Are you looking for tips on how to start a business? Starting a business from the ground up especially when you have limited capital may seem like entering uncharted waters. There’s no clear-cut formula, or a roadmap to success. Every business is unique, from its concept, customers, marketing strategy and so forth. In fact, you can’t approach each business the same cookie-cutter way.
Perhaps you’re excited to take things to the next level and you’re willing to take risks; leaving a stable job or moving to a new location, without the assurance of having personal revenue for a while. But, the lack of adequate capital is one huge logistical issue that can stop you from chasing your dreams.
Regardless of how determined you are to start a business, five practical tips can help you get off to a good start and navigate your path in this competitive world of business. Here are tips fitting to those who want to set themselves up:
Look for a financing partner
It could be an investor, or a loan facility that offers accessible and affordable financing product such as a business line of credit, Tax Debt Loans, working capital loans, or any other product suited to your needs.
One of the best options is a specialized lending facility that provides loans to startups, or those with no stable cash flow and credit history. The reason is that you need money to operate a business. You need money for the licenses, permits and special paperwork. All businesses need to buy supplies.
If you need to buy raw materials, office equipment or special machinery, and pay for office space, it is important to look for the right funding that can help you cover those costs. You may need to join associations, subscribe to certain publications, or be a member of a certain organization to gain leverage in the market. Also, businesses need to pay for Operating expenses, Legal fees and manpower.
Don’t mix business with personal life
Your business is not an extension of your personal finances. That means you don’t get money out of your company’s earnings to buy your dream car, unless you allotted that money as a salary for yourself. When you run a business, you need to pay for taxes, take care of accounting records, and pay your suppliers and employees and so on. If you are sole entrepreneurs, you have to be personally accountable for them. When things get tight, never get the money allotted for working expenses or taxes to pay for your personal needs, unless you want to deal with its ugly repercussions later.
For example, it is illegal to use your business credit card to pay for your personal expenses and deduct them on your business tax return. And even if you exclude them from deductible business expenses, remember that the business entity you created shields you from personal liability when your business fails.
When you co-mingle your personal and business accounts, you lose that legal protection. Aside from being a good bookkeeping practice that can help you avoid serious legal litigations, separating your personal and business expenses would also help you keep your finances in order.
Reduce business needs
Create a business model that is suited to your finances. If you want to start a consulting business you can reduce your employee expenses by being the only employee of your own company, until you can afford to hire additional staff. If you can’t pay for an office space, why not use a spare room in your house? Look for cheaper raw materials or supplies to ensure that you can afford to get the ball rolling with limited budget.
Bootstrapping helps newbie entrepreneurs. If you are not yet financially equipped to launch full throttle, why not start with basics? You might want to start with a niche service, limit your audience and reduce expenses while getting a head start.
Pay your bills diligently
Set up automatic payments for the minimum amount each month. Add alerts/notifications about upcoming bills and due dates, and pay your utility bills and credit bills as often as you can to fix bad credit.
Lenders take unpaid bills or late payments listed on your business credit report seriously. Inconsistent payments may show your inability to meet monthly payment obligations, and may prompt lenders to question how financially responsible you are and whether you can manage to repay additional debt. Multiple missed payments can wreck your credit, and ignored unpaid debts can lead to summary judgments. Late fees and penalty pricing also add up quickly, adding to your balance and begin accumulating interest, making increasingly expensive overtime. Missing payment can result in a bad credit rating so you may need to try to clear credit history.
Those who want to know how to start a business need to realize that it is a multi-step process that requires you to stay organized, frugal and diligent with money. Keep doing what you have to do to keep your business afloat and you will definitely stay on track and achieve success.