• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
Cult Of Money

Cult Of Money

Personal finance for the crypto-curious.

  • About
  • Podcast
  • Contact
  • Cryptocurrency
      • How To Start

      • What Is Cryptocurrency And How To Invest?
      • What Is Bitcoin And How Does It Work?
      • What Is Ethereum And How Does It Work?
      • Most Common Crypto And NFT Scams (And How To Avoid Them)
      • Proof Of Work vs. Proof Of Stake vs. Proof Of History
      • How To Invest In Crypto In Your IRA Or 401k
      • Tools + Resources

      • Best Cryptocurrency Exchanges
      • Best Cryptocurrency Wallets
      • Best Crypto Savings Accounts
      • Best Tax Software For Crypto And NFT Traders
      • Reviews

      • Coinbase Review
      • Gemini Review
      • BlockFi Review
      • Binance Review
      • Hodlnaut Review
      • Ledger Wallet Review
  • DeFi
      • How To Start

      • What Is DeFi?
      • What Is Staking Your Crypto?
      • Centralized vs. Decentralized Exchange
      • Tools + Resources

      • What Is Uniswap And How Do Decentralized Exchanges Work?
      • Reviews

  • NFT
      • How To Start

      • What Is An NFT?
      • Tools + Resources

      • Most Popular Play-To-Earn Crypto Games
      • Popular Projects

      • What Are VeeFriends And Are They Worth It?
      • Bored Ape Yacht Club NFTs Are Popular (And Expensive)
      • What Is The Sandbox And How Can You Play?
      • Why Visa Bought A CryptoPunk
  • Investing
      • How To Start

      • Tools + Accounts

      • Reviews

  • Personal Finance
      • Banking

      • Best Bitcoin Rewards Checking Accounts
      • Tools + Resources

      • Tax

      • Income Tax Prep Guide
      • Bookkeeping And Accounting For Crypto And NFTs
Career

Even a Side Business May Need Funding at Some Point

By Robert Farrington • July 12, 2016

At The Cult of Money, we want to help you navigate your finances. To do this, many or all of the products featured here may be from our partners whom we receive compensation from. This doesn’t influence our evaluations or reviews. Our opinions are our own. Learn more here.Advertiser Disclosure

There are thousands of financial products and services out there, and we believe in helping you understand which is best for you, how it works, and will it actually help you achieve your financial goals. We're proud of our content and guidance, and the information we provide is objective, independent, and free.

But we do have to make money to pay our team and keep this website running! Our partners compensate us. CultOfMoney.com has an advertising relationship with some or all of the offers included on this page, which may impact how, where, and in what order products and services may appear. The Cult of Money does not include all companies or offers available in the marketplace. And our partners can never pay us to guarantee favorable reviews (or even pay for a review of their product to begin with).

For more information and a complete list of our advertising partners, please check out our full Advertising Disclosure. CultOfMoney.com strives to keep its information accurate and up to date. The information in our reviews could be different from what you find when visiting a financial institution, service provider or a specific product's website. All products and services are presented without warranty.

It’s an easy mistake to think those side businesses don’t count as a “real business” and will never need outside funding...but it’s still a mistake.Although most people hear “small business owner” and think of somebody who does that full time, many fully employed people run a small business on the side. So do retirees, stay-at-home parents and other people who don’t have another paying job, but only work on the business part time.

It’s an easy mistake to think those side businesses don’t count as a “real business” and will never need outside funding…but it’s still a mistake.

The Reasons

We get it. Why would you invest in a business that’s just a sideline? You invest for the same reasons you invest in yourself to get your regular job: to help you move from the situation you’re in to the situation you want to be in. With your side business, the same reasons apply.

Surviving a Rough Patch — businesses of all kinds hit slow periods that threaten their ability to stay open. Side businesses can often weather these patches more easily since you don’t rely on it for living expenses. Still, well-timed funding can make the rough patch go more smoothly and set you up to capitalize on better times when they arrive.

Maximizing Profits — every business encounters opportunities to improve their profits. Some examples include marketing media, large sales that reduce the cost of goods sold, and equipment to improve the efficiency of the operation. In many cases, the regular cash flow of a side business never amounts to enough extra to take advantage of these opportunities. A one-time cash influx, though, might.

Filling Orders — full time businesses often have deep pockets, access to strong credit, or a cash flow cycle that’s reliable. A side business benefits from fewer — if any — of these. This can put you in a position where you have orders to fill, but no funds to buy the parts or goods to make the order. Funding even one time can tip the cash flow scales so you’re always stocked to fill orders.

Firing Your Boss — this is the secret dream of many (maybe most) folks who run a side business. They’re looking for the day that business generates enough cash to become their full-time job.  Truth is, that rarely occurs when you’re viewing the business as a side business. Some funding and extra effort can give it the legs and scale to shift your thinking and make this secret dream and open reality.

Sometimes you can provide the needed funding out of your own coffers (an option often more available to employed people with side businesses than to full-time entrepreneurs). Sometimes you need to find the money elsewhere (see below for more about that).

The Risks

The risks associated with funding a side business are the same as those with funding a larger operation: what if the funding doesn’t lead to success. This means you’ve put extra money into a side business that wasn’t generating enough money in the first place. With full-time, brick-and-mortar businesses, this kind of thing closes doors.

With a side business, you’re likely to be able to stay open…but the lost revenue defeats the purpose of all that extra work. The key is to fund for the right reasons, at the right time, and with the focused attention one would put into a full-time operation.

The Routes

If you decide to fund your side business, the next decision is how to get the funding. There are a few common routes to get the money.

  • Self-Funding — paying for the funding out of your own pocket. This is the most common way for people to fund small businesses. Pros: simplest method, no interest payments. Cons: limited resources, puts all risks on you.
  • Investors— you can invite in friends or family members to buy a portion of the business and share in the profit. They provide the funding, and hopefully the extra profits mean your share of the pie is larger than the whole pie before the investing. Pros: no interest payments, easier than some bank loans. Cons: giving up part of the ownership.
  • Credit Cards — if all else fails, you can use a business or personal credit card to make ends meet. This can take the form of buying things direct with the card, or of using the card for other expenses while you go through personal or business cash reserves. Pros: simplicity, speed of access to funds, potential access to points or miles rewards. Cons: high interest rates, difficult to get business credit cards
  • Business Line of Credit — though large banks will rarely touch a side business with a worthwhile loan, online lenders are often eager to extend an installment loan or line of credit to a small operation that shows potential. Pros: easy application, rapid funding. Cons: medium interest rates.

All businesses reach a point where you need to invest, die, or find some kind of stasis. There’s no universal answer about what you should do with yours, but if you decide to invest a revolving line of credit can be one of the best ways to grow a side business without dipping into funds from your regular job.

Robert Farrington
Robert Farrington

Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him on the About Page, or on his personal site RobertFarrington.com.

He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.

He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.

Editorial Disclaimer: Opinions expressed here are author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, or other advertiser and have not been reviewed, approved or otherwise endorsed by any of these entities.

Comment Policy: We invite readers to respond with questions or comments. Comments may be held for moderation and are subject to approval. Comments are solely the opinions of their authors’. The responses in the comments below are not provided or commissioned by any advertiser. Responses have not been reviewed, approved or otherwise endorsed by any company. It is not anyone’s responsibility to ensure all posts and/or questions are answered.

Primary Sidebar

  • Facebook
  • Instagram
  • Pinterest
  • RSS
  • Twitter
  • YouTube

Editor’s Picks

  • 8 best cryptocurrency exchanges ranked

    8 Best Cryptocurrency Exchanges Ranked For 2023

  • crypto savings accounts

    6 Best Crypto Savings Accounts For 2023

  • Cryptocurrency Bonus Offers

    10 Best Crypto Promotional And Bonus Offers

  • best crypto wallets

    Best Crypto Wallets For 2023 (Software And Hardware Options)

  • Best Portfolio Trackers For Cryptocurrency And Stocks

    6 Best Portfolio Trackers For Cryptocurrency And Stocks

  • best tax software for crypto and NFT traders

    Best Tax Software For Crypto And NFT Traders In 2023

Popular Posts

  • proof of work vs. proof of stake vs. proof of history

    Proof Of Work vs. Proof Of Stake vs. Proof Of History

  • Why I Bought An NFT

    Why I Bought An NFT [And 5 Reasons You Should Too]

  • My Dogecoin Experiment: What I Learned From Investing $2,000 In DOGE

  • common crypto and nft scams

    Most Common Crypto And NFT Scams (And How To Avoid Them)

  • Bookkeeping and Accounting for Crypto and NFTs

    Bookkeeping And Accounting For Crypto And NFTs

  • what is a 51% attack

    What Is A 51% Attack? (And How Is That Game Over For Crypto?)

  • what is staking crypto

    What Is Staking And How Can You Make Money With Your Crypto?

  • what are veefriends

    What Are VeeFriends And Are They Worth It?

  • how to file a complaint against crypto exchanges

    How To File A Complaint Against A Crypto Exchange [Crypto Regulators]

Footer

Pages

  • Best Cryptocurrency Wallets
  • Best Cryptocurrency Exchanges

Categories

  • Cryptocurrency
  • DeFi
  • NFT
  • Personal Finance

About

  • About The Cult Of Money
  • Contact
  • How We Make Money
  • Advertise With Us
  • Facebook
  • Instagram
  • Pinterest
  • RSS
  • Twitter

Copyright © 2023 | Cult of Money | Privacy Policy | Terms of Service