasn’t been doing so well. After the crash of 2008, employers laid off record numbers of employees world wide, and many people have reacted accordingly: by endlessly job hunting, hoping against all odds that they’ll find a new job in a market that’s absolutely saturated with other people trying to find jobs as well. Well, we have some suggestions for those of you in the job market, but there’s also another way to bring home the bacon; starting your own small business.
It’s not for the faint of heart, but chances are if you clicked on this article, you were already considering it anyway. People have no shortage of interesting business ideas, but it’s only those that act on them which excel – at least in starting their own business. I assure you, the business fairy isn’t going to swoop down and force your hand.
Small Business Perks… at a Cost
Starting a new business can be a great way to increase your income and get a flexible schedule. Everyone likes the idea of being their own boss, and this is an effective way to do it. The trouble, is that you probably need a bit of money to get started. Everything from putting down a down payment for a rental property, buying the necessary office equipment (computers, phone, accounting software, etc…), to signing up for small business insurance – it all costs money up front.
Now, there are endless ways to do it, and some of them depend on the type of business you’re planning to start, but here are a few straight forward ones that you may find useful.
Angel Investors: One option is to try and seek out angel investments, from either friends or strangers. Angel investments are typically for lower denominations of cash, and angel investors are well aware that the business will probably be risky. If you need $10,000 to start your business as opposed to $500,000, this may be a good bet. Just be aware that you’ll absolutely have to pitch the investor on your idea, and you’ll also have to share future profits with them as well. No short term loan payments, but long term profit sharing for the investor.
If you’re interested in giving this route a shot, I recommend checking out Angel Investor Tim Ferriss’ page on the topic. He explains in depth how to do this, as well as the common mistakes and pitfalls.
Saving Up: Depending on whether you’re currently employed or not, and how much money you have saved in the bank, simply using your own capital might be the way to go. You won’t owe anyone a dime at the end of the day, and it might put some positive pressure on you to make sure you succeed. If you go this route, remember… never invest more in your business than you can afford to lose. Starting a business is a risk worth taking, but don’t be an idiot about it either.
If you don’t have the cash up front but would still like to start a business debt free, consider taking on a second job or extra hours and using all that extra money to fund your new business. This will undoubtedly take you longer, but you’ll be hedging your bets as well. Making sure you have a roof over your head is pretty important if you ask me.
Credit Cards: This is by far my least favorite option – especially given how terrible we are as a species with credit cards. Having said that, if you’re positive you’ve got a sure bet and can re-pay the debt in a timely fashion, this may give you the cash infusion you need to kick things off. It’s going to take discipline, and I suggest you make damn sure to lower your lifestyle expenses first if you go this route. While you’re at it, make sure to use an online resource like Nerd Wallet to figure out the best credit cards to have. If you’re going to rack up a ton of expenses on your card, you may as well do it on a card that offers you cash back or some kind of perk.
The best credit cards business owners can use typically have rewards and low interest rates anyway, and considering companies give our credit cards like candy these days, you shouldn’t have trouble acquiring one. Just make sure you make your payments on time, and you’ll be fine.
Small Business Loan: Depending on what country you live in, and whether you’re willing to shop around a bit, taking out a small business loan might be a good option for you. If you’re located in the United States, the Small Business Administration or SBA is a government agency that guarantees small business loans for entrepreneurs. They offer low interest rates and easier approvals than what you can get from other financing programs. Loans are generally flexible, and providing you have a clear plan of action, this might be a good option for you.
Making the Choice
Regardless of which option you choose, it’s important that you’ve given the whole affair a lot of thought. Having every single detail of your business planned out in advance is both impossible and impractical, but having a good sales pitch and a general outline of your plans to monetize and grow should be priority #1 for you, long before you even consider seeking out funding. A little bit of planning goes a long way… measure twice, cut once… you get the idea.
(Photo by Rachael Voorhees)