The number one reason why most businesses fail is that they’re underfunded. That’s a fact. And while, at one time, you could just about go to a bank with a good idea and a great name and get a small business loan, it’s a lot harder in today’s economy to get solid funding for your business.
There are lots of ways to minimize your expenditures when you’re launching and growing your business, but let’s face facts: you need some money to make money.
As I’ve preached to you week after week, you need funding to pay the experts you should be consulting, the designers and developers for your logos and websites, marketing efforts, and more. Since I rarely recommend business loans to my clients (partly because they’re hard to get and partly because my clients rarely actually need them), let’s get into some nitty gritty about alternative ways to fund your business startup.
Get your personal finances in order. Before you start looking anywhere else, look at home. The very best thing that you can do for your business is to make sure your personal finances are in order. Ideally, you want to have good credit, an emergency fund, and long-term savings in place before you start a new business venture. This makes virtually everything else easier for your business.
If you have good credit, you have a better shot at the borrowing options I’ll talk about later. If you have savings, you can live on that until your business is able to sustain you.
Know what you need. It’s crucial that you know what you need before you start looking for funding. Otherwise, how will you know when you’ve reached your goal? If you don’t already have a business plan, then, depending on your goals, you may want to write one, to get a clearer picture of your financial needs and expected future income.
Borrowing. Before I get into borrowing, let me be clear: my clientele tends to be micro-small-business, coaches, consultants, independent professionals, and contractors. I work with brick-and-mortar companies, as well, but only occasionally. So, when I say that I rarely recommend borrowing, that’s primarily because I rarely work with a client whose business needs warrant borrowing.
Funding a business is one of the biggest challenges for most entrepreneurs.
But by getting your personal finances in order, living below your means, selling what you don’t need, and finding creative ways to borrow, you can adequately fund your business, even in this economy. It may not be the most fun, but business often requires sacrifice. The greatest success stories include lean years, and you may have your share of those. But stick with it, be wise with your finances, and you’ll reap big rewards in the long run.