Just because you’re in debt doesn’t mean you need to let go of your dreams of owning a business. It just means you need to take a couple of additional steps to ensure your venture has the necessary funding. You might look to grants or alternative lenders to fund the new venture. Of course, you won’t want to quit your job while you’re in debt, but beginning a new company is still possible. The key is making a plan now.
Reduce Your Personal Expenses as Much as Possible
Being an entrepreneur often means you’ll have to make personal sacrifices so your company can survive. Your finances are no exception, so you might want to reduce your personal expenses to grow the company. There are many expenses related to beginning a business, and it’s often more difficult if you have debt. Instead, try to keep your bills relatively low so that you can invest more cash in the company.
For instance, you might consider relocating from an expensive city to one where the cost of living is cheaper. And you might consider reducing subscription-based services and reducing the number of times you eat out each week. If you have student loans, you might consider refinancing them into a new payment. It’s possible to consolidate multiple balances so you can lower the amount you pay each month.
Look into Financing Options
If you are in a lot of debt, you likely don’t have the best cash flow for financing your business. There are a few options, such as credit card financing and alternative lenders. Still, every opportunity has its pros and cons, so you’ll want to do your reproach when finding the right one. It’s possible to get a loan for your new company, even if you have personal debt. Still, many lenders want you to guarantee that you will repay the loan if the new organization cannot. It might lead to more debt obligations, and it might make you feel stressed. That’s because the financing tends to be relatively expensive.
Find a Partner with Cash
While you might not have the funds to start the organization, you might work with a friend who does. You could find a friend ready to partner with you as long as they have a steady flow of cash. That way, you can get started faster. You could ask a relative or friend for interest-free loans. You’ll want to set a timeframe to pay back the funds. Just make sure that you are willing to let them have some control of the company when taking on a partner. It would be best if you had an attorney draw up the agreement and create an exit plan for that relationship. They also need to detail the financial aspects and expectations of each partner.
Another option is having your friends and family invest in the company, although you’ll want to make the process formal. You may consider drawing up a formal agreement with every investor to prevent conflicts or arguments. Just ensure that you agree on how much you have invested and the rate of return you expect.