One of the big hurdles entrepreneurs usually come across in their quest to turn their ideas into businesses is getting capital.
Where, and how to get it is one big question that has no one single answer.
Previously we’ve looked at some questions one can ask to figure out if taking a loan from a financial institution could be ideal, especially when they depend on the borrowed funds to start them off.
Today, we are at it again, looking at more questions around the topic ‘capital’.
Can one save money to start a business?
Yes. It is possible.
Can you? Yes. You can.
But sometimes the real answer to this question goes deep, pushing you to think real hard about how to actually save enough funds to open your doors to customers on the earliest possible date.
The challenges to saving money to start a business
First, we know how little the money some salaried or self-employed people get each month. Sometimes it’s not that it’s too little to justify putting off the dream of business ownership every single month.
But when you think about your dependants and all that you want to spend on, it can be scary sometimes, just looking at the money in your hands or bank account – especially when you focus on how little it is.
And once there’s mild panic, some people shake their heads, and start asking themselves a lot of questions:
What if I use part of my income only for the business to fail?
What if I invest all this money and loose it in one stroke of bad luck?
What if my spouse thinks that taking our money and sinking it into a hole no one knows how deep can be is just a recipe for disaster?
What if my landlord starts kicking my door open every few days because all the rent went into a business that is responding slowly to growth?
What if the money I have can’t get me all the things I need to start no matter how hard I try to save?
How drastic will the change in my, or family’s, lifestyle be?
These are some of the worries that push people to say, ‘Forget it, no need to save aggressively. I will just get a loan,’ or something similar to, ‘Why not invest money in this other business that requires little money to start and promises quick returns?’
What happens when one reaches such conclusions?
One, they realize that banks are not happy to fund every idea.They realize, maybe for the first time, that they can be turned away. Some choose to fight. Others choose to take a short or big break.
They realize, maybe for the first time, that they can be turned away. Some choose to fight. Others choose to take a short or big break.
The quick money in this other new and promising business that they want to mint money from in the short term may also turn to be a scheme that only causes more frustration in the long run – scheme, here, is defined loosely – it could mean that while doing their research, they, while reading, watching, listening or reading, bought into hype and settled for expectations that are unrealistic and sometimes plainly ridiculous.
Some also get the loans they wanted only to realize quickly that their business simply needs more of their patience, time, sweat and creativity more than it does money.
What does that tell you?
You guessed it: you can actually keep saving and have enough money to start you off.
I recommend reading the article and ebook below
Scaling down the size of your business idea to be able to start with as little money as possible outlines some of the things you need to do to pull this off. Read the article. And dive deeper by reading the free guide 10 Things to Look At If You Are Thinking Of Starting a Business (get it here).
When saving money to start your business, you will be doing two things:
- Doing something else that brings more income – such as freelancing. And all or the bulk of this new income generated is to be put away and only used as capital when you are ready to launch your venture.
- Taking part or the bulk of money you usually spend in a few areas of your life, saving it and spending little to no money in those areas for awhile – or permanently.
What can you take money from?
Things you can do without.Many people have activities or things they don’t
Many people have activities or things they don’t need but still spend some money on because they have accustomed themselves to doing things a certain way.
- Electronics and all the things they need to ‘satisfy’ us: phones, computers and peripheral devices, kitchen appliances, tablets, apps, consoles, games, TV, DVDs – which can be sold on classified ads websites or auction sites.
- Clothes, jewellery, accessories, beauty products.
- Your bills. How can you take money from your bills? Use what you are paying for wisely. Then you will notice how much you can save on water, phone, internet, cable, electricity and other bills just by doing this.
- Subscriptions and memberships.
These may not apply to you a hundred per cent. That is why taking some time to think of areas, you currently spend on, that you can take money from to go towards your savings is an effort which you can be greatly rewarded for many months or years down the road.
You just have to remember that while doing all this, one rule must never be broken: when you save to start your own business, do just that.
Fight the temptations to give up saving or using the money already accumulated in your savings for another thing that doesn’t come with big and more rewarding responsibilities that only a business can bring you: being able to serve others who are willing to make your venture profitable.
Share your thoughts, experiences and questions by submitting them in the comments section below.