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In the 2015 David O’Russell film Joy, Jennifer Lawrence portrays real life entrepreneur Joy Mangano, inventor of the self-wringing Miracle Mop. As a divorced mother of two who lives with her mother and grandmother, Mangano knows that life has more to offer her.
When the character stumbles upon the idea for what would later become the Miracle Mop, she finds herself in need of money. She borrows money from her father’s girlfriend which she uses to manufacture and assemble parts for her mop. Without revealing too much of the film, it’s enough to say that Mangano went on to great success.
There are undoubtedly many people like Joy Mangano in the world, individuals with stellar ideas and entrepreneurial hearts. But like Mangano, they don’t have the money to get their ideas off the ground. These people also might not have connections to family or friends who can loan them money. Without any other options, some people simply give up on their dreams. Others will turn to traditional money lenders like banks.
However, for some of these individuals, it can be difficult to get a bank loan to start a new business without a proven track record. Traditional lenders rely on more than ideas when lending money. Convincing individuals to invest in you and your startup is also not easy.
Being turned down during your first attempts for business funding doesn’t have to be the end of your efforts. An alternative that may work for your business would be to use a personal loan to launch your startup.
The APR (Annual Percentage Rate) may be higher with a personal loan than some other business funding products. Because of this, you should exhaust all your other options first before choosing a personal loan.
Once you have your loan in hand, it’s time to invest in your business. Handling business finances can be different from handling personal finances. Below are some tips for managing your business’ finances:
●Separate your business finances from your personal finances. Start by opening a bank account that is dedicated to the business. Get a credit card that is only used for business expenses. It may seem very easy to keep everything straight when your business is small, but as it grows, it becomes harder and harder.
●Study your business. Know where the money is coming from and where it’s going. Examine each bill and each expense. Knowing your business inside and out will help you make better decisions and keep it healthy, both in the short term and in the long run.
●Document everything. Keep every receipt, every bill, and every scrap of paper because it may come in handy one day. You will also need to figure out a filing system that works well for you.
●Make a budget and stick to it. As a new business owner, you should get used to saying “That’s not in the budget.” Even if you have never had a personal budget, with a new business, you need one, especially if you’re taking out loans for your startup. Set up specific budget items for specific expenses. Then use only the allotted money for each item. If you set an advertising budget, don’t use that money for anything else, except advertising.
●Pay yourself last. Once your business is turning a good profit, it may be tempting to indulge in some personal splurges. But with a young business, most of your money will probably be more useful being reinvested into the business. As it becomes more and more self-sustaining, then you can pay yourself more.
●Hire an accountant. It may seem like an unnecessary expense, but having a financial professional to advise you will more than pay for itself (especially when tax time rolls around). You may not need to hire an accountant immediately, but soon enough, you’ll be wishing for someone with financial expertise to help you sort everything out.
If you have a great idea like Joy Mangano, don’t let money stop you from making it happen. You too can accomplish your goals, start a business or launch a new product with the help of a loan.
In the world of lending money, online lending has emerged as a great alternative to traditional small business financing.
If you have been having trouble finding funding for your small business, consider switching gears. We invite you to use LoanStart to request a personal loan for up to $35,000. If funded, you should be able to use that money toward your startup. Please let us know if you have any questions about the process. If you’re ready to get started right now, then head on over to our online request form.