4 Tips to start a business when you have debt

Tips to start a business when you have debt

Have you planned to start a business? If so, that’s a great idea as you are going to be your boss soon.

But you may have to face some obstacles during your entrepreneurship journey. And one of such situations is when you are having debts. You might give up your plan to start a business thinking about accumulating funds for your business when you are already having debt obligations.

But it’s possible to start your business while in the debt pool if you are smart enough.

So, here are some of the best possible tips that you can follow to start your business while in debt.

Keep tabs on your living expenses

Well, you need to remember that both starting your business and paying off debt requires money. So, you need to relook at your budget and chalk out the categories like transportation, food, gym, cable subscriptions, etc. where you can cut costs. Also, you can try implementing some of the best tips to live a frugal life to save more money.

Even if your business earns a decent revenue, keep a tab on your living expenses so that you don’t end up splurging.

Reduce your debt amount before starting a business

Perhaps the best way to start a business while in debt is to reduce your outstanding debt amounts as much as possible before starting your new venture. But reducing outstanding debt amounts is not an easy task, especially if you have unsecured debt like credit cards.

In that case, you can opt for the debt consolidation program offered by a reputable debt relief company. By doing so, you will be able to repay your multiple unsecured debts with ease and lower interest rates. Eventually, it will help you to save more funds to start your business.

Look for a low-cost business idea

According to a report by the U.S. Bureau of Labor Statistics, about 20% of U.S. small businesses fail within the first year. One of the prominent reasons behind it is not having enough funds to meet the necessary expenses.

So, you can choose a low-cost business idea that may not require a substantial amount of capital to start. In most cases, low-cost businesses require a personal computer, internet connection, and phone. For example, you can look to start a business related to SEO (Search engine optimization) consultancy, real estate agency, handmade goods, blogging, professional reviewer, etc.

So, by choosing a low-cost business idea, you will not require a huge amount of capital. Hopefully, you can start even when you have debts to pay off. But remember, to establish your business, you will have to do a lot of hard work and devote your precious time.

Opt for budget-savvy marketing strategies

Well, marketing is an integral part of any business to flourish. But when you are having debt obligations, you will have to opt for low-cost marketing strategies that fit well in your budget. Here are a few ideas that you can follow:

  • First, you will have to create a website for your business. It can help to establish your web presence and pave the way for coming up in the local search results.
  • You can open a page for your business on social media platforms like Facebook, Twitter, etc. You can post updates regarding your business and try to be responsive to any queries or comments. Also, you can tie-up with social media influencers (who don’t charge hefty amounts) to promote your brand and increase traffic to your website.
  • Start creating a blog for your business. Blogging is one of the most inexpensive ways of marketing your brand. So, try to post articles regularly and share them on your social media handles too.

What are some alternate funding options for starting your business while in debt?

Well, raising enough money is an integral part of making your business a successful one. And when you already have debt, it won’t be a good idea to opt for a business loan or a business credit card. So, here are a few funding options that you can consider to start a business while in debt.

1. Crowdfunding

In crowdfunding, you are asking for funds from a large group of people. You will have to set up a campaign and an approximate amount of money that you want to raise. Also, you will have to arrange some gifts for the people who are willing to fund your business. Once done, you can raise funds for a specific time. For example, the most popular crowdfunding platform Kickstarter makes payments to you through credit card. Once you achieve the target amount, Kickstarter deducts 5% from the total amount as its fees.

2. Angel investors

Angel investors are high net-worth business professionals who invest in promising startups in exchange for convertible debt or ownership equity. Angel investors can help you to take the first steps of establishing your business. They can provide you with a one-time investment or a regular pumping of funds into your business, especially during the early stages.

3. Government grants

You can take advantage of government grants to fund your business. You can find offices of the Small Business Administration (SBA) all over our country. They can guide you through the available resources on grants and other business-related consulting and training as well.

Also, you can visit Grants.gov to find information about federal grant programs and find the right one for you. So, the bottom line is that starting a business while in debt is not an impossible task to do.

You might think that you will start a business once you become completely debt-free. But it might take a considerable amount of time to ditch debt completely. And in the meantime, you may lose interest in starting a business or lack the energy to work on establishing your business.

So, don’t let debt extinguish your entrepreneurial fire. You can start a business when you have debt obligations! All you need is a smart approach and follow effective strategies to balance debt repayment and start your own business.

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By Valentina Wilson on February 22, 2021

Valentina Wilson is a writer and blogger who specializes in personal finance and positive change and associated with BestDebtConsolidation. She has a master’s degree in financial journalism and seven years of experience in personal banking and believes that small behavioral changes are the key to achieving financial freedom.

Follow her on Linkedin: valentinailson