One of the most enticing dream of every employee is to one day become their own boss. Many Americans are actually business owners, thanks to startups and microbusinesses. According to the United States Small Business Administration, 30.2 million business are classified as small which accounts for 99.9 percent of enterprises in the United States.
But there are a few hurdles that prevent just anyone from resigning their post to become their own boss. Chief among them is financing their startup. The average cost for a new micro business or fledgling startup costs approximately $3,000 whereas a franchise run out of your home can go from between $2,000 to $5,000.
Although you can finance such a business with a mortgage with no cost or a bank loan, you can explore other avenues for saving up. Below are 5 methods you should consider when trying to finance a new business.
1. Freelancing
If you want to combine having a more-or-less regular salary with the free time to pursue your business goals, you can turn to the lofty world of freelancing. Thanks to advances in technology and the increasing digitization of the world, you may find it easy to land a freelance gig, provided you have a marketable talent. The gig economy covers such practices such as ridesharing, online tutoring, content writing and similar endeavors.
Pros: Its easy thanks to an abundance of apps and online sites. You will have a paycheck to support yourself and your business. You are in control of your schedule, freeing up the time to set up your business.
Cons: You could live paycheck-to-paycheck. Scheduling may become hectic due to clients. You will have a lot of competition due to the nature of the gig economy.
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2. Crowdsourcing
The internet is home to multiple avenues for finance but one of the most popular is crowdsourcing. Platforms like Indiegogo, Kickstarter and others have successfully launched products and companies before. With a good enough campaign, you won’t just finance your small business, you may also have your first batch of customers and clients right from the start.
Pros: Helps establish rapport early on with a solid client base. Can raise tens of thousands of dollars with the right campaign. Can put your company on the map before it even opens.
Cons: Unreliable due to the nature of the platforms. Mostly reliant on catchy marketing campaigns beforehand to generate interest.
3. Lifestyle Reduction
A tried and tested way to save up money is to reduce the cost of living by cutting down on certain amenities you enjoy. This can save you anywhere between a few hundred dollars to potentially thousands. For this to be effective, you have to assess which of your expenditures are necessities and which are whims. You must then excise or significantly reduce the latter to free up your income for your business.
Pros: Passive and lowkey, with low effort but high rewards. Can lead to a more frugal lifestyle even afterward. You can hold down a job while doing so to increase your revenue streams.
Cons: Can be disruptive to your lifestyle. Can be challenging if you live with other people or supporting a family. Takes time to generate enough savings to make a difference.
4. Garage Sale
A time-honored tradition among Americans seeking to replenish their coffers is to scrounge around the house and hold a garage sale. Who knows what sort of treasures could be lurking around your home? Perhaps you want to get rid of a pair of cheap PS4 controllers. Maybe If you have an abundance of clothes, old furniture or antiques you’re willing to part with, they can help you build the foundation of your new business. According to some sources, a successful garage sale can net you anywhere between $500 to $1,000, enough to make a large dent on your startup costs.
Pros: Helps declutter your home while making money. Can help you socialize and establish new relations with your community, building a platform for new customers. Can lead to discoveries of precious items.
Cons: Sales depend entirely on what you can scrounge from your home. Neighbors may not be interested in your wares. Time consuming and runs the risk of failing.
5. Combination
Finally, you can use any or all these techniques in tandem to quickly build up the money you need. You can hold a garage sale while you are waiting for your crowdfunding donors to cough up. You can live a reduced lifestyle while you are working freelance. All it takes for you to make such arrangements work is organization and scheduling.
Small businesses are the backbone of the American economy and the foundation of the commercial sector. Save up for your business today and take that crucial step to strengthening the nation’s economy and securing your financial future.