Financing a start up and saving money - Top 10 Tips
Before you turn to the bank for a loan, think about creative ways to finance your business without raising start up capital from external sources.
Here are 10 top tips:
1) Start small – even if you have a grand vision for your business, concentrate on generating short-term revenue to get enough cash to fund the long term business idea.
2) Focus on sales. Get on the phone and start cold calling. Go for quick wins – contracts that bring in cash and will lead to other sales. Generating cash flow is the immediate goal in order to start building your business.
3) Don’t waste money on expensive advertising which can be hit and miss. Concentrate on networking and building up contacts, as word of mouth is the most effective form of promotion.
4) Keep overheads to a minimum - work from home if you can and borrow or lease rather than buy expensive equipment. It’s easy to get carried away resourcing a new business – but only buy what you really need to get the job done.
5) Open a company bank account that offers free business banking for start ups for at least the first 12 -18 months. Internet banking makes it easier to keep a close eye on transactions.
6) Utilise a 0% credit card for essential expenditure – but be careful to keep the debt under control and either pay it off or transfer to another 0% card well before the interest rate goes up.
7) Invoice your clients in stages – 50% at the half way point and 50% on completion. Make sure you have clear payment terms in the contract and on the invoice.
8) Retain cash in the business – take as little out yourself as possible. This might mean going without a holiday or you may need to start your business whilst still in part time employment to cover your bills.
9) Try business bartering – offer your design services in exchange for goods and services you need. This saves you spending cash and can be a good way to develop relations with a new client base.
10) Put time into PR – think of an unusual hook and write a press release or article. Conduct a survey about a topical or controversial issue with your potential customers. Publish the results as a story to attract free publicity for your business.
Many big businesses were started using imagination and initiative rather than relying on big start up funds. If you can start to bring in consistent sales and keep your costs and overheads low, your business will begin to look very healthy. Not only will you have proof that your business is viable, you will be able to attract investors to support your future growth.
Source: Jo Hill, Affinity Trading Network: http://www.affinitytrading.com
