The idea of starting your own business can be very attractive - being your own boss and having almost complete control over your income is the stuff the American Dream is made of. However, you have be sure that you have the funds to start your entrepreneurial business and live comfortably at the same time. Here are a few tips on how to set up a cash reserve for your new business:
Save your money. The simplest way to have some money on hold is to not spend it. Figure out just how much it will cost for a comfortable home situation and stay as close as possible to that amount. If you're still working a job, set aside a fixed amount of your regular paycheck, say 5-10%. You'll need every dollar you save to keep things at home and at your business going smoothly.
Borrow from others or a bank. Of course, there are other places outside your own wallet to get some cold, hard cash. The closest and most accessible of these hold a special place in your heart - your friends and family. You're likely to find a buddy or relative supportive enough to invest in your long-term plans if you ask nicely enough. Keep in mind, however, that this can bring a few changes to your relationship; just be sure that things will stay as amicable as when you started, in case things go bad.
If you don't want to risk losing a loved one to the throes of financial ambition, you can always get your funding from a bank. It will be hard getting a bank to support your new business, but you can boost your chances by drafting an impressive business plan. You can also try a bank overdraft which, unlike a loan that requires immediate repayment, has no fixed repayment date, but lasts for roughly 6-12 months, so long as you stay within the overdraft limit.
Use a credit card. If you're willing to risk years of debt, then you can try your credit card as an alternate source of funds. However, this is only advisable if you're certain that you can pay it all off with your business earnings in a relatively short time.
Apply for a grant. Certain companies and institutions award business grants to fledgling new businesses with specific qualifications. Try looking a few grants up and see if your area of industry, purposes and reasons for starting your business match the requirements. If you're lucky enough to obtain a grant, be prepared to receive only a part of the amount you need.
Approach a Business Angel. Close your eyes and pray... that wildly successful businessmen find your proposal fascinating enough to invest in. Often referred to as Business Angels, these individuals will likely donate a very substantial amount in exchange for some shareholding in your business. While there may be a sense of loss on your part with respect to having control of your company, the Angels can provide valuable experience in making sure things run smoothly. Thankfully, a simple Google search can help you find the many Business Angel networks out there.
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