6 WAYS TO SELF-FUND YOUR SMALL BUSINESS

Having the perfect idea for a business is only one factor in growing a successful venture. Millions of new startups are launched every year, but only a fraction ever make it past their first year, primarily because of a lack of proper financing. Small businesses that don’t have the right capital to get started often never get off the ground.

Traditionally, many entrepreneurs look to banks or finance companies to get funding for their businesses. However, some owners are interested in maintaining their independence free from the constraints of investors, choosing to self-finance their company. Relying on independent capital resources is a risk, but one that isn’t realistically possible if you are willing to make the right sacrifices. 

The bootstrapping method of business financing isn’t the easiest road, but it can be done if you know how to pool your resources. You can dip into your savings or look online for an auto title loans calculator to get you started. Let’s look at a few ways to self-finance your startup.

The most obvious source of financing for your startup is dipping into your savings. You may have been building your nest egg for several years, and it is just waiting to be put to good use. Before you clear out your account, it’s essential to put some limitations in place. You may need to keep some money in your account for emergencies that are not business-related.

Owners that want to remain independent without the responsibilities of dealing with investors may still have to borrow in the form of credit. Switching your current credit cards over to lower interest accounts could help give you the cash you need to set up your business. If you have existing credit accounts, it is beneficial to find a lower interest option and transfer your remaining balance. You may want to research credit card companies that allow for a consolidation arrangement to help you limit your interest payments to one card. Remember that any credit account needs to remain in good standing, so it’s essential to pay your minimum balances on time.

Most people avoid withdrawing from their retirement account until their careers have ended. But, for entrepreneurs, your 401K account may represent a convenient source of capital for your business. You will have many years to develop and grow your company and rebuild your 401K contributions if you choose to use those funds to start your company. Keep in mind that an early withdrawal will likely include fees and penalties that can eat into your savings.

If you have been playing the markets, you may have some capital saved in your investment portfolio. If you are searching for funding to start your own business, talking with your financial advisor about your options can give you a clearer picture of how much money you have to work with. You may be more open to taking some risks and investing in quick-return stocks to help you grow your capital account. Investing never guarantees a return but can be an avenue for future income with the right market guidance.

As a business entrepreneur, you have to be willing to make significant sacrifices. Bootstrapping is the most common strategy for entrepreneurs to scrape together their startup costs. It’s important to evaluate your assets and where you can liquidate them. If you own a vehicle, motorcycle, RV, or boat, you may be able to qualify for a title loan that will give you an amount equal to your vehicle value without having to give up ownership.

Self-funding your startup can be a tricky strategy, but it is possible to succeed. Research each of these strategies to help you find the funding solution to help you reach for success.