Using Your Startup Capital Wisely
Max Wideman presents a contribution by author Clarence Wilkins
If you are planning on starting a business and have only limited funds available, you may be wondering how to get your new venture off the ground. Here are some tips on how to make the most of your restricted finances.
1. See the opportunities
While the road is never smooth for many businesses, rarely do real opportunities surface more than once. Not only are you likely to have less competition to worry about just now, but it's easier than ever to find and hire talented employees — particularly those who have been looking for a while. Then there are the uber-practical aspects to consider, such as closed businesses who are selling off equipment, business loans available with lower interest rates, and more cost-effective marketing options.
2. Be eager to learn
If you plan to launch your business soon, the desire and willingness to learn must still be present. It's essential to remember that you can always get better at your craft, and that there are always things you can learn. So, constantly seek advice from whatever sources you can, whether it's reading business and leadership books, finding a mentor, or working with a consulting agency to help you establish a viable strategy.
3. Seek the right funding
The type of funding that you secure in the early stages of your business will have a significant impact on how you run your business. Do your research and make sure you will be able to pay back any money you owe within a reasonable timeframe, whether you're working with angel investors[1], venture capitalists[2], business incubators[3], crowdfunding,[4] or any other sources.
Whatever the potential source of your funding, be sure to have any prior credit cleared away, because the higher your credit rating the better the chances are for you to secure new financing. When it comes to traditional lenders, you will get the best loans at the lowest rates when you have an excellent credit score. A score of 740 and above is considered excellent.
4. Manage your money
This may sound simplistic, but if you don't work to a viable budget, you will eventually lose track of your new company's finances. Therefore, if you have not done so already, then create a detailes budget that includes every cent of your finances. If you have assembled a team, then make sure everyone on your team stays up-to-date on where the business stands.
If you are planning to do your own finances, then you will need reliable accounting software. On the other hand, if you hope to eventually outsource your business's bookkeeping and accounting, professionals can help you position your business for success. The advantage of working with an accounting expert like a CPA[5] is that you're not just handing off the work, you're finding a partner who can help you learn the best ways to understand and apply your finances.
5. Strategize your marketing
There's no substitute for effective marketing when it comes to running and growing a business. And when you are trying to make the most of your startup capital, it is critical to avoid overspending on marketing that isn't doing your company any good.
In this day and age, make sure that you have a great website and that you are promoting your brand through channels like social media and email. Whether you work with a freelancer or employ an agency, make sure you settle on a marketing strategy that gives your business a leg up on the competition.
6. Purchase the right equipment
Finally, having the right equipment and technique is essential when it comes to launching a business. For a solo individual, a top-notch laptop or desktop computer, complete with applicable software, a printer/scanner combination and a reliable smartphone are a must. This is not to say that older devices should not be used, but they can add chinks in your armor when you are starting out. On the other hand, if you buy new, make sure you know how to use it!
Of course, you don't want to burn through your capital just for the latest and greatest. Affordable, quality equipment can be easily found with a bit of extra homework. Shop smart by unearthing sales and discounts, which will become more prevalent as the holidays near. In some instances, used equipment can also be worth considering. Regardless of what you buy, remember, your office equipment is tax deductible, so keep those receipts filed in a safe place.
7. Start now
If you are ready to start a business right now, there are many reasons to go through with your dream. Just take care to make the most of your startup capital. Along with implementing the tips discussed here, remember to constantly seek out other ways to improve on your money management, as well as with managing other aspects of business ownership.
1. Angel investors are wealthy private investors focused on financing small business ventures in exchange for equity.
2. Venture capital (VC) is a form of private equity and a type of financing that investors provide to startup companies and small businesses that are believed to have long-term growth potential.
3. A business incubator is a program that gives very early-stage companies access to mentoring, investors and other support to help them get established.
4. Crowdfunding is the practice of financing a project or venture by raising many small amounts of money from a large number of people, typically via the internet.
5. Certified Public Accountant.
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