While the prospect of owning your own business and being free of an employer is an exciting prospect, being in debt may limit your options when it comes to financing. Yet, the average American has about $38,000 in debt, so fret not, as being in debt doesn’t necessarily preclude you from owning your own home-based business. In fact, the US Census Bureau reveals that over 13 million people work from home now. It will mean, however, that you’ll need to tighten your belt a little more than usual and you might need to implement a few strategies to mitigate your debt.
Lower Your Personal Expenses
Being an entrepreneur and operating your own home-based business means making certain sacrifices for the greater good. It’s not uncommon, therefore, for entrepreneurs to take more extreme measures to cut down living expenses when reducing costs and expenses.
Shavings from keeping your bills and cost of living low, will free up extra cash for your new business. Similarly, smart meal planning and cutting down on that expensive coffee will save you unthinkable amounts of money. Refinancing any loans you have or consolidating any other debts, will also help you save on monthly payments and interest.
Reduce High-Interest Debit
High-interest debt generally means credit card debt which is one of the leading causes of debt in the country. With Inc. describing that Americans currently have the highest credit card debt in history at $1.201 , entrepreneurs with poor credit history might struggle to qualify for a business loan. The best thing you can do is to have a look at the debts you currently have and analyze which ones are high-interest. Then systematically work your way down to the lowest interest debts so you can budget how much to pay off and how much to save.
Of course, while there is no hard-and-fast rule over how to balance your debt versus saving up for yourself and your business, experts recommend that you prioritize high-interest debts first. The money you’re paying in high-interest could work much better for you in a savings or retirement account. Reducing your high-interest debts will also make you less of a risk to lenders and you’ll be able to take advantage of larger business loans at lower interest.
Maybe you’re having a tough time finding a good loan with the debts you owe, or maybe you just don’t want to jump into another loan. Why not consider grants instead? If you qualify for grants you can’t turn down free money, right? Small business grants, which don’t have to be repaid, may be available to fund your company from sources like the U.S. Small Business Administration through their State Trade Expansion Programs or women’s organizations like the National Association of Women’s Business Owners.
There are also other organizations for minority-owned businesses and more. Grants can be an ideal way to fund your home-business and can also provide you with free-press and networking opportunities. Keep in mind, however, that it is a time-consuming process, and you’ll need a strong business plan to be competitive and to get approval.
exclusively written for hrnbiz.com
by Rebecca Jacobs