Oleksiy Nesterenko: The biggest hurdle for most would-be entrepreneurs is figuring out how to finance the startup. A viable business cannot be started for free, and the reality is that the early expenses, at the very least, are going to come from the owner’s pocket. If you have any designs on turning your great business idea into an actual business, the time to start saving for startup is NOW.
There are only two ways to set aside the capital you need for your startup — increase income or cut expenses. Obviously, picking up part-time employment or side jobs is a good way to increase income. If your business idea includes operations that you are not familiar with, consider taking a part-time job in the industry you plan to enter. That is, if you are opening a restaurant but have never worked in one, spending a few months as a hostess or waiter will greatly reduce your learning curve…and on someone else’s dime. Evaluate your own skills and consider doing side jobs offering what you know. Anything that brings in some cash, from mowing lawns to tutoring the neighbor’s kid to becoming the local Mr. Fix-It, will go a long way in building your startup fund. Of course, you can also increase income by selling off things you don’t need, or that can be replaced once your business is off the ground!
Cutting expenses is a better option for many. Start by reviewing where your money is going. If you don’t have a set household budget, create one. Often, simply listing out where your money goes each month will provide obvious opportunities to cut back. Look at the small stuff as well. If you go to the movies often, consider signing up for Netflix instead. If you frequent Starbucks, look into buying your own espresso machine. Dump the premium channels from your cable package and shop around for a better cell phone plan. Cut your grocery bill by planning meals ahead and shopping with a list. Try the generic or store brand of your standard foods…you might be surprised that they are just as good as the premium brands. Drop expensive habits like smoking, soda, going to the gym, and the like. Nearly everything you do can be done for cheaper with a little creativity and commitment from you.
Basically, start living like an entrepreneur to get you ready to be an entrepreneur. You probably expect that once you launch your business money will be tight for a good while during the development phase. Cutting back now will not only make the transition easier, but will also give you some capital on hand to get you the tools and resources you will need to get your venture off the ground. By cutting back expenses, you will also likely find that you have more free time at home. Use this time to start work on your business idea. How you handle the planning stage can make or break the future of your venture, and the sooner you get started, the more thorough job you are likely to do.
Save as much cash as you can, but buy what you need to plan your business. If you will need investors, they will want to see that you risked your own cash before they commit theirs. Purchasing the tools and resources every business needs is a good way to invest in your own venture. Start saving now for your startup and the decision to take the leap will be that much easier when the time comes.
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