10 Aug How to start a business without getting a loan
This seems like the most impossible proposal to start a business without getting a loan.
How can anything get off the ground without some substantial funding? The other scenario also presents itself through the presence of available capital but no viable enterprise to start. Trying to get some venture capitalists to invest in your business idea might also be a shot in the dark because you have no idea if they are able to visualize the concept you have in mind.
So, will getting into debt be the only viable route to take? The startup costs can be quite daunting. You have to hire employees, lease a space, acquire materials, define your logistics, invest in equipment and juggle a whole lot of other details. These costs can also go through the roof if you hope to engage in the realm of manufacturing and retail.
Does this mean that without an adequate source of financing your business venture will remain a pipe dream? Not entirely, because you don’t have to run straight away to your nearest bank seeking a business loan.
Do you have enough money saved up or would you still need to lean heavily (at first) on your family and friends for some initial capital? These are some options to consider to get things going. The goal here is to be free of a debt trap so that you don’t have to subject yourself to stringent financial requirements. Let’s go through some means or ways to give your business that initial push without the going through a loan…
Consider the venture as a Part-time activity
Look at this as a way to test the waters. See what you can accomplish in your spare time so you can monitor if the enterprise remains feasible or not. Don’t put all your eggs in one basket. You can get a feel for the business and get a sense if it can really progress.
See what you can handle with the Bare Minimum available
In other words, save where you can. But, this adage remains true for almost every startup.
One of the ways to start a business without getting a loan is to maximize your resources. Consider working from home initially before diving into an office space rental. Use second-hand equipment before investing in more costly materials.
Keep your budget as low as possible
Office leases, furniture, utilities, taxes, and such add up to the cost. Maybe you can look into a co-working space for the meantime. When you need a meeting room to meet a potential or new client, there are meeting rooms that can be rented only when you need it. Your staff can be hired on a per-project or part-time basis. Freelancers can also keep your costs down. There are various outsourcing options available that won’t be too much of a financial burden. And having a digital infrastructure might be a less costly option compared to the usual brick and mortar setup.
The closest people in your life might be a possible source of funding
It’s never going to be comfortable asking for money from family or friends. But, another way to start a business without getting a loan is to ask help from those people closest to you. There’s nothing wrong with that.
If your business plan is clear enough and your presentation convinces them to help you out, then grab that opportunity. With your projections in place, always budget when you are able to pay them back. Make sure to
Find a like-minded partner and/or an investor
Your partner can help you handle accounting concerns, marketing possibilities, and probably be a source of inspiration on what other ideas can be implemented to improve business momentum. Your investor assures some funding so your ideas can happen. You still remain the sole proprietor with this arrangement.
Your profits must be reinvested into the business
When some money comes in, it’s best to reinvest that into a fund that can give you some adequate returns. But you’ll be tempted to splurge because you think it’s the best way to reward yourself for doing such great work.
There’s no disputing that would be a good way to spoil yourself. But the real question: why splurge when you can save?
It’d be better to research on what investment options are available to grow your business even more. You are doing the wisest move and that is to scale up your business.
[ Read: When to Scale Up a Profitable Business? ]
What are other low investment business ideas?
There are some businesses that are not as capital intensive as others. Service-oriented agencies, consultancy companies, freelancing projects, outsourcing options, brokerages may not need as much investment as other ventures.
Try out crowdfunding or equity
These seem to be one of the more popular avenues that entrepreneurs take so that their product gets some initial support. Whether it’s the next revolutionary travel bag, a smart wallet, or a limited-edition wristwatch, these crowdfunding sites always intend to share that engaging story. For your potential backers, you need to convince them why your business should be given support. These sites might possibly get a percentage from the generated capital, so this is something to consider if you want to try out this method.
As a final note
There’s no simple way to get funding for your business. Cheers if you are able to do so without formally applying for a business loan!
Yes, you can start a business without getting a loan.
But, you may need to be more open in the future to take in more risks with capital inflows as your prospects improve. This is for you to not miss out on such opportunities. Having the proper financial backing in place will assure you more of that growing success.
It is always admirable that entrepreneurs try to keep their business growing without the need of acquiring a loan. Our suggestions may just be a few ideas that hopefully will keep your startup afloat with minimal need for a loan with huge interests. The passion for excellence must be sustained and that might be the most important ingredient for any business to succeed.