Tips for Starting a Small Business

Kayley has no debt except the house and eight months' worth of expenses in her emergency fund. She'd like to start a small business. How can she do that without the extra money to fund it?

QUESTION: Kayley has no debt except the house and eight months’ worth of expenses in her emergency fund. However, she doesn’t have much money left for luxuries at the end of the month. She’d like to start a small business. How can she do that without the extra money to fund it?

ANSWER: Spend only with cash; that’s one of your guides. That’s a limiting factor for most of us. Your emergency fund is a little high, so you could reallocate some of that; maybe back that down to about five months and move the difference over to an account that you use as a fund to open your business. You can then grow that fund a little bit until you have enough saved to open the business.

The big thing is to not be afraid to start small. Some of the best businesses ever start as micro-businesses or cottage industries. They start in your living room or garage. With an online thing, you have a chance to do that.

The fact that you said you would like to start slowly with an online business in addition to your full-time job, every bit of that sentence is wisdom. That’s a good way to do it, and the good news is that it doesn’t take a ton of money to do that. You’ve already got that saved.

Just move it over into a little business account. Then just watch your budget and think about what you’re going to spend and stay ahead of that. You are someone who is in control of your money anyway, so you will do a naturally good job of budgeting anyway and not overspending on this unless you just somehow flip a switch and go crazy.

No debt, use cash and don’t be afraid to grow slowly. There’s no shame in that. The best businesses do grow slowly before they grow fast. They don’t outrun their money or their human or technological resources.