In times of economic confusion, starting your own business tends to sound like a great idea. Whether you’re looking to take on business ownership as a hobby or you eventually want to flip it into a full-time gig, it’s important to know the financial pros and cons of going into business for yourself. It’s not a small task in the slightest, and roughly half of all new businesses don’t make the five-year mark.
With that in mind, how much money will you need to reach your personal business goals? Before you take the plunge, there are a few important fiscal elements to consider.
- Looking at the basics - When it comes to starting a business, there isn’t a one-size-fits-all approach to procuring funding. Every time of business, whether it’s a one-person operation or a company with employees, will have its own particular costs. Start with the basics when you’re considering the kind of capital you’ll need. Start-up fees for things like a business license, retail or office space, or utility costs all need to be considered in the beginning, and implemented into a budget going forward.
- Being profitable on a smaller budget – You don’t need to be a millionaire or a trust-funder to start a business, even if you might feel a bit of sticker shock at those initial costs. In fact, most small businesses started out with less than $5,000. One of the best ways to reach high levels of profitability on a smaller budget is to keep a “bootstrap” mentality, keeping your business expenditures at a minimum and keeping all kinds of alternative options on mind when solving costly problems.
- Expanding on your existing capital – Many new business owners find that they need an influx of cash to truly get their operation off the ground and running successfully. Polam FCU offers a variety of personal loans that can be used for both startup operations and already established businesses, and team members at our branches can answer any questions you may have about procuring capital for your business.
- Keeping in mind your personal finances – One important rule of thumb for prospective business owners is to have three months of living expenses set aside for emergencies before taking the ownership plunge. You don’t want a business venture to go under and leave you and yours in financial despair. Many owners restructure their business from a sole proprietorship to a corporation or limited liability company (LLC), which can help limit any damages that might accrue if a business fails. Also, purchasing insurance that is specific to the type of business you’re operating will help with financial risk in the long run.