Starting your business.

Do you have money to live off of while starting and establishing your business?  You may not have any sales for the first months (maybe longer) as you establish your presence. Or, you may have sales and cash coming in, but you are expending more money than is coming in.

There are a number of avenues for having cash while starting a business. Can you get a SBA loan? Can you get a Home equity line of credit?  Can you use your personal savings?  Can you sell your boat? Your second car?  Your jewelry?  Can you tap into your 401K?  Can you work a part-time job? Can you work your full-time job, and work on your  business night and weekends?

Even before approaching investors, you will need to add value in the form of your own money or a substantial cut of sweat equity—which in and of itself takes money in the form of living expenses for you and your family—hence, the need to have a source of cash to move forward on.

Most investors don’t want to pay your salary for the 1 – 2 years of starting your company. You need to have cash to live on and then ask for money to build your company.

Most startups need enough cash to last for 24 – 36 months—this includes both cash for paying the bills at home and building the business.  For startup professional services firms, there should be at least 12 months of cash for paying the bills at home and paying for the needed equipment.