If you’re starting a business with the expectation that you’re going to make lots of money right away, then perhaps you need a wake-up call. Businesses take time to mature. In order for them to mature the correct way, you have to control your expenses and avoid debt at all costs. With that said, here are seven ways to avoid debt when starting your own business.
Start From Scratch
Starting your own business without borrowed money is challenging and takes extreme efficiency. As an entrepreneur, you have to recognize your spending limits because of this, and remember that starting off small takes patience. Working your way up and reaching your ultimate goals takes time. Also note that your competitors may gain market-share and gross revenue more quickly because they’ve taken borrowed capital to pay for their marketing and production efforts.
While this may seem intimidating to a new entrepreneur, evidence proves that a business without debt during economic downturns has a better chance of surviving than one with it. Additionally, when the economy strengthens, the business without debt will be in the position to take advantage of the market.
Avoid Credit Cards and Loans
If you want to start from scratch and build your business from the bottom without debt, it’s important to avoid running up your credit card balance or taking out excessive loans. Many new entrepreneurs finance their businesses’ operating expenses with credit cards, because this tends to be the most convenient source of revenue available.
Although this can seem like a tempting option because of the easy accessibility to the funds, it could prove troublesome until the company turns a profit. Also, avoid taking out loans. Remaining independent and not dependent on other resources is the best way to proceed in your new venture.
List Your Needs
Before starting your business, you should put every idea and plan on paper so you can prepare accordingly. This includes making a detailed list of everything you’ll need for your business to operate, including supplies and employees.
To help manage your list, separate the items into two groups including what you need now and what you can manage without until your business prospers. Invest in the essential items that’ll help you run your business, and resist caving in and financing things you don’t need right away. Prioritizing and allotting the money you do have for things you need will help avoid debt.
If you’ve started your business and have a handful of employees, perhaps implementing a byod program is something to think about. Not only do you cut the costs of paying for mobile devices and services for your employees, but you can let them work from home while still having access to company information. If you don’t need a large space for employees to work in, you can save on rent expenses that are costly.
Research the Market
If you’re a new entrepreneur and want to cut on costs and save money any way you can, then performing research should be something you’re doing constantly. Take some time out to research your market and who the competition is. Remember to find out if there are enough potential customers who will seek out your products or services that’ll result in supporting your business.
Also, check to see what the competitive price for your product or service is so you know how to price it. You don’t want it too low or too high, so find what similar businesses are charging and what they’re offering for that price.
Find Ways to Promote Your Business for Free
A great way to cut on costs and save money is to find ways to promote your business for free. Because there’s so many ways to do it, this is probably the most effective way to go about getting your business name and brand out there while not paying a cent. Whether it’s taking advantage of social media, asking for referrals, or creating your own website, there are ways to save on advertising and marketing. If you’re going to take advantage of these services, remember to stay proactive.
Embrace Slow Growth
One of the most important things you’ll need to embrace as a new entrepreneur is the fact that your business won’t blossom overnight. Business growth, usually, is a slow process. This is especially true if you’re not pumping in borrowed money into the business. On the other hand, by abstaining from taking on a ton of debt, you’re not risking an ultimate downfall. Remember to stay patient and persistent in your endeavor.
Starting a business is no easy task, but with careful planning and preparation it’s possible – even with borrowed money and debt. Just remember, even though it may take some time, your sacrifice will reward itself in the end.