Starting on a shoestring

shoe*string: noun – 1. shoelace 2. a small sum of money; capital that is barely adequate.

People are talking, dreaming and some are even doing it, despite (or perhaps because of) difficult times: they are starting their own businesses. The survival rate for small businesses is about 70 percent after the first 2 years, but drops to just over 40 percent after 4 years, according to the Small Business Administration. That’s a better rate than the previously-held belief that 50 percent failed in the first year and 95 percent fail within five years. Regardless of where the numbers of succcess versus failure fall, insufficient capital is one of the top three reasons small business fail, according to the SBA.

Starting one’s own business has long held some very romantic, Horatio Alger-esque notions: dump the corporate world and parlay that little bankroll into a million-dollar deal, or at least enough security and peace of mind to turn one’s back on nine-to-five society. Start humble, work a little, be a lot lucky, get discovered…you know the rest of this Hollywood script.

Now for the reality of saving up that little bankroll: it’s a combination of nickels, dimes, pennies and work:

*  I save my change every day. It goes into change jars, and goes to my savings account when the jars are full.

* I pay myself $2 per load of laundry and save that money.

* Any money I save from coupons, rebates, sales, BOGOs (Buy One, Get One) is saved. Darn right I clip coupons. It takes about an hour a week to clip, sort and go through the week’s ads to make up grocery lists. Average savings: about $70.00 per week.

* “Street Money” (literally found on the street) is saved.

* Tax refunds and stimulus checks: saved.

* My savings account for My Next Life is a one-way street, meaning I have no debit card or checking account for it. Money goes in automatically and stays there. 

* I like store loyalty cards, and I use them. But compare and shop the local and online ads. There are dozens of deal sites on the Internet. Some of them will even send you alerts if you sign up for them.

* I believe in multiple streams of income. Not everyone can handle part time work on a regular basis. Irregular part time income adds up, too. Look at your abilities and skills and let your friends and family know that you are available. Print your own cards, signs and flyers to advertise. Consider bartering your work.

* I believe in rethinking and retraining: rethink what stuff is important to you, and question every purchase. Retraining means expanding your job skills, or improving the ones you have, in a cost-effective way. Try a community college or adult ed instead of expensive four-year college or technical specialty school. Check out classes given by local merchants: I took a 12-week cake decorating class at a bakery for a fraction of what it would have cost at a local cooking school.

This list is just an outline of what I’ve been doing to build a financial bridge that will be stronger than a shoestring.  In my next post, I will introduce you to a hero of mine; someone who has lived her last few years dangling on the end of the shoestring – and used it to climb right back up to the top.

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