Starting a business is never easy. Regardless of size, industry, and the nature of what you are intending to sell, establishing an organization for the sake of generating profit will require a lot of sacrifice. As well as physical resources, time, energy, relationships, and peace of mind are just some of the things that aspiring entrepreneurs must be prepared to exhaust the moment they decide to follow through with their start-up.
It doesn’t matter if you have the most innovative business idea of all or if you are the foremost expert in the field you’re about to enter; without proper knowledge of how to generate and handle finances properly, your business will fail. Of course, coming up with a business plan is the first step. After establishing the creative aspect of your business model, you need to determine your objectives, needs, and expected sales forecast based on the initial scale you have in mind. Once you have all of these set in place, you can start your pursuit for capital.
Producing and managing assets are two very different things. While the first one will challenge mostly your creativity and resourcefulness, the latter requires more focus and organization. Here are some practical tips that can help you in both areas:
1. Ask Uncle Sam.
Believe it or not, the federal government is one of the best sources of funds for entrepreneurs managing the start-up cost of a business, even during times of financial crisis. One bureau to approach is the National Institute of Standards and Technology, a branch of the government that offers grants to co-fund “high-risk, high-payoff” projects with the hope of providing Americans a higher standard of living. However, keep in mind that government agencies get tens of thousands of requests for grants each year and are therefore are very selective.
2. Look around you.
One of the biggest mistakes aspiring entrepreneurs make is being too focused on finding money outside their homes and not looking at existing resources that they can convert to cash. Do you have any clothes that you can sell at the local surplus shop? What about kitchen utensils you aren’t using or toys that you’ve outgrown? Be creative. There are many places you can go to raise some extra cash. Why not check out some freelance jobs on the Internet for some extra income?
3. Get a loan.
As an entrepreneur managing the start-up cost of your business, you should be aware that—unless you’ve got a lot of extra cash stored in your basement—you will likely need to apply for a loan. The trick here is to find the institution that will offer you the best terms. Don’t be afraid to ask around and try to get a loan that will be enough to cover all of your initial expenses and sustain your operation for 6 to 12 months. In that same vein, make sure that you do some credit monitoring as well. Checking your credit score at freecreditscore.com can help you narrow down your choices by giving you an idea as to which types of loans and interest amounts you qualify for.
4. Acquire a credit card.
You may be thinking, “Isn’t getting a loan enough?” but chances are that it isn’t. Any business is at risk of failing due to a multitude of unforeseen circumstances, such as an increase in the price of raw materials, the sudden appearance of a formidable competitor, or even something as sudden as a tornado. It’s always better to have places where you can pull up extra funds in case of an unexpected incident. Again, checking your credit score prior to applying for a card is important because having lenders deny your application due to a low score can lower your score even further.
5. Practice good management.
So you’ve already acquired the funds you need for your business. What do you do now? Keep in mind that running a business entails a lot of strategizing and math. As an entrepreneur managing the startup cost of your business, you must be prepared to do a lot of management. Make sure every single thing you purchase is documented and properly categorized as either an asset or an expense. Keep your record books clean and your files organized and be sure to always maximize any resources you have at hand. These are the makings of a good businessperson.
6. Don’t forget about credit monitoring.
Part of managing your business is making sure that all your payables (business and personal) are paid on time. Remember that you and your business’ credit score are now connected to each other, so be sure to always keep on top of anything that needs settling. The importance of doing this cannot be overemphasized. If you’re thinking of sticking with your business for the long haul, then keep in mind that regularly checking your credit score can help you get better business opportunities in the future.