Everyone at one point or another has an original idea to start a small service-oriented or product-based business. The fascination of launching this business is probably fueled by the idea that this business might eventually grow and expand. Often though, the biggest hurdle that stops this from happening is that “You don’t have much money as capital.”
Let’s Be Realistic
Let’s be realistic in the fact that any, and we mean “any,” starting business always needs a little cash up front. Of course, startup cash will depend on the different needs of different businesses. Consider that at one point or another your startup business will need any of maybe all of the following:
- Licenses and permits (this will depend on your region and registry to operate)
- Supplies – this will naturally depend on what business you’re opening, if it’s based on raw materials or the need for computers.
- Equipment – you may need special machinery of software.
- Office space – a huge expense you can’t ignore along with internet and utilities.
- Operating expenses – along with the water and electricity don’t forget marketing.
- Legal fees (that is if you’re consulting a lawyer)
- Contractors and employees – suppliers and people on payroll can’t be ignored especially if your startup idea is huge.
With all this, here are 3 options you can take to reduce your capital spending:
Reduce your needs
You can reduce your business model so you get the solo demand. For instance, if you’re a web developer or web designer, you can be the sole employee and start working from home. As you get more clients and gather more money, you can save up for future expansion. However, be careful to note if your region requires home based businesses to be registered.
You can treat your business as a “warm-up” wherein you can just start with the basics instead of being in full-fledged business mode. Instead of a series of services you can just focus on one and just keep adding on when you start to turn profits. You can save up on revenue when you start really small and just build up piece by piece as time goes by.
The more riskier option is to find sources of funds from many sources and pooling the capital together. This is assuming you’re very confident with your product or service and you know your startup will really turn the corner soon enough. You can find sources from:
- Family and friends – Never rule these people out because they’re the ones most likely to give you a helping hand.
- Friendly investors – They can also be friends or family who want to seriously invest in your business or are wealthy acquaintances who love to invest in business ideas in their generation. They may ask for partial ownership which is a worthy sacrifice actually.
- Venture capitalists – These are really serious investors constantly in search for business partners willing to be under their overall umbrella.
- Crowdfunding – The latest online trend to get funding, assuming you can really show a great business idea and that you’re really hardworking.
- Government and bank loans – You can apply with the Small Business Administration for a loan or grant or open a line of credit with a bank.