A valid concern for the many who dream of starting their own businesses is the financing.
Veterans who have just gotten out find that they need to watch every single penny.
A few have some money saved up but don?t know what to do with it next.
When it comes to financing- Where does one even start?!
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It is very common to hear different schools of thought when it comes to financing.
A common one is this: Burn the ships and go all out
There are those that will tell you that when it comes to planning for financing, it is better to burn the ships and go all out. This is also known as proceeding with no set plan.
Admittedly there is some merit to this. There is something to be said about being brave and taking the risks.
The main disadvantage to this strategy though is the stress that comes with it. It CAN be stressful to have no plan whatsoever. That’s why people most often use products like CBD Oil UK to negate that stress.
Veterans that have partners and families have to think about the repercussions about going with this plan. Not only does this put stress on the veteran but it also affects his wife and the rest of his family.
For most people this isn?t exactly the recommended route to go. While in the grand scheme of things material things are not really important, it is still essential to establish a level of security though a steady cash flow, and savings
In fact having this security net can even give one more freedom. A number of studies show that worrying about money can drastically affect one?s normal decision-making process.
If you want to avoid making bad decision, it may be better to prioritize security.
The question still remains- what are the different ways that veterans can finance their business if burning the ships is not an option?
There are different kinds of businesses.
There are some businesses that can be likened to helicopters in the sense that they do not need a runway to take off.
A consulting business for example will not need much runway for it to become successful.
One can get customers in and get them to pay quickly. This method of doing business can solve little financing needs.
This method of getting money works for those who do not have to get and pay for the cost of goods in order to effectively operate.
Expert businessmen like Jimmy John Shark says that if the nature of the business is more involved in information marketing, and you are expected to create the information first before actually selling it then it will be more difficult to make money in he first 6 months of operation. While it is possible, it is very rare.
In order to figure out financing, each veteran needs to ask himself these questions:
1.? Is it possible to lower my standard of living so I can get my savings up in order to finance the business?
An average veteran living in the United States may have overhead expenses that can range from $4000 to $5000 a month.
If he wants to save up money so he can finance his business, he may want to examine his standard of living and see if there are ways to cut back.
- Can you live somewhere cheaper?
- Could you potentially move in somewhere where you will not be charged for rent?
- Can you lessen expenses for food and other needs?
- Do you need to go out less and stay in more?
- Can you give up little luxuries such as internet and cable television?
2.? How much money will I put into the business?
There is no absolute way to estimate down to the last cent how much money will go into the business but it is possible to have a realistic budget and work off that figure.
When one has a rough estimate about the business finances he can easily see if he needs to slow down or cut back even more to make ends meet.
3.? Is it possible to still keep alternative income streams flowing instead of focusing solely on the finances that the business will bring in?
Individuals who are considered experts in the field of business often say then in the early stages of the business it may not be wise to quit one?s day job.
A veteran should see if there is a way to effectively run the new business while still keep his day job. If his day job is not the main income stream while the business is still trying to get on its feet, then it should be made clear where that money will come from. A payroll management company in Malaysia can also help maximize your company’s ability to be nimble at all times.
With those out of the way, the focus can be shifted on the actual different ways to get money for the business:
a.? Bootstrapping
Bootstrapping simply means using one?s own means to finance his business. There are no outside parties involved.
Bootstrapping involves scrounging up enough cash to get the business going.
It is good for a number of reasons, the first one is that the business owner has 100% equity. Because he has put his own finances and hard work in the business and no one else?s the rewards are also just for him to enjoy.
Bootstrapping gives a business owner independence. It allows him to make choices that he feels are best for his own business without having to consult anyone else. It is also up to him what he wants to do with the business earnings- how much of that he wants to put back in the business or save.
The tradeoff with bootstrapping is that the businessman is limited to what he has saved up. He cannot grow the business beyond what he has.
b.? Debt financing
Debt financing involves taking on a loan from a bank or another business owner or even friends.
This involves borrowing an amount that you will eventually have to pay back.
Debt financing can be effective if there is an existing business that has proven to be successful but for some reason the owners want out of it.
If you are interested in the business and know that it will yield a profit it is essentially low risk and a good idea for you consult with a bank and see if they are willing to loan you the amount that you need to acquire the business.
Of course there is a risk when it comes to borrowing from a bank. If you sign for a loan that debt is sure to follow you until you pay it off or file for bankruptcy. That could be a potentially difficult situation especially if the business fails.
c.? Angel Investors or Venture Capitalists?
Another way to finance a business is to get an angel investor or venture capitalist involved.
These are individuals or even small companies who are see the potential in your business idea and are willing to put money into it in exchange for equity.
Angel investors and VCs will usually be more open to risks compared to banks who may not grant a loan if they feel unsure about a business.
d.? Crowd Funding
A more recent way to finance a business is through crowd funding. To put it simply- crowd funding is finding a way to sell them dream to others to the point that they are willing to support it.
In a crowd funding platform, the ?crowd? can give money to a business that has broken down how much it needs to operate. The money can be in exchange for the product (once it has been produced), some sort of equity or for nothing but a show of support.
While crowd funding is a good way to finance the business the key is its success is to actually market the business idea successfully so that people want to get involved.?
Obviously, there are a myriad of ways to finance a business but take a look at the examples here and figure out the best fit for you and your current situation.
If you?re a veteran, best of luck in your business endeavor and we wish you all of the success in the world!
Click here to listen to?How To Finance Your Veteran Owned Business on Stitcher
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