Financing a New Business – Do You Need To?
Posted on May 30, 2010 by Elaine Lockard, One of Thousands of Executive Coaches on Noomii.
Are you starting a home-based business? Do you need or even know if you need financing? You may want to check out this article first.
Once you have decided to start a home-based business and know what you are going to offer, you must ask yourself, “Do I have the startup money to begin and maintain my business until it is profitable?”
According to statistics, it takes on average, 3 to 5 years for a business to be profitable, if you even succeed in making it that far. Also, since this is an average, it could take more or less time to reach this point. Therefore, you must do your due diligence and thoroughly consider what funds you need to start and maintain your business from month to month and what money you are going to need to live on and pay household expenses.
Many people think if they start a business, the people will come. In reality, it rarely happens in this manner.
I suggest the best course of action is to start your business part-time while working in your present job so you have the security of a regular paycheck. Once you have built your profits to a sustained level, then and only then, consider leaving your 9 to 5 for your home office.
If you don’t have this luxury, you must, even more so, analyze your finances carefully to understand how much of an operating budget you can afford. You must also, in either case, fully research your chosen business to see how feasible it is for profit and growth. Yes, it is great to have a business that you are passionate about but if it is not a sound, profit making endeavour, you will just be throwing your money out the window. This research will also give you a better idea of what kind of expenses you will have to help you in your financial planning.
If your final calculations do not jive with what you can afford, I suggest you may need to rethink starting your business or consider taking out one of many available home based business loans or grants. Home business financing could be your answer to filling the gap between what you have and need until your profits roll in. Consider talking to your bank or other financial institution or contact the Small Business Administration for more information on what is available in startup business financing.
It is always best to work with the resources you have available rather than adding to your expenses before even starting your business. However, it is nice to know you have options to help you achieve your dreams.