No matter what type of business you’re contemplating, there are some basic steps that every new business owner can take on the path to financial freedom.
Funding and capital expenses
While most people think of popular websites like Kickstarter or GoFundMe when they imagine startup funding, but there are a host of other options to pursue depending on your situation. The Small Business Administration has a portal to connect business startups to potential investors and venture capitalists.
You will likely need to pick your corporate structure and start with a business and marketing plan along with sales projections and a cash flow analysis. If you’ve never created these before, there are templates and guides available on the SBA site as well as through the Service Corps of Retired Executives, or SCORE site. SCORE is run by volunteers and offers free mentoring and workshops in addition to guides and templates.
Don’t want to bother with all that paperwork? You can begin by bootstrapping, which refers to starting out on your own funds, whether it’s savings, credit card debt, selling stocks, etc. The next level of funding would be to borrow money from friends or relatives. In this case, it’s always wise to have a repayment agreement in place unless the money is being given with no requirement to repay.
If you do have your paperwork in order, and you have decent credit scores, you can apply for a personal or business loan at a local bank or even with online investment sites like Prosper. There are alternative crowdfunding sites like Kiva that have lower or no fees compared to the more popular sites. And you can always create a custom campaign on your own using sites like PayPal or Square.
Registration and licensing
You may need to register your business on both a federal and state level. If you are a sole proprietor, you might be using your own social security number under an assumed name or DBA, but that name will need to be registered with your state’s Corporation Commission.
You may also need a state tax ID to pay sales and use taxes depending on your business. Research whether your profession or industry has licensing or certification requirements, as well as liability insurance or bond requirements, before starting your practice.
Working from home is often the most convenient alternative for many start-ups, but neighborhoods and HOAs may have rules about home-based businesses. And sometimes you may not want your home address publicly displayed as your business address.
Some shipping companies now offer boxes that come with a street address instead of a PO Box. Or you can also set up a registered agent to receive business correspondence.
Employees and equipment
So many services and features that used to require employees and hardware are now offered online, sometimes at a fraction of the cost. You can use cloud computing and online storage in place of owning a physical server, and there are many different platforms that allow people in multiple locations to collaborate online in a variety of ways.
You can outsource payroll management and accounting features, as well as customer service, with things like Oracle call center software. You can even hire people as independent contractors to work on short-term projects like producing a sales video or radio ad.
Don’t discredit the idea of buying used equipment. This can often be the most frugal way to get your foot in the door with a plan to buy newer equipment down the road when cash flow allows. Manufacturers and distributors often have access to used equipment or returns. And there are other things like online liquidation and auctions in addition to apps and marketplaces like LetGo or Facebook.
The amount of money you can save during the startup process is in direct proportion to your willingness to research and do the legwork to find deals. Take advantage of volunteer services like SCORE and don’t be afraid to ask for help from friends and family to make your dream come true.