How to Make Every Cent Count for Your New Business
So you’ve decided to start a new small business. Perhaps you even took advantage of some business solutions to help you with all of the nitty gritty details involved in running a business, but you still need cash. Here’s what you have to consider:
1. Know how much you need
Before anything else, you have to figure out how much money you actually need. Without knowing the amount of funding you’re looking for you won’t be able to figure out the best place to get that money from. Most likely, you’ll find that you don’t need too much since you’re running a pretty small business at the moment that is only in its infant stages.
2. Know where to look
Large banks aren’t the only source of money. Since you’re probably not looking for a huge loan, there are places you can go for a significantly better deal. The first option, obviously, is to pay for everything on your own. It’s a slow start, but you’ll have full control without the pressure of having to please anyone else. If you’re only looking for a small amount to supplement what you have, you can borrow from family or friends. You’ll know you’re borrowing from people you trust and you’re likely to get a better deal. If you think that you need more than you can pay by yourself or get from acquaintances, it’s time to look for a “partner” (be it just an investor or actual venture capital) or go to the bank.
3. Be Smart
No matter where you’re getting your money from, be sure there’s a written agreement. Yes, even with family and friends you should have a document written up with inked signatures at the bottom. It seems silly, but it’s better safe than sorry since it will save arguments later and will stop a confrontation that could end a friendship.
4. Be Budget Conscious
Just because you get money doesn’t mean you have to immediately spend all of it. Be careful with how you spend, and avoid doing things like buying new equipment or hiring consultants. In fact, if you can get away with it, don’t even rent an office space!
5. Don’t Be Afraid of the Credit Card
Sam Thacker, owner of Business Finance Solutions says that “The biggest pro to using credit cards in this economy is availability.” And he’s right: credit cards get you money fast and they have a high limit. As long as you pay attention to that budget we just talked about, credit cards can be a major boon. Skeptical? Sergey Brin and Larry Page funded Google with credit cards in the mid-90s and that certainly worked out well.
6. Deposit All Your Cash
Thinking of what to do with the money you’re making? Deposit it. Why? Dal LaMagna, author of Raising Eyebrows: A Failed Entrepreneur Finally Gets It Right, notes that, in response to him asking his bank, “Why now?” when they gave him his first loan, they said, “Besides the fact that we know you are in control of your business — those monthly statements — we know you are honest.” Depositing that money shows that you’re making headway and also creates a good habit for the future (tying into being careful with your budget).
The moral of the story? You probably don’t need a lot of money right now and, by being intelligent about how you use what cash you have, you can make a little go a long way. Put in hard work and add a little bit of prudence and more money will come pouring in.
James Kim is a writer for Choosewhat.com. ChooseWhat is a company that provides product reviews and test data for business services and products. Their goal is to help small companies make informed buying decisions on business solutions that help their business.