5 Tips for Starting a Business After Financial Setbacks

Financial setbacks are never pleasant, but they don’t have to be fatal when you’re an entrepreneur. It’s true, financial setbacks are part of becoming a successful entrepreneur. The trick is learning how to navigate those setbacks so that you can position yourself for success in the future. Kimberly J. Howard, CFP explains how you can bounce back.

1. Learn From Your Mistakes 

Most founders who’ve experienced significant financial setbacks, or even lost their business, made substantial mistakes along the way. Mistakes are part and partial of growing as an entrepreneur. Bill Gates’s first company failed, executives removed Steve Jobs from his own company, and Walt Disney lost $15,000 on a company that failed before starting Disney. Look at your mistakes, ask others for advice, and learn from them. 

2. Create a Detailed Business Plan

Having a business plan is essential before starting a business. Using other people’s money, such as angel investors, can increase your chances of success. However, angel investors often require a solid business plan before investing their money. Your business plan should include the following: 

• Marketing strategy. How will you advertise your company to potential customers?
• Competitor analysis. Be honest about your competition, but detail how you’ll beat them. 
• Financial projections. Have some precise economic forecasts for the first three years.
• Details about your business. Detail your product and service and how it’ll serve your potential customers.
• A section on HR. Discuss employee requirements and how you’ll meet those requirements. 

3. Use Free Tools to Keep Costs Low

You’ll need to utilize free tools during the startup phase to keep costs down. Fortunately, there are many free tools to choose from, including:

• Website builders. If you’re looking to keep costs minimal, look for free website builders that offer easy design with a clean look.
• Accounting software. Free accounting software is helpful, and ProfitBooks offers precisely that. 
• Word processing. If you need to edit documents for your business, you can use Google Docs. 
• Invoicing. A free online invoice generator makes it easy to create and customize invoices that you can quickly send via PDF.

4. Find Mentors

Everyone faces financial setbacks when they start a business. Some people overcome their setbacks, yet others never start a company again. Finding mentors is the best way to learn from your mistakes. 

Look for various business networking events throughout the year where you can meet business leaders. Use these events to find mentors with advice on how to overcome financial setbacks. 

5. Don’t Fear Failure

You shouldn’t be scared to fail when you start a business. Although failure is somewhat likely depending on your risk levels, fearing failure will achieve nothing. In the future, use disappointment to motivate you to succeed and switch failure from a negative into a positive.