Find MONEY

SHORT ANSWER:

Getting started with your business is FREE.

You must figure out how much money you need, before you know if you do not have money at all.

So spend time researching your business and your idea.

Until you know how much money you need, you do not know if you do not have the money.

Get started with the money you already have.

When you’re ready to spend specific dollars on the business keep reading…

LONG ANSWER:

Find the Cash You Need to Get Started with Your Business

To start to find money for your business, recall the words of tennis legend Arthur Ashe who once said, “Start where you are. Use what you have. Do what you can.”

You probably have more money than you believe is available to get your business started…

What is Money?

Money is:

A medium of exchange
A unit of accounting
A store of value

Most of us use money as a medium of exchange – you give money, in exchange for something someone gives to you.

But behind that definition must be a level of public trust. You can literally say ‘money is worthless’ when no one will accept your currency as a medium of exchange. So that really means – money is whatever we – the functioning society using it – says it is.

Money is not mysterious or special or elusive. It is whatever people want to believe. Your belief system attached to money is going to define whether you actually have money.

For you as a Ready Entrepreneur – money is to be identified and repurposed for value. It is your medium of exchange for items you need to get your business going. And finding money is not an insurmountable obstacle to your success.

Fears about Money

Many of us were raised to view having money as unreachable. With phrases like, “I’m not made of money” or “we don’t have two quarters to rub together,” or “Do I look like a Money Bags,” and so on dominating the discussion when we asked for something only money could buy.

And for so many people creating this mystical fear around money, paralyzes them, and worse, makes people unable to see and understand how much money they really have and even more importantly – how much they’re spending.

If you learn to think differently about money – you will probably realize you have more than you thought and you’re spending more than you need to.

The average U.S. worker in 2015 earned about $48,000 a year. And the average adult life span is, between men and women is about 79 years. Assuming the average person is employed from age 22 to age 65, that’s 43 years for working. Given the average annual earnings per year over those 43 years, our worker in this scenario, earns $2,064,000 during a working life.

When you delay your entrepreneurial plans to say ‘maybe I’ll start a business if I have the money’ – what are you really saying?

I literally do not have one dollar
I have so many upcoming bills and expected payments
I have to be ready in case something bad happens
I have put away anything extra for retirement
I am not willing to repurpose my spending towards my business

A Ready Entrepreneur has to be prepared to make trade-offs. And the money trade-off is for your very specific business launch goals.

If your plan is to open a restaurant or a brick and mortar store, you may be concerned about the amount of money you need based on the business idea you have developed. You will probably need more money upfront than a person starting a business online, unless the online business involves manufacturing and delivering a product. But even if you are focused on starting a business requiring a large initial investment – you still have many tasks to do. You will have administrative, operational and marketing costs before you open your doors. You may also have costs associated with attracting investors and making presentations. In other words, saying the amount of money you want is so great, you’re not going to be able to start on your business, is a deflection. You can start with the money you have.

Where does your money go?

Money is spent on Fixed, Operating, Discretionary, and Financial expenses. Now be warned: we are going to target all of your discretionary expenses, and portions of your operating and financial expenses to find the money to start your business.

Fixed expenses – are generally those long-term regular amounts you are legally obligated to pay even if you die. Usually taxes, mortgage, and utilities – are the bills in this category. We are not going to consider your fixed expenses in this money-finding practice. We know there are ways you can reduce your costs here like refinancing your mortgage payment but there could also be penalties. Make sure you check the options closely if you decide to look at finding money from these expenses.

If you automatically place a portion of your salary into savings (which you should do), consider that payment to be a fixed expense.

Operating expenses – are what we like to call – what you have to pay to continue to function as a civilized human being. This would be food, clothing, personal care products, household products, grooming costs, healthcare, prescriptions, transportation and all the related expenses including gas, car maintenance and insurance. Also anything you have to pay to make money – expenses that are 100% related to having your job such as your annual professional license fees or uniform costs.

Here within your operating expenses – you have an opportunity to find money.

Discretionary expenses – are the things you spend money on but do not need to buy to survive – like movie tickets, tuition, games, decorations, electronics, charitable donations, gifts, and vacation travel.

Discretionary expenses are the key money-finding target for those who say they do not have any money to start their business.

Financial expenses – are what we call the cost of having money – bank account fees, transaction fees, interest payments, and credit card annual fees are all in this category.

Where to find the money?

In every expense, you may find hidden costs – that is a premium you are paying because of the process or structure you have set-up. For example, you are paying a bank account service charge because of the type of bank account you have. But you may be paying more than you need to because you’re paying for an account with features you never use.

When you look at the detail of your expenses, you are looking for extra or excessive costs that can be reduced or eliminated to free up more money.

One practice for identifying where this money could be hiding is to understand your expenses not only as a stand-alone item but as a function for something else – in other words in relation to why you bought the items – is the purchase a habit you can stop?For example, do you have dozens of packs of gum because you always buy one when you are bored and standing in the checkout line at the store? That’s what we mean by – is the purchase related to something else, some other habit you can change?

In this assessment, your purchase cannot be looked at in isolation – how you classify the purchase may depend on where and why you buy it.

Ask:

What is the purchase?
How is it purchased – habit or necessity?
Is the price in your process?

You might find – when you look at your spending from a different angle, you realize, there are a few things you can change which means there is money for your business. And that’s all we are trying to do here – find money for your business from the resources you already have.

Always remember why you are looking for this money – you need free cash to start your own business. To find the money, you have to identify your spending – so you can determine where there may be a few extra dollars for your entrepreneurial plans. And this applies even if you will need major investments down the road. You still need cash upfront to get started.

You want to be an entrepreneur who says – I have the money to open my business.

Look at your purchases in the context of why you are purchasing and whether the entire circumstance makes the purchase an operating expense that you cannot live without or a discretionary expense that can be repurposed into money for your business.

Breaking out your expenses into separate categories to determine the type of spending:

Food/Groceries – only count items required to survive
Food/Dining out/Local – discretionary if you could have cooked
Household Supplies – enough for a year or immediate needs?
Alcohol – not counted as ‘food’ when added to restaurant charges, sporting events, and other activities
Magazines – did you make the impulse buy at the checkout line?

Remember operating expenses are things you need to buy to live a decent, civilized life.

Remember the reason you want to breakout your purchases into the items you are really spending money on is to see where you can find a few extra dollars to invest in your business.

Understand the actual expenses being accumulated on every bill that you pay. Realize you may be able to save money by removing some of those items or changing the way you shop. When you clearly identify what you are spending – you often self-correct because you are focused on your bigger goal of having money for your business.

Remember these changes do not have to last forever. You want to have the money to start your business. When your hard work pays off and your business is thriving, you can go back to purchasing without thinking. With the caution of course to not let your hard work go to waste.

Start small and manageable. Instead of starting with one hundred line items, pick a category or two that you are going to look at in a week and see if you can find savings. Then move on to the next category – you don’t have to do it all at once. What you want is to embed this Ready Entrepreneur practice into your head, so you think about the line item breakout whenever you are shopping.

The Ready Entrepreneur practice for MONEY asks you to:

Look carefully at your shopping receipts and credit card bills
Account for operating, discretionary and financial expenses separately
Determine if the operating or discretionary or financial expenses were necessary
If not, isolate those funds for investment in your business

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