Starting a business is never a convenient or simple choice. However, the lure of a life that allows you to earn more, control your own time, and build a better future for yourself and your family may make the effort worthwhile. Reducing your personal financial risk and liability risk will need to be a critical early step in your business plan.
Don’t borrow until it costs you not to get a loan. Borrowing at the front end without a strong plan will lead to poor spending habits which you will be required to pay back. You may be able to start with an SBA microloan; be prepared to present a quality business plan and jump through some hoops. Inspiration can make it easy to work on your business when you’re tired out, but dealing with funding issues takes grit and drive.
You may also be better off boot-strapping your company while working your regular job. If you live alone or have a partner who is excited about your business idea, have a discussion about building up savings by doing a short-term no-spend as a team. This will allow you to raise personal funds that you can invest in your business.
Take a hard look at your budget and scale back your activities and spending for six months. Use these funds as your start-up. Allow generous terms for your business to pay these funds back.
Protect Your Personal Funds, Time and Credit
Once you get your business going, scale back the personal funds you’re putting into the business. If you have to take on a second job to keep your business going, you may be setting yourself up with an unsustainable burden. Start-up cash is one thing, but if your bottom line is in the red every month, you will need to sit down and take another look at your business plan.
Protect Against Liabilities
Recent world events remind us that financial risk can crop up quickly. If your start-up is heavily leveraged and your business suffers a financial hit or markets in general slow down, a special purpose vehicle can limit your exposure to those liabilities.
Look into this as an option to benefit your business. Ultimately, starting a small business without personal funds can be tough. However, you can limit your exposure with the right structure in place.
Diversify Your Income Streams
If your terrific business idea is tied to trends, make sure your product line is extremely diverse. Not every product that you launch will take off. Avoid serious financial hits by having a product line or selection of offerings that may or may not take off. If you have to retract one product for a redesign, make sure you have other products out there for review and purchase.
Reducing your personal financial risk and liability risk will need to be a critical early step in your business plan
You may have a wonderful idea for a product that is the end-all and be-all to many people. However, you may do well to sit on this for a short time while you promote and build a market for the products that you can control, produce and sell.
If you have a great product that relies on components from other suppliers or manufacturers, your launch could crash if your supplier drops the ball. Under-promise, over-deliver, and start with what you can control.
If your small business offers a unique product, be ready to share your expertise. For example, you may have an excellent gadget that will do XXXX for a consumer. A simple way to promote this profitably may be to start a blog, demonstrating how your XXXX will make their lives easier.
You don’t have to be able to write to create a blog. You probably have bloggers and experts that you enjoy following. Do they write their own columns? Do they invite in guests? You may want to shop out your posts to a ghostwriter who can generate something that offers the tone that you enjoy reading.
Once the tone works for you and your message, you can step in and write up the technical jargon. A ghostwriter will also limit your risk of sharing proprietary data.
Starting a business is always a learning process. Ultimately, you may need to start a few businesses to hit on one that works for you and your family. Your great idea could be the key to freeing up your time and increasing your wealth!
Also, read: 5 Simple Ways to Protect Your Startup Business