How To Self-Finance Your Business
Oct 30, 2023
There are several methods to handle your own money, from not leaving your day job to acquiring a loan from a bank or relying on credit cards.
You are likely to hear the term Bootstrapping when you consider using your own money. It’s starting up a company with little or no outside financing, basically taking whatever resources are easily acquired. It can mean not paying yourself while you pump money back into the company, but it also keeps you in control.
Using your own money doesn’t take away the urgency of having a solid business plan in place. A business plan allows you to recognize your particular needs and conclude how much money is needed. It also gives you legitimacy when approaching banks or other lenders. You also want to make sure you can turn your idea into a business before potentially going into debt.
To save money, work with a small group, offer stock options instead of cash, and only hire those you need. Consider interns for a free or low-cost alternative to regular employees, especially if you live near a college. When going this route, make it clear the stipulations of the agreement, including pay, and prepare an independent contractor agreement.
As far as cash, make a list of what you have on hand. Include savings accounts, equity in real estate, retirement accounts, vehicles, and any collection that you can barter for cash if needed. Investments may help you get loans. Consider options including a home equity loan or credit cards. If you go this route, get it in writing with a promissory note.
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