Over the next several posts, I’ll discuss some of the key questions entrepreneurs should ask before deciding to start a business. The first one is how much cash do you have to invest in your new business?
You do realize that you need some of your own cash, right? This is a great time to take a personal financial inventory. How much do you have in your checking and savings accounts? How much do you have in your investment account? What about home equity and retirement savings? Where is your money, can you get your hands on it and in what time frame? Make a list of these sources of funds for your reference.
Does your spouse consent to your investing your savings into a new venture? This would be a good time to discuss it.
Do you have the ability to personally borrow funds to invest in your business? Maybe you have a family member that wants to support your new business. What about assets you can use as collateral for borrowing? Maybe your car is paid off and you can use it for collateral at the bank. What about home equity or credit cards? Be careful with the use of these borrowed funds, but in a pinch, they might be the source you need to get launched.
So before you get started too far along in this new venture, figure out how much cash you can invest into your own business. Make a list of possible sources of personal funds. Whether it’s from your own cash in checking accounts or cash borrowed from a home equity loan, make a list of all these sources and figure out what you have available. It’s not time yet to decide how much you will invest, but how much you can invest.
If you need a worksheet template for your financial figuring, go to my book website,www.BusinessStartup101.com. Look in the templates page and download the sources of cash worksheet to use as a guide. And if you haven't yet bought my book, Business Start-up 101: From Great Idea to Profit...Quick! then now would be a great time to do so. It's available from my book website or directly from Amazon.
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