Yes, you can. If you are thinking of putting your business idea into action, you don’t have to put it on hold till you pay off your student loan.
My friend Sarah started her small business, while on her student loan debt. In fact, she was able to successfully able to pay off her loan six months before the loan term period. I’ll tell you it’s not easy. If you are motivated and determined to see this through, you could be just like Sarah.
Here’s how you can start a business with your student loan debt:
Evaluate your position
Starting a business requires serious consideration. Before you start putting your idea into action, you should be evaluating your position.
Where do you stand when it comes to your finances?
You already have a student loan that you need to pay off. Review your loan payment history. Have you been paying your monthly payments on time? Will you be able to do so in the future?
If you are going to start a business, you probably would have to do without a job. This means you won’t have access to a stable income source for future payments. If so, how are going to pay off your student loan without a job?
Many small businesses owners don’t start their own business after quitting their job. They start their business, work on it for 6 or so months, and then quit when they see profits rolling this. This is a smart move if you have loans to pay off.
Create a financial plan for the next 6 months or one year. Evaluate how you are going to off your loans and cover your expenses while you are setting up your business. You should also consider adding an extra income source for a few months to raise initial capital for your business.
Financing your small business
Starting any business would require some kind of cash. With your student loan, you might have difficulty getting access to getting small business finance.
In some cases, you can also have your student loan forgiven. In that case, you are ready to start your business without any prior debts. This means you can now take out a small business loan, without a problem.
Read More: What Is Student Loan Forgiveness?
Fortunately for you, there are also other ways to finance a small business right now. You can save up some capital by working on a side job. Put all your income for your second job in a saving account until the time you are ready to finally start your own business.
You can also explore the possibility of crowdfunding. Websites like Kickstarter and Go Fund Me help you raise capital from investors. These investors could be anybody from your friends to angel investors. When you go with crowdfunding, think about what you will be offering your investors in return. Maybe one of your product, or even a percentage of your profits.
Unfortunately, if you have student loan debts to pay off, you probably won’t be able to start a small business that requires big capital. Consider starting your business online first. With an online business, you can significantly reduce costs in rent and utility expenses. You can start your online business, right at home through your laptop or PC.
Some Useful Advice
Once you have your plan in place and capital to start your business, here are some useful advice that’s going to come in handy when you start your business:
- Start Lean. Cut down your expenses as much as you can. If you can do without something in the beginning, cut it out. You don’t have to invest in the most expensive gadgets. Look for second-hand items and discounts. Ask friends and family to help out where they can. Cut down on your own personal expenses initially. Make your meals at home rather than ordering a takeaway. Use public transport. Hold off shopping, until absolutely necessary.
- Work Hard. When you have a student loan to pay off, you have no choice but to take your business seriously. You might have to put in a lot of hours in the business. Compromise on leisure time, if you are working a job with your business. Find time to relax, but look for activities that don’t drain out your energy or time. Maybe you can even find a way to combine your business with leisure.
- Network. When it comes to launching and running your business successfully, networking becomes crucial. Create your team. Network with like-minded entrepreneurs and also your target market. This could be both online and offline. You should always have a pulse on your target market to understand their needs and to cater to those needs. Networking with other entrepreneurs will help you pick up new skills and strategies.