First Step Marketing

Money is the oil that greases the often squeaky wheel of American businesses, large and small. While the primary ingredient of small-business success is hard work and lots of it, money is still essential to launch and then maintain the often-spotty first year of a small-business’s existence.

Now that you have a good idea of how much money you need to start your business, and how much you’ll need to generate to pay the bills every month, where are you going to find it? It’s a sign of a true entrepreneur to believe that your talents and energy levels are so wide-reaching that the cash will start pouring in—and never let up—from the first week your business is open.But even if this fairy tale were to come true, there are far too many contingencies and unexpected expenses to be able to comfortably rely on this for long. Another way is to use available cash to grow the business as it comes in, a kind of pay-as-you-go method. The problem with this technique is that if you’re forced to rely on whatever comes in, or whatever’s left over after you cover the basic expenses of your business and your personal life, the growth of your business can be spotty and sporadic, or nonexistent. Steady business growth relies on consistent effort and marketing, and if you plan a big advertising campaign one month, only to run out of advertising money for six months, your customers and clients to be may wonder where you’ve gone during your hiatus. Some may even think you’ve gone out of business, and call a competitor before they think to contact you to see if you’re still around. Remember the tortoise: Slow and steady wins the race.

There are a variety of ways to find the capital you need for your new enterprise. Many new business owners use their own funds by liquidating savings accounts, stocks, bonds and other investments, or selling a house or other big-ticket item. While this may limit the projects and growth of a small business, the advantage is that because you’re not pressured by outside investors or the necessity to meet a monthly loan payment, you will answer only to yourself and your own vision for your business, not to outsiders who may not be familiar with the quirks of your business.

Of course, you can also take advantage of the years you’ve spent building up your personal credit by using it to buy or rent the equipment you need to start your business. Leasing a computer or a vehicle means that more cash will be freed up for the day-to-day expenses of running your business, and it can buy you the time you’ll need to establish your business. After all, not every customer will pick up the phone the first time they hear about your business; you’ll need the extra time to win over the reluctant customer who wants to make sure you’ll be around in six months to complete his project. If you choose this route, try to insert the name of your business into the lease documents. That way, even though the rental agreement is listed under your name, if you also include the name of your business it’s a step towards establishing credit in the name of your business only. It can be difficult to get a corporate credit card or business lease when you are first starting out; establishing a business checking account is easy, however, and will provide future creditors with financial records of your business from day one.

Another way to personally finance your business is to take advantage of the assets you’ve already accumulated, but without depleting them. This, of course, is accomplished by using your personal credit cards or by taking out a home equity loan or a second mortgage to cover start-up costs and to buy business equipment.

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Finding the Funds You Need

This entry was posted on Monday, November 10th, 2008 at 9:02 pm and is filed under Advertising, financial. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.