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Financial Ministry

You Don’t Have to Give Up on Your Dream Business Because of a Financial Setback

Financial Setback

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Amy Collett

Amy Collett

Amy is a guest writer to our site. You can also learn more about her at www.bizwell.org.

According to statistics, 18.4% of new businesses in the United States fail in the first year and almost half fail by the five-year mark. If your dream business ended up a statistic, it is understandable that you may be hesitant to try again. However, a financial setback doesn’t have to be the end of your dream.

Take Sensible Risks

There is no such thing as a risk-free business venture. However, you can limit your chances of a second failure by taking sensible risks. The key is to conduct a thorough risk assessment of any business opportunity. Start by identifying the risks. Next, determine how likely the risk is to occur and what the impact would be if it did. Analyze how the risk could be managed. Compare the potential benefits of the opportunity against the potential risks to decide which risks are worth taking. 

Analyze Your Financial Position

Before you start a business, it is essential to fully understand your financial picture. Check your credit score and review your credit report. If there are any errors on your report, contact the credit bureau to get them removed. If your credit score is low or there are recent negative items on your report, such as late payments or a bankruptcy, you may have difficulty obtaining traditional financing or may pay higher interest rates.

Take stock of your assets and your potential sources of funding. How much cash do you have in savings? Do you have any assets you can sell? Can you borrow money from friends and family? If obtaining funding will be very difficult or expensive, you may want to take steps to improve your credit before you start your business. If you’re still in debt, visit MRHerrera Financial Ministry for actionable tips and strategies for eliminating debt and getting back on track.

Consider How to Structure Your Business

Running a business as a sole proprietorship puts your personal assets at risk. This isn’t ideal when you have already had a business fail. Consider organizing your new business as a limited liability company. An LLC protects your personal assets and provides you with tax advantages, reduced paperwork and more flexibility. You can avoid expensive legal fees by using a formation service or filing yourself. However, if you file yourself, be sure to research the regulations in your state.

Make Sure You Get Paid on Time

You may be strapped for cash at the start and customers who do not pay on time can cause cash flow problems. Increase your odds of getting paid on time by using an invoice system with clear payment terms. Send invoices immediately and accept a variety of payment methods.

You can make this process easier by using an invoice template to create professional invoices that match your brand. Choose from an assortment of templates and customize them with your name, brand colors, logo and other information.

Hire Freelancers

You could try to hire and maintain a staff of employees, but compared to a staffing agency, this solution can be costly and time-consuming for a new business. Work with a recruiting agency to find freelance talent worldwide. You can find marketing, design and tech specialists available for remote positions, and some recruiters can provide you with a list of candidates in as little as two days.

Starting a business after a financial setback takes some courage. However, with a good plan you can overcome your past mistakes and use what you have learned to make your new business a success. Carefully analyze risks, consider your finances, choose a business structure, set up an invoicing process, and work with a staffing agency to hire freelancers.

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