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Are you excited about the idea of starting your own business? Maybe you already have a business idea, or maybe you’re just looking for an idea to start and grow your business. You are prepared to take risks such as leaving your current job and losing your financial stability for a while. But there is another obstacle – you don’t have the funds available(you don’t have the money).
On the one hand, this is a big problem, but lack of financial means should not stop you from achieving your dreams. In fact, it’s quite possible to start and grow your own business with almost no financial investment – you just need a very clear action plan.
This portal is a great example! I started this website with very, very little investment. Domain costs €12 per year, hosting costs €5 per month. And now, 10 months later, it is a real business that brings me money every month. When I started this website, I had no idea it would turn out so well – so take the plunge!
Why does a business need money?
First, we should understand why businesses need money. There is no set start-up capital to start your own business, different types of business will require different amounts of money to get started. Before you start your business, you need to calculate the approximate amount you will need to start your chosen business.
Some items you should consider:
- Choosing a business form. Ltd, micro-business, self-employed – some of these business forms require funds to open.
- Raw materials. If you choose to start a manufacturing business, you will definitely need raw materials from which to create your products.
- Equipment and facilities. Does your business need special equipment? Is special equipment or work clothing required? Don’t forget to include them in your costs.
- Commercial space. Businesses generally need premises. You can, of course, get started in your garage or basement if you have the opportunity. You should also include a cost line for office, production or storage space. And then there are the cleaning costs, the management costs, the utilities… Better to start in the garage, though! 🙂
- Operating costs. Every month you will have to pay for electricity, water and, if an appliance breaks, repairs.
- Staff salaries, outsourcing, etc. If you don’t do everything yourself, you will have to think about others, pay their salaries and pay their taxes. Will you be an accountant yourself? Probably not – so you’ll have to outsource your accounting.
If you realise that starting a business is quite expensive, you should figure out how to do it more cheaply – by cutting costs or getting more funding from other sources. In this case, you have three options:
Reduce your needs
Your first option is to change your business model to have less of the above costs. For example, if your plan was to start a consultancy or freelance agency, you might start out as the only employee. If you don’t need office space, you can work from home. If you are a manufacturing company, you can certainly find a cheaper supplier of raw materials or start working only on products with cheaper production costs.
Some cost items are unavoidable in business. For example, from paying taxes. Of course, there are various ways to avoid paying tax, but is it worth it? You can become self-employed for free!
Business development through LIAA business incubators
Read this article: 5 Reasons to Join LIAA Business Incubator
Have you heard about LIAA business incubators? It is a place where people who want to start their own business meet with experienced entrepreneurs who want to expand their business. If you have a business idea, the first chance you get is to join a business incubator, where you can turn your idea into a real, profitable business! The incubator will provide you with the knowledge and, later, the financial support to develop your business.
Loan from bank or other sources
A third option is to obtain funding from other sources. In fact, there are many ways to raise money to start a business, but they are very different. Let’s take a look at some of them:
Friends and family: don’t rule out borrowing money from friends or family. You can borrow a small amount from each of them, or the whole amount you need from the wealthiest :). But be careful – this can damage a relationship in ways you certainly wouldn’t want.
Business enablers: business enablers are wealthy individuals who support business ideas in their start-up phase. These investors usually want a share of the company in return, and this is often a difficult decision for young entrepreneurs to make.
Venture capitalists: venture capitalists are like business angels, but in an organisation or partnership. These investors most often work with companies that have already demonstrated their market potential
Crowdfunding: This type of funding is popular for a reason – with a good idea and effort, you can raise money for your business idea.
Bank loan: probably the most popular way of obtaining finance is through a bank loan. If your credit history is in order, there is a good chance that the bank will grant you a loan to implement your business idea.
By using one of these sources of finance, you should be able to reduce or even eliminate your personal investments. You should be ready to make a financial commitment, start a business on your own, work 16 hours a day – this is often what starting a business looks like. But if you believe in your idea, none of these counter-arguments should stop you from pursuing it.
