Be Your Own Bank: Self-Financing Tip for Businesses

It's no secret that the banking industry has changed a lot since 2008, and the entities that were the primary source of funds for any kind of business are now less available than before. In many cases, they don't seem to lend money anymore unless you have a very well rounded set of guarantees to offer them in turn. Which is, of course, quite controversial.

Other kinds of fundraising - from theĀ confirming practice to the widely discussed crowdfunding method - are often an insufficient or unreliable option for a startup, for an early business or for a company in a specific phase of change. And if your company is not even in the position to pitch itself to investors yet, then you might have no other choice than to rely on your own money.

Another option? Maybe there is one indeed and it's a good start to a self-financing practice.

Self-Financing 101: Start Acting as Your Own Bank

As counterintuitive as it is, the moment when there's shortage of money is the right one to prepare and become your own financial source of security.

In fact, there's one self-financing tip that you can introduce in your financial routine and that will ease you in on being more independent money-wise.

Allocate 2% of your monthly revenue in a fund (and forget about it)

No matter the order of magnitude of your revenue, this rule will force you to:

  1. Save every month at least the 2% of it
  2. Put this 2% in a specific fund that's not available for use
  3. Set a target amount to reach before you can actually use a partial amount of the fund

This practice performed over time will enable your startup, your company or your business to acquire a little more strength: if you commit to the 2% rule, you'll end up having cash - proportional to your numbers - that can grant you a certain degree of financial freedom.

Once your business feels more established and secure, you can upgrade the game and allocate the 5% of your monthly revenue, which will improve the substance of your practice and make it easier for you to be your own bank in case of necessity.

Leveraging interests

Allocating funds wisely can result in gaining interest upon the sums that you place in a bank account. We wouldn't suggest, at this stage, to spend a lot of time chasing after the best rewarding program, but picking a kind of deposit that earns you some extra money is definitely worth it, since it's cash that flows in effortlessly.

Category:

business gems

Time to Read:

5 min