Your parents gave you some money, your neighbors said “go for it,” or you just won the local lottery. Regardless of what happened, you find yourself with $5,000 in the bank and are thinking about starting the business of your dreams.
$5,000 might not seem like a lot of money, but here are three things you can do to make that money stretch even father.
1. Establish Business Credit
While it is tempting to keep asking for money from friends and family, at some point you might overstay your welcome or simply don’t feel like being dependent on their support anymore.
However most businesses require more than $5,000, in which case you should consider establishing business credit – for example, by securing a business credit card or trade credit. There are a few key reasons why this is a good idea.
- If your business requires many upfront purchases, you might max out a credit card pretty quickly. Making these purchases on a business credit card instead of a personal one may protect you from damaging your personal credit score.
- Though personal credit cards may sometimes offer generous credit limits, businesses can often times get access to 10 to 100 times more funds than a regular consumer.
- Last but not least, establishing business credit early on will help you build a strong credit profile for your company, which will become more and more important as you enter into vendor relationships who will provide you with better payment terms if your business credit scores are strong. A good business credit score can also provide you with savings when it comes to on-going costs, such as insurance.
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2. No or Low Overhead Business Models
Another way to utilize your $5,000 in the bank is to come up with a business model that doesn’t require much overhead like office rent or staff salaries.
One example of such a business model would be freelancing. In the era of the ever-expanding Internet, more and more online companies are investing into “content marketing,” which requires them to publish strategic content assets (such as videos or blogs) that support their overall SEO and social marketing plans. As a result, freelance writing positions are created every day. The good news? You can write from home or anywhere you want, provided you own a laptop (which would cost you much less than $5,000 if you were to invest in one).
Offering virtual assistant services is another example of a low-overhead business model. Similar to writing, it only requires you to have access to the Internet and a computer from where you can organize schedules, conduct marketing research, take phone calls, and reply to emails on behalf of your clients.
In addition to investing into a computer and Internet connection, you might consider using your $5,000 to pay for referral services to secure clients, website design and hosting, and some online advertising to promote your services.
3. Create Products that Sell
The obvious way to making this work with $5,000 in the bank is to come up with a product or service that costs you very little to produce, but you can sell for a sufficient amount due to the value you are providing to your customers.
The best way to ensure that you are creating a product like this that you can sell is through market research. Identify who your target market will be, and get out and talk to people who fit within your target audience. Before introducing your idea, identify if there is a need for your offering by asking strategic questions. After introducing your idea, be sure to ask for feedback and improvements on what you’re trying to do.
As you can see, there are many different ways to use $5,000 in the bank to your advantage. The important thing, though, is to invest every single dollar wisely so that it ends up working for you as opposed to the other way around.
About the author: Nick Rojas is a business consultant and writer who lives in Los Angeles and Chicago. He has consulted small and medium-sized enterprises for over twenty years. He has contributed articles to Visual.ly, Entrepreneur, and TechCrunch. You can follow him on Twitter @NickARojas,. or you can reach him at NickAndrewRojas@gmail.com.