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NO MATTER what type of business venture you are looking to undertake, you are going to need some capital to get you off the ground.
Some of the costs you will need to be able to cover include:
• Licences
• Permits
• Space
• Furniture
• Legal fees
• Equipment
• Website development
• Supplies
Often you will find additional costs will come your way, but that list should give you a pretty solid idea of what you will need. This can also vary, depending on how willing you are to integrate your professional life with your personal life.
You can save on your startup fees by starting your business in your home and using a PC you already own. This is especially easy, assuming your business can be done solely via the Web.
Another matter to take into consideration when choosing whether to blend your business with your personal life is your assets and liabilities.
It costs a little money to keep them separate, but this will offer some reassurance should your business fail.
Personal savings
Now let's look at how you can obtain the capital needed. It’s pretty common for entrepreneurs to dig into their savings to help with initial fees. The number one reason for this is you won’t incur additional interest on the money invested.
This will also limit the amount of money you have to pay creditors. If you are still in the dreaming phase and have yet to build a nest egg, it’s a good idea to look into highest online savings account rates at NerdWallet before you start the saving process.
Another idea is to tap into your home equity. This however is a huge risk and not highly recommended, as you really don’t want to be out of a business and a home all in one fell swoop.
Credit cards
Using personal or business credit card as financing is also an option. You should be overly cautious with this method as incurring credit card debt can get you in trouble quick. This is also only an option assuming you have or are able to get a credit card with the necessary limit. If you are able to go this route, make sure you use a card with a low interest rate.
Financing a business at 15% interest can become extremely difficult to keep up with.
It’s fairly easy to obtain the best business credit cards for small business, assuming you have established credit.
Whether you use it for startup or to finance along the way, you will need one of these cards, so you may as well know your options.
Business line of credit
A business line of credit is pretty similar to a business credit card, in the sense that it is an unsecured loan.
This is often better than getting a loan because you are able to use the line of credit as needed versus having all your funds transferred in one lump sum.
You can use this as a way to pay your employees, refinance debt or to fund the startup of your business.
Business loans and SBA loans
These are clearly two different things, but are essentially large sums of money at one time. With a business loan generally considered to be short-term, you can expect to pay this off within five to seven years depending on the bank.
Generally you will be expected to put something up as collateral such as real estate or a vehicle. An SBA loan is generally used when one is unable to secure a regular business loan.
Of course, when it comes to starting a business there are always more options.
You can find an independent investor, venture capitalists or ask family and friends to help. Whatever you do, it is most important that you understand your options and make an educated decision.
- Fin24
*This guest post is by freelance writer Sara Stringer, who most often writes about personal finance.
Some of the costs you will need to be able to cover include:
• Licences
• Permits
• Space
• Furniture
• Legal fees
• Equipment
• Website development
• Supplies
Often you will find additional costs will come your way, but that list should give you a pretty solid idea of what you will need. This can also vary, depending on how willing you are to integrate your professional life with your personal life.
You can save on your startup fees by starting your business in your home and using a PC you already own. This is especially easy, assuming your business can be done solely via the Web.
Another matter to take into consideration when choosing whether to blend your business with your personal life is your assets and liabilities.
It costs a little money to keep them separate, but this will offer some reassurance should your business fail.
Personal savings
Now let's look at how you can obtain the capital needed. It’s pretty common for entrepreneurs to dig into their savings to help with initial fees. The number one reason for this is you won’t incur additional interest on the money invested.
This will also limit the amount of money you have to pay creditors. If you are still in the dreaming phase and have yet to build a nest egg, it’s a good idea to look into highest online savings account rates at NerdWallet before you start the saving process.
Another idea is to tap into your home equity. This however is a huge risk and not highly recommended, as you really don’t want to be out of a business and a home all in one fell swoop.
Credit cards
Using personal or business credit card as financing is also an option. You should be overly cautious with this method as incurring credit card debt can get you in trouble quick. This is also only an option assuming you have or are able to get a credit card with the necessary limit. If you are able to go this route, make sure you use a card with a low interest rate.
Financing a business at 15% interest can become extremely difficult to keep up with.
It’s fairly easy to obtain the best business credit cards for small business, assuming you have established credit.
Whether you use it for startup or to finance along the way, you will need one of these cards, so you may as well know your options.
Business line of credit
A business line of credit is pretty similar to a business credit card, in the sense that it is an unsecured loan.
This is often better than getting a loan because you are able to use the line of credit as needed versus having all your funds transferred in one lump sum.
You can use this as a way to pay your employees, refinance debt or to fund the startup of your business.
Business loans and SBA loans
These are clearly two different things, but are essentially large sums of money at one time. With a business loan generally considered to be short-term, you can expect to pay this off within five to seven years depending on the bank.
Generally you will be expected to put something up as collateral such as real estate or a vehicle. An SBA loan is generally used when one is unable to secure a regular business loan.
Of course, when it comes to starting a business there are always more options.
You can find an independent investor, venture capitalists or ask family and friends to help. Whatever you do, it is most important that you understand your options and make an educated decision.
- Fin24
*This guest post is by freelance writer Sara Stringer, who most often writes about personal finance.
