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How to Really Start a Business (or Why You Don’t Need Money to Make Money)

How to Really Start a Business (or Why You Don’t Need Money to Make Money)

    Everyone has excuses–conscious or otherwise–about why they can’t (actually won’t) earn more money. A common excuse is, “I need money to make money”.

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    You and I know that’s a myth (you do know that’s a myth, right?), but most people take it as a truism.

    A lot of people think they need tens of  thousands of dollars to get in on a franchise, or put cash down for a rental property, or buy into some silly multilevel marketing scheme.

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    The fact is, there are plenty of ways to make money without the need for a pile of cash — as Chris Guillebeau’s recent book, The $100 Startup, covers. The first step is to realize that there are always multiple solutions to any problem, whether it’s making more money, building your retirement nest egg/strongbox, or bartering for broccoli.

    Must-have tools for creating a business on the cheap are:

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    • A bootstrapping mindset: How can you get or do something for free or extremely low cost? Again, creative brainstorming and flexible thinking will help you figure out how to accomplish a task on a shoestring. Check out some more specific bootstrapping principles to get you started.
    • Small steps and a willingness to experiment: This is the iterative, lean startup approach, where you try something small & fast, learn from it, and improve. What? You haven’t heard of the lean startup approach? Well, start reading up on it. It’ll save you from wasting time and money, and reduce startup frustration and misery–unless you’re into those sorts of things.
    • Market validation: Again, from the lean startup/customer development paradigm, make sure that you’re offering something that people want and will pay for. It could be scooping dog doo, but you’re aiming at serving a market need. What what? You haven’t heard of customer development either? Not a problem. There’s great info out there to get you started.

    With all that said, you’ll also need to recognize your barriers to actually starting down the road of entrepreneurship. Here’s a list of the top 4 excuses people give for not making more money:

    • No time
    • No money
    • No expertise
    • No ideas

    When you reflect on why you haven’t started exploring how to earn more money, probably every one of your barriers (excuses!) falls into one of the above categories. You might say to yourself:

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    • “Starting a business is too complicated.” Nope. That’s the “no expertise” excuse.
    • “But I work insane hours, have eleventeen kids, and a 4-hour commute.” Granted, you might have limitations on your time, but you’ll always make time for the things that are most important. And 20-30 minutes a day is something you can carve out–especially if it’ll change your life.
    • “But I don’t have $10 grand to fund a business.” OK, go back to the top of the article and re-read it. Done? OK. Repeat after me: “I can start a business for under $100.” Say it again. And again. Know that there are many ways to do any task. Sometimes the first thing that comes to mind is some high-falutin’, expensive way. Dig deeper. Focus on exactly what the outcome is, and brainstorm all the crazy ways you could get to it. I guarantee you’ll find ways to get it done on the cheap.
    • “But I don’t have any ideas for a business.” Try this: train yourself to look for problems. That’s right — look for problems throughout the day, every day. Jot them down in a notebook or in Evernote. Remember that every problem is an opportunity. Successful, sustainable businesses solve problems. Don’t want to cook dinner? Go to a restaurant. Problem solved. Hate to iron your clothes? Take them to a dry cleaner. Problem solved. Want to find & stay in touch with friends? Join Facebook. Problem solved. (You get the idea.)

    It’ll take hard work, but the payoff is worth it

    Starting and building a successful business takes hard work. But since you’re reading this, you and I both know you have an urge for something better. You daydream at work about quitting your job. You curse your commute and wish you could ditch your day job. You feel stuck at a job you hate.

    While starting a business may not solve all your problems, it can give you a completely new worldview that’s empowering and full of possibilities. It took me a long time to get past my mental barriers and excuses before I started my own business, but when I began taking action, I started seeing things change. A few years down the road, I earn much more, have more financial security, more flexibility, and have no reason to complain about work. It’s been an amazing turnaround.

    And while I’ve learned a thing or two about how to do things on the cheap since I started my business, I was still able to start my business inexpensively–and so can you. Now though, you have the advantage of tons more free and low-cost tools for starting your business. The most important things in your toolbox are a bootstrapping mindset, a focus on experimentation, and providing value.

    (Photo credit: Businessman Reaching for Pennies via Shutterstock)

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    You should NEVER charge an hourly rate Why You’re Not Getting Any Business Results (But Still Working Like Crazy) How to Really Start a Business (or Why You Don’t Need Money to Make Money) How to Reach Your Goals By (Almost) Ignoring Them

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    Last Updated on March 3, 2021

    Top 6 Hacks on How To Build Credit Fast

    Top 6 Hacks on How To Build Credit Fast

    When done right, credit can open doors and provide a lifestyle that you never imagined possible. Anything from flying around the world in first-class and staying at 5-star hotels entirely for free to starting and scaling businesses. It’s also an area where it can be easy to make mistakes and hard to recover from without the right information. In this article, I will break down how you can build credit fast so you can open doors in your life!

    When you start to think about improving your credit score, you have to answer three important questions first:

    1. What are you trying to achieve by having good credit?
    2. What really is your credit score?
    3. How is your credit score calculated?

    What Are Your Credit Goals?

    Having a high credit score is great, but ultimately, your credit score is a tool in your personal finance arsenal that you can use to open doors. The first question you should ask yourself is “what will a higher credit score do for me?”

    I work with many clients directly at Freedom Travel Systems to help them fully leverage the power of their credit so they can enjoy free luxury travel and start or grow their business. For my clients and many others, here are a few common goals many credit-savvy individuals have:

    • Free Travel – getting access to travel rewards cards so you can get tons of free travel and even get first-class flights, hotel suites, and luxury amenities all for free
    • Start/Grow a Business – getting access to business credit so you can start and grow a business with 0% or low-interest financing that does not impact your personal credit
    • More Approvals – getting approved for credit cards, auto loans, or mortgages so you improve your lifestyle or build your personal wealth
    • Better Rates – getting better interest rates on any loans you get will save you tens or hundreds of thousands of dollars over your lifetime

    What Is Your Credit Score?

    Your credit score is simply a 3-digit number that tells potential lenders how reliable of a borrower you are. Keep in mind that lenders, such as banks and credit issuers, stay in business by lending. Their goal is to find the people that have the highest probability of paying them back and they assess this primarily through your credit score.

    What’s important to know is that there are two major scoring models used to create your scores. These scores are your FICO Score and your Vantage Score. More than 90% of lenders rely on your FICO score, so when you are checking your score, you want to make sure you see the actual score that the lenders use. And no, checking your own score does not hurt your credit!

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    Then enters the 3 main credit bureaus, which are essentially agencies that collect credit information on you. These are Experian, Equifax, and TransUnion. These bureaus then apply a scoring model to the information they have on you and voila, you now have a credit score! Bureaus sometimes have different information on your report, which is why you will see 3 different scores.

    How Is Your Credit Score Calculated?

    Next, you need to understand how the credit score is calculated. This will provide a high-level overview, but there is more detail to each of these factors alone.

    There are 5 main factors in the calculation of your credit score:[1]

    1. Payment History (35%) – This refers to the amount and percentage of on-time payments you have.
    2. Utilization (30%) – This is how much revolving credit you use as a percentage of the total revolving credit issued to you. Note that installment loans like auto-loans or mortgages do not count towards this while credit cards do.
    3. Age of Credit (15%) – This refers to how long your credit history is, primarily your “average age.”
    4. Credit Mix (10%) – This is how many different types of credit you have. For example, there are credit cards, student loans, auto loans, mortgages, personal loans, and lines of credit.
    5. New Credit (10%) – This primarily refers to how many inquiries you have for new credit.

    Top 6 Hacks on How to Build Credit Fast

    Now that you’ve learned more about your credit score, here are the top 6 tips on how to build credit fast.

    1. Don’t Close Your Cards

    Many of us are taught that getting a new credit card is bad and having too many will hurt your score. In fact, the opposite is true. You want to have many positive accounts reporting to your credit report. Logically, this makes sense because having more accounts with more on-time payments shows that you are a more reliable borrower. You just don’t want to open too many accounts too quickly since that can hurt your “new credit” factor.

    Instead of closing a card, what you should do is simply keep the card open and put a small subscription service on it monthly. Why? Because each time you have an on-time payment, it helps build your payment history, the largest factor of credit.

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    If you close a card, you are missing on potential on-time payments, age of credit, credit mix, and also lowering the total credit lent to you so your utilization percentage may go up. If you have an annual fee on a card you don’t like, see if there is a “no-fee” version of the card and downgrade it to that card rather than close it.

    2. Use Autopay to Never Miss a Payment

    This one is easy to do and easy not to do. Go into your credit card account and set up auto-pay. You can choose to either pay the full amount, the statement balance, or the minimum payment. Personally, I like to set up autopay to pay the minimum payment so that I never get a late payment. Then, I go in and manually pay the statement balance each month by the payment due date.

    This helps me personally see my spending and have a manual review of my charges while ensuring, not have to pay interest, and still get the benefit of making sure that I never miss a payment if something goes wrong. Think about it, if you were to have a medical or family emergency, the last thing you want to experience on the back end of that is a late payment and a drop in your credit score. So, set up autopay.

    A pro tip is to update your payment due dates across all bills and accounts to be the same so that you can “time batch” the process and have one time a month where you sit down and handle your payments. You can do this by simply contacting the credit card company or doing it online.

    3. Get a Credit Limit Increase to Lower Your Utilization

    One of the factors that get most people into trouble is using too much of their allotted total credit. Their utilization, which is the percentage of revolving credit they use, goes up, and their score tanks. You should aim for less than 30%, and in an ideal world, less than 10%.

    To help drive this down, call your credit issuer and ask for a credit limit increase. This will help increase the total amount of credit extended to you and drop your utilization. Oftentimes, they will only give it to you when your utilization is fairly decent (less than 50%), so work to pay it down as best as possible before doing this. You should ask if the credit limit increase will give you an inquiry as some banks do a hard inquiry while some do not. If they do a hard inquiry, it is often better to just get a new card altogether or pass.

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    4. Add Authorized Users to Increase Your Age, Add History, and Decrease Utilization

    This is one of the best hacks out there as it helps with the 3 biggest factors of improving your credit: payment history, utilization, and age. This concept is also called “credit piggybacking” where someone with great credit history on a card adds an authorized user (AU) to the card. When the AU gets added, the credit history and information from that card are added to the AU’s report!

    This is extremely helpful for people with young credit because it can drastically increase your age of accounts. It can also help many people with limited payment history or high utilization.

    Please be aware that anything good or bad on that account you are added to will show up on your report. So, you want to avoid any cards with negative marks or high utilization. That being said, it is a one-way street, so nothing that you do with your credit can impact the primary account holder.

    This is so valuable that there are companies that sell AU accounts. I always suggest starting with your family and/or personal network first as there are likely people in your network that can help!

    5. Space Out Your Application Strategy

    New credit is the smallest factor of credit, but it still matters! If you are looking to build up your credit, you should space out your applications. If you apply for too much credit in a short period, it looks very needy in the eyes of the lenders. For this reason, it is safest to apply for cards slowly over time unless you have really studied more in-depth how this works. A good rule of thumb is once every few months.

    If you are in the credit game for the hopes of getting tons of credit card points for free travel, which is what I personally take full advantage of, you will want to familiarize yourself with the different bank rules and card promotions to put together the right application strategy. Applying blindly will waste inquiries and leave tons of benefits on the table!

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    6. Review Your Report for Negatives

    If you have any negative or “derogatory” marks on your credit report, this will hurt you drastically. They do impact you less as they age, however, you should review your credit report to ensure that everything on your report is 100% accurate and actually yours. Wrong information ends up on credit reports all the time and you will want to take personal responsibility for making sure it is accurate.

    The “burden of proof” is on the credit bureau to confirm that any information on your report is in fact accurate. If you find inaccuracies, you can dispute that with them, or you could consider getting a credible credit repair company to help you.

    Final Thoughts

    There you have it, the top 6 tips on how to build credit fast so you can get closer to reaching your goals. Now that you’ve learned more about how credit score works and how you can improve yours, you’ll hopefully be able to make better financial decisions and achieve your financial goals quicker.

    More Tips on How to Build Credit Fast

    Featured photo credit: CardMapr via unsplash.com

    Reference

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