A pandemic has shown how economic downturns can lead to financial distress for the new ventures. New ventures need to think out of the box to survive in these non-favorable conditions.
Ventures need to preserve their liquidity. The need for business seed capital and structuring is possible through bootstrapping.
There is a positive association between bootstrap financing and self-employment experience. Knowledge for inexperienced entrepreneurs can help prepare them to use bootstrapping methods.
Mortgage as a Source of Seed Fund
Debt financing to fund the business is an option to consider and can help you with your seed capital. If you have bought a car on loan, then you have already availed of debt financing.
A mortgage loan for business works the same way as for houses. You can contact mortgage brokers to find the best mortgage option for you. When you decide you need a loan, you can click here or head to the bank.
Since your business is new, the bank will check your credit report. While applying, keep all business records in order. If your loan gets approval from the bank, it will set up payment terms and interest rates.
Advantages of Mortgage loans for business:
- The lending bank or institution can not give directives to run your company
- Once the loan closes, the borrower lender relationship ends.
- The interest on mortgage loans is tax-deductible
- You can include the monthly payments in your business forecasting model
The main disadvantage of Mortgage loans is the need for a fixed cash inflow to pay the debt.
However, the approval of the loan depends to a great extent on your credit report.
Talent Acquisition through Equity
A startup involves job roles with many responsibilities and creates an entity from scratch.
The people you hire should be open to taking up roles that are beyond their set domain. They should understand that their failure means startup failure and not expect money upfront.
Managing a mix of the new and experienced talent pools is difficult and expensive.
Connecting the team in unison towards a common goal is crucial for the startup to be successful. There are various ways to gratify and motivate the employees. Equity is your best option for assuring commitment and focus.
Sweat equity honors their commitment and contribution to the company.
Or, it is a good idea to start as a part-time business. It will allow you to look for a partner with different skills that you do not have and team up with them. Your new partner can handle things in your absence, giving you time to manage your day job. It cuts down human resource costs significantly.
Beg, Borrow, Defer
The suppliers for many products will directly ship your product to cut your inventory costs. Do not be afraid to ask for a retainer for services to offset your costs.
Although business terms are negotiable, new entrepreneurs with a high cash flow do not bother to ask.
If the solution you provide has value, many vendors and existing partners will understand your challenges. You may also be able to defer payouts to vendors. There is no harm in asking. You should practice your sales skills beforehand.
For doing small jobs like moving your furniture, avoid hiring paid personnel. Reach out to your friends and family, seek their help.
New Beginning From Garage
Many companies have started their operations from the garage. World’s Top companies like Amazon, Microsoft, Disney, Google, HP, Disney, Dell, Apple, .etc. have all started their journey from the garage.
It helps you save the commercial rent money, which you can use for business growth.
This is the age of smartphones, video meetings, and high-speed internet. Pandemic has shown that using these techs, remote teams can be very productive. Office space costs involve the need for equipment, machines, and staff travel expenses.
A well-designed website can showcase it all for you.
Barter is Better
When you start the business, it is wise to save the startup seed capital as much as possible. Swapping products and services that you need with someone else’s needs can be a means to do so. But, ensure that the quality of the product in exchange is like the one you put on offer.
So you have to be agile and creative to start your venture and leave no stone unturned to sustain in the market and become successful. An economic slowdown tastes your mantle and refines your idea. It gives you a chance to taste your business plan and concept.
All progress begins with a brave decision.