One of the most common questions that I get as SmallBizLady is about start-up financing. ”Do I know where people can get a grant to start their small business?”. Now Hear This: BYOB doesn’t just stand for Become Your Own Boss! BYOB also stands for Be Your Own Bank! There are NO grants! When you are starting out in business you must come up with your own money to invest into your brilliant idea. You also need to have resources to maintain your household while you are building your business. You are your business’s credit and debt. Now there are micro-loan programs when you may be able to borrow up to $25,000, but you better have a great business plan to get it.
If you are ready to start your business, you must develop a plan for yourself to save more money and become debt free. Now, I am not talking about paying off your mortgage, but I do mean everything else. I am talking zero debt–meaning no credit cards, no car payments. Basic living expenses only. Eliminating your debt will allow you to always make decisions that are in the best interest of your business. You also need to establish zero debt to free up your credit capacity. When I realized that I wanted to leave my job to start my first business, I took out a home equity loan (which you need to do while you are still working and can prove income) and paid off every bill I had, even my car. I used home equity because you can write off the interest paid against your income taxes.
Getting your house in order financially will be one of the first milestones on the road to starting your own business.
To find the money to start your business, take these steps:
- Develop a plan to eliminate all debt. Make a list of all debt, the balance owed and the interest rate. It is best to start with the credit card with the lowest balance, while you continue to pay the minimum fees on the others cards to keep them current. By starting with the card with the lowest balance you will boost your confidence about your personal finances. Next, should be the card with the highest interest rate. Keep working your way down the list.
- Make of list of what you need at the store. To avoid impulse buying, take a list with you to the all stores and do not deviate from it! Be careful not to go grocery shopping when you are hungry. It is very hard to stick to your list that way.
- Keep driving your car. Drive you car until it stops running. As a new business owner, you will no longer be able to afford to upgrade your vehicle every two years. Buy a reliable car and take care of it, so you can ride without a car payment as long as you can. (I still do this! My car is more than five years old).
- Cut back on trips to Starbucks, Dunkin’ Donuts, and cut your cable bill. The money you spend each month on unnecessary extras can really add up. Treat yourself once in a while to a pay per view, but the pay channels need to go. You’ll be shocked how the money you save will add up.
- Check out the library. You can borrow books, magazines, and the latest DVDs from the library. You can also make requests and they will order things for you. If you’re a serious book junkie like me, find a good used bookstore or buy used books on Amazon.com. The books will still be new to you.
- Drink at home. Stop drinking alcohol in bars and restaurants. If it’s beer, wine, or mixed drinks that you like, they are much cheaper when you pour them yourself. Pick up a six-pack or a few bottles invite over some friends and hang out at your home.
You will start your business if you develop the ability to control your spending and cut costs. Follow this advice. I promise you will find money you never realized that you had. You cannot kick your addiction to your paycheck all at once. It will be a gradual step-by-step process, but you can do it!
Do you have any other cost saving suggestions for start-up entrepreneurs?
Melinda F. Emerson, known to many as SmallBizLady is one of America’s leading small business experts. As a seasoned entrepreneur, professional speaker, and small business coach, she develops audio, video and written content to fulfill her mission to end small business failure. As CEO of MFE Consulting LLC, Melinda educates entrepreneurs and Fortune 500 companies on subjects including small business start-up, business development and social media marketing. Forbes Magazine recently named her one of the Top 20 Women for Entrepreneurs to Follow on Twitter. She hosts #SmallBizChat Wednesdays on Twitter 8-9pm ET for emerging entrepreneurs, and publishes a resource blog at: www.succeedasyourownboss.com. Melinda is also the author of the national bestseller Become Your Own Boss in 12 months: A Month-by-Month Guide to a Business That Works. (Adams Media 2010)