Do you want to start your own business? You may have a particular idea, or you are attracted by the idea of starting and growing your own company. You are prepared to take some risks, such as quitting your current job or spending less money for you for a period of time. However, there is something holding you back: lack of funds.
Even though this may seem like a big problem at the surface, you should not abandon your dreams because of the lack of funds. If you have enough confidence in yourself and know what you are doing, it is possible to start a business with little or almost no personal investment whatsoever.
Why is capital so important for a business?
Let’s discuss why a business needs capital in the first place. Each and every business will have different needs since there is no universal startup for building businesses. Before you start searching for alternative methods to fund your company, you have to precisely estimate how much you need for the startup.
Take the next uses under consideration:
- Permits and licenses. You may require special paperwork and registry in order to function, but it depends on your region.
- Supplies. Are you purchasing raw materials? Are you in need of PCs and/or other similar devices?
- Equipment. Are you in need of specialized machinery or software
- Office space. You simply can’t overlook aspects such as Internet Connections and utility costs, so this is quite an important expense.
- Relationships, subscriptions, memberships. Which are the publications and affiliations to which you will subscribe every month?
- Functioning costs. Don’t neglect marketing and dig into the nooks and crannies.
- Legal fees. Did you consult a lawyer throughout your business-creation plan?
- Employees and contractors. You will need individuals on your payroll if you cannot do it alone.
Therefore, there are 2 important paths of starting a business without a major capital: boosting your available capital from outside sources or lowering your costs. Here you have three options:
The first option: Lower your requirements
The first option would be to change your business model in order to request fewer things. You can easily reduce your employee expenses by being the only employee at the start, in case you are planning on starting a company of personal trainers. You can also work from home if you don’t necessary need an office space. In order to discover cheaper sources of supplies, you can do a little bit of research.
However, you won’t be able to avoid the following expenses. Regardless how much you cut down, you won’t be able to jump over licensing and legal fees. Numerous micro businesses will start on bellow $3000, according to the SBA. Moreover, the home-based franchises don’t need more than $1000.
Second option: Bootstrap
In this second option, you will have to consider a sort of warm up for your business. Take a moment and start with the basics instead of jumping right into the full-fledged business mode. In order to obtain a head-start, you should launch a blog and one niche service and decrease your scope and your audience. It is very important to avoid some of the biggest initial costs in case you can start as a self-employed individual.
You will be able to invest in yourself and build the business of your dream once you start making some money.
Third option: Outsource
Getting funding from outside sources would be your third option. There are numerous ways to build capital, regardless of the sum of money that you have at the beginning. Below you will find a list of potential sources:
- Family members and friends. You should never neglect the possibility of asking a friend or family member for some funds.
- Angel investors. These are practically wealthy individuals who invest in interesting business ideas. In exchange for their investments, they will partially own the company or business that you create.
- Venture capitalists. They are very similar to angel investors; the difference is that they invest in businesses that are already functioning.
- Crowdfunding. This implies attracting money from different sources.
- Loans and grants from the government. Small business can grow and prosper with the help of The Small Business Administration.
- Bank loans. In case your credit is in good standing, you can always open a line of credit.
You should be in a position to lower your personal financial investment to practically 0 if you benefit from one or more of these three options. If you have confidence and invest trust in your idea, you will surely succeed in your path. However, you have to know that it will take a lot of sacrifices from your part. The lack of capital can be easily overcome, even though it seems like a major problem in the beginning.
Did you have the right amount of cash to start your business? Please share your comments below
