They say “it takes money to make money” and now more than ever is that the case. Lending standards are high and even established companies are having trouble getting loans. And you will need even more help if you are trying to have a location for your company, because in that case there are a lot of new things that you have to think of like utilities, furniture and the most important is having a home insurance. This will help you on case of an accident. You can estimate the costs of your homeowner’s coverage at that link, and knowing that is very useful to make things easier. What’s a start-up company to do?
Aside from maxing out your credit cards in an attempt to get your business off the ground, or hitting up every friend and family member for a favor here are four ideas that can help your sign shop get the cash it needs to get up and running.
- Keep your day job. If you still have a day job, keep it. The money you earn there can provide you with enough to keep you going and perhaps support some of your new business venture. Make sure that getting your sign shop operating doesn’t interfere with your day job, and isn’t in direct competition with the company you are working for (a big ethical and legal no-no.) The steady cash flow coming in will help keep you on your feet while making your dream of running your own business a reality.
- Borrow from your business.Keep an eye out for people interested in selling their businesses – they may be willing to let you buy them out over time using a loan called seller financing. In such an agreement you make a down payment to the seller of the sign shop, then make monthly or quarterly payment with interest over a period of time until the loan is paid off. Make sure you are buying into a a solid business, avoiding liens and law suits by doing good research.
- Pay the company first. If you have a couple of clients already, you might be able to do what is known as bootstrapping – using the company’s cash flow to fund itself, rather than relying on external financing. This means, rather than pocketing the money the business is pulling in, you push it back into the shop. To build a business this way you need to be extremely careful with funds, keep expenses low and really hone in on your target markets. To successfully bootstrap your business you might consider working from home, leasing or bartering for equipment or services, and negotiating with suppliers. Try to get pre-payment deals from clients or work on a retainer for an additional cash flow that can be used to launch the business to the next level.
- Turn your revenue into royalties. What is becoming known as royalty-financing is becoming increasingly popular with new businesses. With this type of loan you must repay creditors via a percentage of the business’ incremental revenue, usually between 2 and 6 percent. This kind of financing isn’t cheap, but it does let you retain ownership and full equity stake of your business. Also, even if you have an off month its okay, because you are paying based on a percentage of revenues, not a fixed rate.
Without a doubt getting a small business off the ground requires drive, dedication and a lot of hard work. What kinds of funding have you used to support your sign shop? Share with us in the comments section.