by: Michelle Kennedy
A reader recently asked how she could finance her business idea when she had used up her savings for education, and does not have family or friends to ask for money from.
Well, the truth is, that having no savings or family and friends to turn to can make starting a business as a woman difficult, particularly in this country. According to the SBA, women are starting new firms at twice the rate of all other business and own nearly 40 percent of all firms in the U.S. These 8 million firms employ 18.5 million-one in every five U.S. workers-and contribute $2.3 trillion to the economy. However, the SBA also admits that women continue to face unique challenges when trying to finance those businesses, paricularly in the start up stage.
We are going to begin by assuming that you already have a business you want to start, and hopefully a business plan from which to get going. If you need help writing the plan, check out The Women's Business Center Online for a step by step approach.
What you'll need to do first is determine your financial requirements. Assume that there will be a gap between the time you start your business and when you start to produce significant income. Depending on your business, that could be for as long as six months. You should try and have your expenses covered for this phase. Now, remember this is for businesses that require a high amount of overhead, for example a retail store or restaurant. Many women choose to start service or home-based businesses because the start-up costs are considerably lower than other businesses. So a person with little or no cash or credit to start can still build a business if it has low overhead.
In determining your financial needs you will need to add together all of your fixed pay-outs each month (electric, rent, car payment, etc.) and then add your flexible pay-outs (clothing, take-out, entertainment), if after subtractibg all of this fron your current income you still have enough left over to save for your business then great. More often than not, though, this is not the case. So what can you do? Well, you can start your business part time. Work on your plan nights and weekends. If you have crystal clear credit, prepare yourself to visit the bank for a loan. According to Creativeinvest.com, you will need to:
