Small Business Series - Powering Your Finances

Anyone who has started a small business can tell you that your small business finances can be the difference between success and closure, no matter how great a business idea may be. From startup capital, to reducing costs and record keeping, it may feel as though staying on top of your business finances takes more than any other operational task. Here are some quick ideas to get your finances rolling and keep them going for the long-term.

Finding Startup Capital:

It’s no surprise that the easiest way to finance your new business is by covering the startup costs yourself. However, that option is not feasible for many new business owners. Similarly, finding small business loans can be difficult because financial institutions may be hesitant to invest in an untried venture. A strong business plan, which we discussed earlier in the series, can put you on the best footing to secure a loan.
 

Even if traditional methods of financing your new business seem out of reach, don’t let that discourage you. More and more new business owners find start up resources in obscure ways. Here are a few:

Apply For a 0% APR Credit Card

Depending on your type of business and your credit worthiness, you could secure a personal or business credit card with a 0% APR for the first 6 months to a year. You may be limited in the amount you can borrow. However, with a 0% APR, you are not eating into your start up funds by paying off interest charges. Just make sure you continue to payoff the card each month so the debt does not get out of hand for when interest does begin accruing.

Equity Financing

Securing investors in your business is another way to finance your start up. If you are passionate about your mission and can clearly articulate your plan of action (hint: business plan), finding investors can be a great way to not only finance your business, but also bring on other people to help you promote it. Your investors will be motivated to help you succeed because they want to see a return on their investment. Equity financing can provide you access to funds, as well as influence from your investors’ networks. The downside is you are turning over a piece of your business and potentially portions of control of operations.

Small Business Grants

If you are looking for options that you don’t have to pay back, its worth taking the time to research your industry or personal demographic to see if there are grants that your business may qualify for instead of a loan. Grants do not need to be paid back, but generally have strict requirements on how and when the funds are used. You will also need to submit a grant proposal, which can be a daunting task in itself. However, a grant could be just the way to get your business started on a positive financial footing.

Family/Friends Loan

Finally, don’t be afraid to reach out to family and friends that may have resources to help you get started. Since they likely already believe in you, they are likely to also believe in your business. Just be sure that you treat these loans as any other loan, and stick to whatever repayment terms you originally agree to for the loan.

Reducing Startup Costs & Overhead:

Once you have your start up capital, you want to have a solid financial plan in place so that you do not spend unnecessarily trying to get your business up and running. Instead, try these simple ways of reducing start up costs, as well as keeping on-going expenses down.

Go Paperless

Paper products, ink, and storage are just a few costs associated with traditional hard-copy business methods. By switching to paperless operations where possible, you can save on those costs, help the environment, free up physical space in your business, and make searching for particular records and documents more efficient.

Search For Cost-Free Options

These days you can generally find an app or software program to do anything-at a cost. However, there are also free versions of different apps available that may suit your needs just fine without the subscription cost. At the very least, you can try the program out before committing to another expense. Many apps also offer free trials of their premium services so you know you will really use those extra features that come with the extra cost.

Look For Discounts

Many businesses offer discounts or special perks exclusively for small business owners. You may be able to save hundreds of dollars per year on expenses you regularly use such as business supplies, travel, and insurance. And don’t forget to use your rewards on any business credit cards specifically for your business. That way, you’re putting your business purchases to good use!

DIY

Take a look at any business-related tasks to see what you have the time (and ability) to do yourself. Rather than hiring a full-time sales clerk, you might be able to take on some of that work yourself. Or, if you have bookkeeping experience, and a good bookkeeping program, you could save money by doing the record keeping yourself.

Record Keeping

Speaking of record keeping, having clean, up to date financial records is a must for small businesses. At any given time, you should be able to access a snapshot of where your business stands financially. This includes upcoming expenses, current and projected revenue, outstanding accounts receivable, and taxes due. You can hire a tax accountant or bookkeeper, or manage your financial records yourself. Many local small business associations have free classes designed to teach business owners the ins and outs of financial recording. Financial software is also available, with most offering live support, which may be included or available for an added fee. Even if you plan on doing your record keeping yourself, make sure you consult with an accountant to know exactly what financial documents, including receipts, prior tax returns, and invoices, you need to maintain copies of for the IRS and for how long.

This article is Part 5 in our Small Business series. Previously published blogs can be found below:
 

Part 1: Nine Steps for Starting Your Own Business

Part 2: Choosing the Legal Structure for Your Business

Part 3: Obtaining Licenses and Permits

Part 4: Preparing Your Business Plan