One of the most significant barriers to starting a business is the lack of cash. Building enough capital to purchase equipment and inventory, hire employees, and pay the requisite taxes and fees can be overwhelming, to say the least.

The good thing is that with enough discipline and financial know-how, you can save enough money to start your business fairly quickly. Below is a list of three things that you can incorporate into your business strategy to help you build up the necessary cash reserves to start your business.

Be Frugal


Your very best tool in your money-saving tool belt is your budget. “But budgeting is hard!” you might say. “I can’t seem to stay on track, so why try?” If you’ve felt this way toward a budget, you’re not alone, but you’re also wrong.

Budgeting doesn’t have to be difficult; it’s a means to set yourself up for success. By setting a budget (and sticking to it), you are saying to yourself that your money has a purpose, and you are in charge of deciding where it goes.

Money Saving Tips

(Pixabay / stevepb)

Budgets can seem frustrating at first, especially if you fall off the wagon in those first few months, but stick with it. Until you have several months of tracking your spending and comparing it to your budget, you will have to make estimated guesses where to put your money and adjust it as the need arises.  The important part is that you stay with it and diligently revisit your budget on a monthly cycle.

Cut Out the Extras

This is the part of budgeting that makes it seem like you’re being robbed of your own hard-earned money, but it’s all a matter of perspective. The classic example for this point is stopping by a coffee shop on your way to work each morning for your usual cup o’ joe. Each time you spend $3 on a cup of coffee, that’s $3 that isn’t being saved toward your start-up capital. You can apply this logic to designer clothes, swanky cars, premium video streaming services, exclusive gym memberships, and fast food restaurants. These extras typically only make up about 20% or less of your total spending, but every dollar counts when reducing business expenses, so why not save what you can?

Go Used

One surefire way to embrace frugality is to buy used high-dollar items instead of new ones. This is particularly relevant when you are in the market for a new vehicle. Even though that shiny new sports car is what you’ve always wanted, the down payment, car payment, increased auto insurance payments, and upkeep are sure to be a drain on your finances. It’s best, at least for now, to go with a less expensive, more practical, used car.

Banish Your Debt

Look at Your Loans

Start by paying off high-interest loans. Make a list of all of your debts, writing down your highest interest loans at the top and working down to lowest interest ones. Begin aggressively, paying off your loans starting with those at the top of your list. Once you pay those off, move on to the next loan until you have worked your way through all of your debt.

Pay Extra

This tip goes with the previous one: make more than the minimum payment. You could end up paying thousands of dollars in extra interest just by paying the minimum balance on your loans. Paying a little extra money each month toward your balance will help you keep more money in your pocket down the line.

Pay Yourself


As soon as you get any money – whether as a gift, a dividend check, a paycheck, or a donation from a benevolent uncle – you need to pay 10% to your savings account first. Make this a non-negotiable part of your budget. Some banks or online money management services offer automated payments to your savings account as a free service to you. You will be surprised by how quickly your cash accumulates when you pay yourself before you pay any of your other bills.

Paying your savings account first (instead of with whatever is left at the end of the month) may seem counter-intuitive, but it works. It shows that you are serious about saving money, and it can give you a much-needed confidence boost when you see that account growing each month. Ideally, you should save up five to six months’ worth of living wages and the upfront capital before you even consider opening your company doors.

Reinvest Your Profits

This last tip is to help with your long-term finances. As soon as you get that check, you may be tempted to go on a spending spree and buy that designer handbag, but resist the urge. Your best bet is to invest your profits back into your company or an investment portfolio. This practice will let you continuously make passive income so that you can spend it on more important things later.

Saving the money that you need to start your business doesn’t have to be like pulling teeth, but it does require some discipline and forward-thinking on your part. Resist the impulse to purchase the “wants” now that will prevent you from paying for the important “needs” down the line.

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