Owning a business is a great idea. Not only do you get to put your talents and skills to use, it allows you to be your own boss, set your own schedule, and earn money based on your awesome business idea.
Unfortunately, so many people don’t pursue their dreams of starting their own business is due to a lack of funds. Some people are able to go ahead and begin their businesses by borrowing money or leveraging credit cards, however, it isn’t exactly a good idea to rack up debt in order to fund your business -- especially if you are just starting out and don’t have any income coming in yet.
That being said, funding your business on your own is very possible. All you need is some good financial planning and time. Below are 5 tips on how you can save money to start your business debt free!
Funding your business on your own is very possible. All you need is some good financial planning and time.
Figure out what your start up costs will be and create a cash cushion
Before you start saving for your business, it’s a good idea to figure out how much your start up costs will be so you know how much you need to save to get your business off the ground.
By definition, your startup costs are the costs you incur as you set up your business. Examples of your startup costs are things like your business domain name, hiring a logo designer, your website development, your first batch of inventory, etc.
In order to get an idea of what your start up costs will be, do some research on your specific business, create a list of everything you think you might need, how much each item will cost and then tally it all up. If you can talk to another business owner to get some insights on startup costs as well that would be ideal. This way you can make sure you are not missing anything on your list.
It ‘s also a good idea to build a cash cushion of 3 to 6 months of business expenses to support running your business before you start generating an income. This way you don’t go into debt as a brand new business owner.
Build your costs into your budget
Once you have a good idea what things will cost, you’ll need to determine how soon you'll be able to launch your business and then build your startup costs into your monthly budget. This way each time you get paid, you can allocate funds towards starting your business.
Building your business savings into your budget means you might need to cut back in certain areas and that leads into the next point.
Get creative with your savings
In order to successfully budget and put funds aside for your business, you are going to need to get creative to ensure you are able to save the amount that you need to get your business up and running.
A few ways to save money could be by taking your own lunch to work, minimizing nights out for dinner and drinks, reducing on your cable and cell phone plans, getting a part time job, etc. Cutting back on some of your non-essentials will allow you to fund your business savings account as quickly possible.
Set up a designated business savings account
To be successful in business you need to be able to track your business financials separately. So setting up a separate business savings account is a great start. Not only will you begin to separate your personal finances from your business finances, it will allow you to clearly determine how close you are to your savings goals because these funds are not mixed up with anything else.
Automate your savings
Automating your savings makes the process of saving money so much easier! You’ll never forget to make a transfer and you are more likely to stick to your goal of saving for your business because your savings will be on autopilot. You can adjust the amounts you save each month via automation.
If you are able to implement these 5 tips you’ll be well on your saving for your very own business!