If you are ready to take the leap into entrepreneurship, you must get really focused on your finances. It will be a real test to get back to only the bare necessities. Are you willing to reduce your lifestyle down to just basic living expenses? Most of the time, the initial capital to start your small business will come from you. Here are 8 tips you may not have considered to find money to start your small business.
Pay your mortgage twice a month to reduce payments. It is the accelerated payment program. Your mortgage company or a third party vendor offers this service for a low or no fee. The money will be automatically debited from your bank account. An extra mortgage payment is made each year; you can reduce a 30 year mortgage to a 22 year mortgage.
Avoid 90 days, 6 months or 1 year – same as cash deals. If you do not have the money the day you are making the purchase, chances are you will not have it in 90-days, six-months or a year from when it’s due. Keep in mind if you can’t pay, the interest rate is hefty and is compounded back to your original purchase date.
Cook at home and bring your leftovers to work for lunch. You’ll save money, get a healthier meal, and spend more quality time with your family. Look for free recipes online and start cooking!
Keep driving your car. Drive your car until it stops running. As a new business owner, you can no longer afford to upgrade your vehicle every two to three years. Buy a reliable car and take care of it, so you can ride without a car payment as long as you can. (I still do this! My car is five years old.) Try to plan your days so that you can do lots of major errands on the same day to minimize gas and parking expenses.
Grab a sweater. Turning down your thermostat five degrees and keeping a throw blanket nearby to save money on heating costs. The American Council for an Energy-Efficient Economy (ACEEE) says that for every degree you lower your thermostat, you’ll save about 3% of your heating bill. Putting your thermostat on a timer during the workday or while you are asleep will have an even greater effect on your heating bills.
Turn down the hot water heater. Heating water is the third-largest portion of the typical family’s energy bill. Heat water to 115-120 degrees to reduce power consumption.
Cut back on trips to Starbucks, Dunkin’ Donuts, Dairy Queen and Blockbuster. The money you spend each week on unnecessary extras can really add up. Treat yourself only once in a while. You’ll be shocked how the money you save will add up.
When you get started in business, you need three pools of money – an emergency savings account for your household, 12 months of budget to run your household, and 12 months of operating expenses to start your business. If you employ these simple money management tools, you will have the money you need in no time.
Melinda F. Emerson, SmallBizLady, is one of America’s leading small business experts, whose mission is to end small business failure. Forbes Magazine recently named her one of the Top 20 women for entrepreneurs to follow on Twitter where she hosts #SmallBizChat, Wednesdays 8-9pm ET for emerging entrepreneurs. She publishes a resource blog www.succeedasyourownboss.com and is also the author of the national bestseller Become Your Own Boss in 12 months; A Month-by-Month Guide to a Business That Works. (Adams Media)