Starting, Funding, and Growing Your Small Business
Many people hope someday to work for themselves and build a business from the ground up. If that sounds like you, regardless of what stage you are in the process, focus on your finances to increase your chances of success. Check out the tips below for a good place to get started.
Planning Your Small Business
If you’re thinking about starting a small business, you may still be considering the big questions, such as “Should I start with a side hustle before going all-in?” “What will my business do?” and “How can I do what I love and make money?”
This is the stage where you should be doing tons of research, because the decisions you make now will guide everything that comes next.
Here are a few key questions:
- What is your vision? In other words, what are your hopes and dreams? What are you building?
- What is your mission? Your mission lays out how you will achieve your vision, including details like your target market and your unique offerings.
- How will you price your product? This strategy may change over time, but you need an initial price model that allows you to be profitable (make more money than your business spends) over time.
- How will you get the word out? Do you have a plan in place for advertising your business?
If you want to talk to an expert at this stage, try connecting with your local U.S. Small Business Administration (SBA) office.
Funding Your Small Business
Unless you’re able to completely self-finance your small business, chances are you’ll need some outside funding. You’ll have to convince people that your business is a good investment, so make sure you have a solid business plan and confident answers to the questions above. You’ll also need to explain exactly what you plan to do with any funds that you raise.
Funding your business can take many different forms, including:
- Self-funding using your savings or even a 401k (using retirement funds has serious implications, so before taking this step talk to a trusted financial professional)
- Small business grants
- Traditional loans from a financial institution like a bank or credit union (you need to pay back this money with interest)
- Venture capital from investors (investors give you money in exchange for partial ownership in the company)
- Crowdfunding from friends, family, or other people who hear about your business
For more information about your funding options, check out this guide from SBA.
Growing Your Small Business
If you’ve already got the basics figured out and are looking to expand your small business, this is a perfect time to reflect on your goals and how things are going in order to maximize the efforts you undertook to get your small business off the ground. Ask yourself:
- What are you doing well?
- What are you missing?
- Is there room for growth? More demand, new product?
- If money is tight, how will you manage your growth to ensure you don’t increase your costs before you’re sure you’ll increase your sales?
Throughout this process, make sure you’re staying on the right side of Uncle Sam and covering your liability by keeping good records and doing your research.
Saundra Davis is a nationally recognized financial coach and educator. Her experience in the U.S. Navy, where she made every money mistake possible, and her 20 years serving community-based organizations led her to the reality that the best way to help people find a path out of poverty is to help them become their own financial expert.