In the economic climate today, 11.3 percent of Americans are carrying some form of debt on their backs. If you’re like most entrepreneurs starting off, you have an excellent idea, fool-proof business plan, but you’re probably flying by the seat of your pants—and that’s fine! But let’s look at some steps to help keep you on track while you launch your new venture.
Know how much you owe
Your first port-of-call should be to make a list of all your owing debts, including the total amount owed and their deadlines. Working this out will allow you to see the bigger picture and help keep your expectations and timelines realistic.
Create a monthly bill payment calendar / always make a minimum bill payment
Once you’ve familiarized yourself with how much you owe, create a bill payment calendar to help you figure out which bills to pay with which paycheque. Make sure your payments align with the dates you get paid. Refer to your calendar periodically, especially as you pay bills. Update it every few months as the amount of your debt changes. Set yourself targets, cross off and adjust as you go. See…this is fun, really!
Find yourself a creditworthy business partner
Partnering with someone with a strong credit history is a smart move to help you get off the ground. This doesn’t need to be your wealthy cousin, twice removed. Partnering with someone who has limited personal resources, but has an excellent credit history can qualify for debt financing that is unavailable to you. A great place to start is to reach out to your network, find someone who has a belief in your business proposal and who has the criteria. Don’t forget, offering full transparency of your situation is greatly advised.
Partner with an investor
Pitch your business to an investor— they may have the necessary financial resources to fund the business while you pay off your debt. It is very important you do your research before you start approaching your list of potentials. They will want to see you have a set plan to pay off your debt, funding a business with a high potential it may not earn is risky for them.
Apply for a grant in your industry
Lastly, another great solution is to apply for a grant within your respective industry. Although limited and highly competitive, these can prove extremely effective in giving your business that kick to get started if you have debt. They allow you to obtain a set amount of business funding without any expectation of repayment or equity ownership, making them the closest thing to “free money” that an entrepreneur will likely ever find.
For more tips or if you’d like to speak with our certified CPAs, give us a all directly at 773-267-7500.