It is not necessary for an individual to be cash rich to kick start a business. Many successful entrepreneurs have proven their ability to start and run a business when they were neck deep in personal debt.
Many experts suggest against starting a venture when an individual lacks a strong financial backing. However, things have changed quite a lot now as it is no longer impossible to fund a business even if the owner lacks adequate funding.
Here are some of the ways through which a business can take off despite substantial personal debt obligations.
- Finding the right funding – If an individual is unable to raise cash through personal funds, then it’s wise to consider alternative lending options. Revenue-based or cash-flow lenders should be an appropriate choice for such small entrepreneurs as these lenders give more weight to the business’ revenue and personal credit score over personal debt. The positive aspect is that cash-flow or revenue based lenders are willing to lend even if there are substantial personal debt on an individual, but charge a higher rate of interest.
- Trimming down personal expenses – One of the common ways of sourcing cash into business is through saving as much as possible from personal expenses. Discarding irrelevant expenses and saving as much as possible out of personal funds can give a little extra cushion to a budding business.
- Partnering with those who have cash – Instead of taking a loan right away, a small business entrepreneur can look to partner with one who has cash. Seeking a loan from a family member could even solve the crash crunch scenario.
- Starting out slow – It is not necessary to start a business on full swing but taking baby steps could be less overwhelming, particularly when there is a burden of personal debt. Setting up social accounts and designing a website could help to establish a brand name and are relatively inexpensive tasks that can get a business going.
- Being disciplined – Running a business profitably does not give luxury to entrepreneurs to direct profits towards repaying debt. Any extra cash should be reinvested in the business as it will provide stability to the business, which in turn, will take care of personal debts.