How to Earn More with Less Capital

If you ever studied Accounting, you would know that Capital refers to the investment value or start up costs for the business. The total of your Capital is equal to your assets less your liabilities. Some businesses have really high start up costs and require extensive funding to get off the ground. Others are much easier to fund because they may not require extensive initial start up costs but costs can grow as the business expands.

Save on Expenses

To get more out of your investment, you can save on expenses. Rather than renting a store front for a shop, consider setting up an online business. This way you don’t necessarily have to pay an employee and you don’t have to pay rent. You can pay as little as US$5.99 per month for hosting and can hire a freelancer to design your business web page.

This option is cheaper than renting a store front and paying utilities. If you have a garage or extra bedroom, you can store your stock there until they need to be delivered to customers. These initial savings could be reinvested into the business. This, however, may not work well for coffee or food businesses.

Budget

When your cash is limited, you need to budget. For a start up, the best budget they can have is a pessimistic one. Your sales are going to be slow and your expenses high. In some instances, you would barely or not even break even. Planning can help you see your goals on paper, tell you what needs to be improved and at the same time show you what costs needs to be minimized. If you realize that you are going to be spending more than you are making, look for alternatives that are cheaper.

Engage in Short Term Investments

One way to stretch capital is to make short term investments. These investments can be cashed out at any time and are not hard to liquefy. So put your money to work and earn yourself a little interest and dividends. You may even be surprised that there was an increase in the market value of your investment if you decide to sell them. These investments are relatively cheap and don’t require too much cash to buy them.

Change the Structure of the Business

When all else fails, change the structure of your business. By introducing a partner or even making the business a company, you are entitled to more capital. The partners will have to contribute financially or give of their time and talents and a company would introduce shareholders who would buy shares.

When you sell off your business like this, you are no longer accountable to yourself but to all investors. Investors generally expect to benefit from some return and an increase in their value. Profits have to be shared. The advantage though is that you do not sustain losses alone and you basically get more money to do more and build the business.