In part one of this article, attorneys Mawuli Davis and Robert Bozeman shared their story of how they took steps to carefully manage their finances during the initial phase of starting the Davis Bozeman Law Firm.
Here, in part two, they’ll give some advice on how they saved money.
The new entrepreneurs kept cash in their pocket by doing the following:
1. Accepting donations. “When I first got started, one of my friends from the U.S. Naval Academy bought my first copier for the office,” says Davis.
2. Limiting staff: When Davis started his firm, he had one employee who filled three roles: administrative assistant, secretary, and paralegal.
3. Bartering: Davis got discounted rent for the office space by bartering his services. “We worked out a sublease with the attorney where I would help with some of their legal work in exchange for a discount. When an opportunity presents itself, you have to be creative and not always spend money for resources,” advise Davis and Bozeman.
Are you ready to start a business? You’ll know you’re ready to make the leap if you have:
- Savings for the next 12 to 24 months. Have a personal savings account as well as a business savings account with 12 to 24 months of savings in each account. The more you save, the better.
- A good credit score. “It’s likely a [business owner] will have to sign a personal guarantee when applying for a business loan. In most cases this means the small business lender will pull a personal credit report. If the loan goes into default, the lender can pursue the company owner personally for repayment. That includes reporting the default on the owner’s personal credit report,” says John Ulzheimer, credit expert at Credit Sesame.com. According to Ulzheimer, a credit score below 700 will cause the business owner to be considered a greater risk, and there’s a chance he or she will have to pay higher rates or be declined outright.
- A backup plan in case your company fails. Many businesses don’t make it past the first five years. Have a plan in place in the event that you don’t succeed.