In today’s world of business using other people’s money or OPM sounds almost like a trend but in reality it is how business is done and how most businesses get started or expand. There are a few caveats to doing this the right way, that’s why I’m here to help you navigate this process.
As per forbes.com the average micro business requires $3,000 to get started but the average house hold in America has only saved $8,863 back in 2018. Its probably less with the way the economy is right now but for the sake of this blog post I’m going to stick to these numbers. That means the average American household would have to shell out 1/3 of their savings to start a business that you don’t know if it’s going to flourish or fail.
We all know that everyone’s situation is different so we can’t say all would be struggling to start a business but most people would have a hard time pulling 3-5 grands out of a savings account to start a business.
So what do you do? Whats the next move? Do you borrow some money? Who should you borrow money from? Well let’s dive in a discuss each option.
- Business Credit Cards
This is the first option to borrowing money to build a business. I know it doesn’t sound sexy but it is still OPM “other peoples money”. The perks of getting a business credit card is the fact that you can get a credit limit that is usually three times the amount of your highest personal limit.
Let’s say you have a personal credit card of $5,000 limit you usually get a business credit limit of at least $15,000 as long you meet all the other requirements with whom you’re getting the business credit card from.
Another great feature about business credit cards is that they usually have a delay before the first payment. A good portion of business credit cards have a o% interest rate for at least 9 months after purchase. So this will give you some time to turn a profit before any interest has accrued.
Plus most business cards come with a bunch of perks like points that give you access to free or heavily discounted deals like business class flights, We work spaces at a discounted rate and great deals on hotels. If you want to check out my favorite business credit card click here.
2. Grants.
This is a great way to get some business funding without putting your credit at risk or having to pay back the money you receive which is awesome when it comes to starting a business.
There are a lot of different grants out there for business owners. You just have to do your research.
3. Business Loans.
This is a good option to fund your business but I wouldn’t try to take out a loan unless your business is proven to have some type of cash flow already. Loans can make you or break you if you don’t know what you’re doing with your business.
Also most business loans require you to have good personal credit especially when you’re just starting. Before you start putting your neck out there on the chopping block you want to make sure your credit is up to par and you have a cash flowing business already. If you want more information about getting a business loan check out the link here.
4. Investors
Lastly we have investors. Investors can be a great source of OPM or they can be source of headaches. There are plenty of different places to get investors from. Especially with the power of social media and even sites dedicated to angel investors. Either option you choose when it comes to using OPM aka other people’s money you want to make sure you have a solid product or business that will be cash flow positive fairly soon, if not already to make sure your able to pay them back.
Until next time Wealthbuilderz
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Guide To Using OPM Other People’s Money