Advertising

How to Manage the Start-up Cost of a Business

Advertising
How to Manage the Start-up Cost of a Business

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.

Advertising

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.

Advertising

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.

Advertising

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.

Advertising

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.

More by this author

Joy Mali

Digital Analyst

6 Online Games to Play to Make Money Hiatal Hernia: Causes, Symptoms and Treatment Thyroid 5 Signs That You May Be Suffering From A Thyroid Problem Hemorrhoids: Facts, Causes, and Treatments 5 Mistakes to Avoid When Shipping Your Car

Trending in Money

1 Financial Freedom is Not a Fantasy: 9 Secrets to Get You There 2 40 Healthy And Really Delicious Meals You Can Make Under $5 3 Life Insurance: A Secure Way To Protect Your Future. 4 How To Save Money On Groceries: 13 Quick Tips 5 10 Investment Tips For Beginners

Read Next

Advertising
Advertising

Last Updated on July 20, 2021

Financial Freedom is Not a Fantasy: 9 Secrets to Get You There

Advertising
Financial Freedom is Not a Fantasy: 9 Secrets to Get You There

Have you ever considered your life now, and how it would be if you had more time to spend with your family and less worries about money?

Nowadays, financial stress is one of the most troublesome weights in life. If you’ve ever encountered financial stress, you know the difficulty of not having enough income to pay your obligations or bills.

Many people say that money is not the ultimate goal of life. While that’s true, money certainly plays a very significant role. The meaning of financial freedom changes with the different phases of our life, but ultimately, it is something that many people strive for.

In this article, we’ll explain how to capture that financial freedom you’ve been looking for. Read on to learn the secrets to financial freedom.

Break Free of Your Finances

Financial freedom is about having a constant flow of cash from your assets to cover all your regular needs.

When you are not worried about your income, or living paycheck to paycheck, you gain a great sense of freedom. It’s the freedom to be obtain and do what you truly need to make your way through everyday life.

Gaining financial freedom, though, is a process of growth, making small improvements and gaining emotional strength.

Though it seems hard to believe, it is really very simple to get financial freedom.

To do so, you simply need to make sure that your assets exceed your liabilities. In other words, you’ll need to find the sweet-spot where your residuals meet or surpass your expenses. This is something that you can achieve with the proper plan.

While not every person will accomplish financial freedom, the potential for anyone to do so is certainly there. Anyone can achieve this success, regardless of their income level.

Advertising

Outlined below are 9 secrets that will help you in your goals of achieving financial freedom.

1. Stop Unnecessary Spending

We often spend money inwardly, instead of objectively.

For example, you may spend when you’re anxious, depressed, restless, exhausted, from fear of missing out, or to please others. This is a very unhealthy way to handle your finances.

To stop this habitual spending, log down all your spending over the course of a month.

Just as some people keep a food diary, keep an expense diary. Remember not to just write down how much and what you spent the money on, also include the circumstances of why you spent the money. Was it an impulse buy at the checkout line or was it something you planned to purchase?

This increased self-awareness could enable you to avoid triggering situations in the future when you are considering an impulse buy.

2. Plan a Monthly Budget

This is a great opportunity to get serious.

Take a seat with your spouse or partner and make a monthly budget based on your income, not your expenses. You are never again going to spend more cash then you have on hand.

Overspending is the thing that led you to more financial obligations. Make sure you decide every month what is coming in and what will be going out and stick to that budget… no matter what.

3. Cut-up Credit Cards

Perhaps you are the type of person who always pays your credit card balance in full before the end of your billing cycle, and enjoys the reward points you gain. If this is the case, then you’re already way ahead of the game.

Advertising

If not, you may want to consider ridding your life of the burden that credit cards bring.

Many cards have strategies set up so that if you make a certain number of late payments, they will raise your interest rate much higher. This can really add up in the long run and you won’t be doing your financial situation any favors. If you’re prone to late payments or have a large balance due on your cards, cut them up!

Without proper self control on credit card spending and payments, you are basically throwing your money away. To ensure that you have better control over your spending, use only cash or debit for all future purchases (and don’t forget to pay at least your minimum payment on your cut-up cards each month!).

4. Increase Savings

There is no doubt that for a comfortable retirement you must accumulate satisfactory savings throughout your working life.

It’s good practice to save up to 15% of your income.

Start with your workplace 401(k), if you have one. If not, a Roth IRA (if you are eligible) or a traditional IRA (if you are not eligible for the Roth) are the next logical steps.

Increase in longevity means you might be able to look forward to 25 to 30 years in retirement, or possibly even significantly more. Investing now in good retirement plans will ensure that you have a guaranteed a stable monthly income when the time comes to stop working. [1]

5. Invest Wisely

Consider investing in funds.

Specifically, you will gain higher returns if you invest in different types of mutual funds such as Debt funds, Equity funds and Hybrid funds with a proper balance, although it absolutely relies on your personal preferences and sense of risk taking.

To get the most of these benefits, make sure you are investing in a variety of assets. Another resource of investing in mutual funds is SIP (Systematic Investment Plan) where you invest some money every month in funds. SIP works by averaging the per unit price of the stock.

Advertising

Mutual fund investors are aware of the benefits of an SIP (Systematic Investment Plan). For one, it is the most secure way to invest in equity mutual plans so that wealth is created over a long period of time. This plan also helps you to gain a better sense of financial discipline, which will come in handy in all your financial endeavors.

6. Invest in Gold

There isn’t really a better way to invest in gold than to have the physical gold itself in your possession.

You can purchase gold coins and bars from mints as well as from coin dealers and other private sellers.

Another way to invest in gold is through ETFs (Exchange Traded Funds).

These are is similar to mutual funds but they are exclusively investments of gold. ETFs are great because they offer more liquidity; the ETF owns the actual physical gold, stores it, and retains the value of the shares. These shares can then be bought and sold in the stock market, and one big benefit is that the transaction costs of gold ETFs are much lower than the that of physical gold.

With its consistently-increasing demand, investment in gold can be very wise long-term investment to make.

7. Stash Emergency Funds

Whether it’s a cash gift or a work bonus, always try to save any extra money that comes your way rather than making unneeded purchases.

If you get paid every other week, you’ll get an “extra” paycheck (three rather than the usual two) twice a year. Either save those paychecks towards your emergency funds or utilize the money to pay down other obligations, such as loans, credit cards or other debts.

Make it hard to get your cash.

Put your savings in an alternate bank, maybe an online bank that forces you to delay for several business days before transferred money hits your regular bank account.

Advertising

8. Find Fabulous Mentors

Find a mentor, such as a friend or family member, who has exceptional control over their finances and pay attention to everything they do.

If you do not have any friends or family that are enjoying financial freedom, then find a mentor online! There are numerous blogs and guru websites featuring the advice of many people who have reached financial freedom, and they exist primarily to let you in on how to achieve it for yourself.

There are also plentiful forums available that share tips and tricks on how to best achieve financial freedom. Read as much as you can and start changing your habits for the better.

9. Be Extra Patient

Patience is the key of financial success.

Being patient can be quite tough, especially when you’re struggling with your finances, but having faith is worth it. You’ll continuously be on the right track if you are taking the proper steps above.

So don’t be discouraged, even if you are only saving a few dollars a month; it all adds up. Within just a few years you’ll look back proudly at your accomplishments and be glad that you had the patience to get there.

Financial Freedom for All

Anyone can achieve financial freedom, regardless of their financial circumstance.

Use the tips provided above to get yourself on the track to financial freedom and toss your monetary concerns out the window. If you wish to achieve a life with financial freedom for yourself and your family then you must adopt a disciplined approach towards your finances.

Following the simple secrets above is a great start to making your money work for you, so you can work less and live more!

Featured photo credit: rawpixel via unsplash.com

Advertising

Reference

[1] Hartford Gold Group: IRA Retirement Accounts

Read Next