Getting your business off the ground can be challenging in many ways: long hours, tough decisions, and ruthless competition, to name just a few. But perhaps the most challenging aspect of launching a startup involves financing.
Indeed, getting the cash flowing and keeping it flowing is the lifeblood of your operation. Without proper financing, sometimes referred to as capitalization, you can’t pay your bills, hire your staff, purchase your inventory, or most importantly, keep your customers coming back.
That said, you don’t have to have an MBA to generate big-time profits. All it takes are basic street smarts about the key ways to best use—and not lose—your money. Here a handful of simple finance hacks to help get your operation off to a running start.
Alternate sources of capital
It used to be that if you wanted to start a business, you just went to your local bank and took out a small business loan. Local bankers often knew you by name and were excited to help get a locally owned business off the ground. But times have changed.
Today, local banks are rare, and without a successful track record and minimum monthly revenue, most bankers have little interest or ability to finance your fledgling operation. Given this, you’ll likely need to seek alternative financing. Fortunately, you have an array of options you may not have considered. From crowdsourcing and peer-to-peer lending to invoice funding and purchase-order financing, there are numerous financing options to help solve your money start-up issues.
One little-known option involves using multiple business credit cards with zero-percent interest rates as a source of investment capital. Known as credit card stacking, in the right circumstances, such financing can be a highly effective—yet underutilized—source of small business capitalization.
While using independent contractors (ICs) might not seem like a financial hack, it’s actually one of the most valuable. In the not-so-distant past, most businesses relied on a mix of full and part-time employees to manage their day-to-day operations. But hiring, training, and firing employees is an entire job in itself, as you may have already learned the hard way.
Because you’ll likely have limited resources—money, time, and infrastructure—when launching your startup, using ICs on a project-by-project basis can be a lifesaver. By relying on contractors for specific tasks that you either don’t have time for or aren’t qualified to perform, you can make your business much more productive and cost-effective.
Plus, with the advent of the gig economy and online work-for-hire platforms, finding qualified ICs is easier than ever. That said, it’s imperative you have solid agreements in place when working with contractors, so be sure to consult with us for guidance and support before you start bringing on ICs or to clean up your current agreements.
Have a trusted team of advisors
Like contractors, having a team of experienced advisors you can turn to when navigating business areas that aren’t your primary forte can be invaluable. While some entrepreneurs hire consultants for this purpose, consultants are usually hired to provide a specific solution to a specific problem. To this end, they mostly offer short-term assistance and generally don’t stick around after the problem they were hired to fix has been taken care of.
On the other hand, advisors typically collaborate with your company over the long term and don’t leave after one specific project is complete. They can also help your company uncover potential problems, offer direction on how to solve a variety of issues, and they typically have a vested interest in seeing you succeed over the long haul.
Given this, advisors generally offer more continuity and consistency than consultants. They’re often quite familiar with the nuances of your operation, so their advice and support is often much more effective. Though you can find advisors to assist you with just about any business function, they’re most commonly used for financial, legal, and tax matters.
We offer a complete spectrum of legal services for business owners and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer you a LIFT Your Life And Business Planning Session, which includes a review of all the legal, insurance, financial, and tax systems you need for your business. Schedule online today.