One important aspect of your business , if not the most important one, will be the financial side. After all you are in business to make money and provide yourself with a nice income to pay the bills or to have all the things you dream about like the big house and fancy cars. However, one point about business finance is in order to make money you most often have to spend money to start.
Consider even a very small business like being the window cleaner in a small town who is just starting off. Even such a business person must buy a bucket, a window squeegee, and some cleaner to get started cleaning windows. No matter how much of a shoestring you start a business on, the fact is you will spend some money doing so.
But that shoestring may be the best way to start a business. So many people think they have to begin by mortgaging the house or finding investors. However fantastic your business idea might be, if it is your first time starting your own business, you really do not want to start off deep in debt.
Debt Can Equal Stress
For one thing, this will add a lot of stress into your life which you do not need when just starting out. Secondly, what happens if your idea goes belly up? What if this attempt fails? Now you have a busted business and your home is tied to that failure. Try to keep the banks from taking your home. And before you say that will not happen, please realize that many of the greatest entrepreneurs you know have had business failures. Even Donald Trump has been bankrupt before he came back and became a success again.
Here is another thing to think on when tying your home as collateral to your business. What happens if you and your spouse get a divorce? I personally know of such a thing occurring and the outcome was not a civil divorce.
This should make the idea of starting a business on a shoestring look a little better. Now realize I don’t mean that you should underfund your business. I have also seen several businesses fail because they simply did not have enough money to keep them going. In one case, the store front never even opened. You do need to be realistic about your business finances and what it takes to get going and keep going.
What is meant by shoestring here is more along the lines of letting your business fund its own development and expansion. Going back to our window washing business, for example, you could do the work yourself with the money you earn buying the basic supplies you need. But as you add clients you will get to the point that you need some help. This is when you look to the business for the funds to pay for that extra helper and let the business finance itself.
Build and expand only as the business finances allow you to do so. Do not underfund but also do not spend more than you should especially when just starting out.