It is actually possible to start your own business when you’re in debt.
Have you got a great business idea, but are skint? Not all businesses require a huge amount of money to get off the ground. While a healthy cash injection and a good credit record certainly helps, it’s not always essential. Many of the world’s most successful companies such as Apple actually started in garages. With creativity, hard work and a little cash you can actually start a viable business.
1. Choose a low-cost business
Pick a business that you can do from home that doesn’t require a lot of capital. Service based businesses such as selling, writing, virtual assisting, tutoring, child-care, administration or coaching have the lowest costs. They won’t require any outlay for stock or office rent. All you need is a computer, phone and table in your own house!
2. Try to clear as much personal debt before embarking on your business
Start tightening your belt right now. If you have existing credit card debt, still pay as much of it off as you can. Review all your personal expenses and bills and make cuts. Find cheaper service providers, do a shopping budget and sell stuff you don’t need. Scrounge up as much extra cash so you go into your new business venture with as little debt as possible. If you’re really in the red and don’t know where to start, consider seeking help.
3. Create a business plan
If you do need to borrow money and have personal debt, create a solid business plan. If you’re as professional as possible, you may score traditional financing from a bank. If you don’t qualify, a well-thought out plan may still help you get financing and spark interest through other sources such as micro lenders, small business associations, business grants, private investors or even crowd-funding.
4. Use low-cost marketing strategies
The key to a successful business is good marketing. If customers have no idea you exist, how will you ever sell your goods or services? Set up your own website through a free service, start a blog, get active on social networking, join relevant business and customer groups on Facebook, start targeted email marketing and send relevant article ideas on your business to online news sites.
5. Utilise free resources whenever you can
Your local small business association is a great way to get free advice and memberships to larger associations, which can provide valuable networking opportunities, education and learning programs, are usually inexpensive. Research as much as you can online and borrow as many relevant magazines and books your arms can carry from your library.
6. Reinvest your profits
While your business is still in its infancy, think about reinvesting the majority of your profits back into the business. Just don’t go crazy. Spending a little on areas like marketing usually generates the greatest level of return. For example you may feel your website might attract more customers with a professional make over. However it’s important to continue chipping away at existing debt. Once your business is performing solidly, clear your debts once and for all. Then you can really start enjoying the fruits of your labour without any nagging guilt. Have fun but just make sure you don’t wind up in a financial hole again!
For more budgeting and debt management advice visit Fox Symes and Associates.