If you have always wanted to own a company, purchasing a startup might sound like an appealing way of doing so. But even if a startup won’t cost you as much as a larger organization, you’ll still want to ensure you have enough cash to do so. There are plenty of ways of funding purchases, from crowdfunding to investors. However, these are all external, and each has downsides. Sometimes, you might have to pay higher interest rates if you qualify for the loan. At other times, you might not have complete control over the organization. So, funding your purchase yourself has several benefits.
Selling Your Life Insurance Policy
Whether or not your policy has gained a cash value, you can likely still get a significant amount of money by selling it. Then you can put the proceeds toward your purchase. But before doing so, you’ll want to determine what the impact on your financial plan might be. You can look at a guide to help you see how much the policy is worth if you are considering selling it.
If you have debt, it’s a good idea to pay those off before purchasing a startup. Consider negotiating with your providers to get a better rate so you can pay them off sooner. You will likely save quite a bit on interest once you start paying off the debt, and you’ll find your monthly expenses go down significantly.
You’ll also want to bring in more money if possible. If you can’t save enough from your main job, you can pick up some side jobs. Depending on your interests and personal skills, even just putting in a few hours each week might help you save enough.
Handle the money you do have carefully. If you have not already, create a budget so you can set aside a few hundred dollars every month. To find out how long it will take to meet your goal, divide the total cost by the amount you are setting aside each month. The result is the number of months until you can afford to purchase the startup.
Consider Alternative Methods
You could consider taking out some of your retirement savings. However, it is not always the best idea to withdraw funds from these accounts too early. But if you have gone through all the other options and need to purchase the startup now, it might be the only option.
You can also try relying on credit cards, but that should only be a last-resort option. You could use credit cards to cover the difference if you need to make the purchase now. However, understand that you will need to pay off the balance at some point. If you do not do so right away, you will also accumulate interest on the balance. It is best to understand what you are getting into.
A better option might be asking family or friends for some financial assistance. They likely will not charge you interest, and they might be open to flexible options. Still, it’s best to get the agreement down on paper and each sign it.