Your Business Credit

How should I fund my side business?

Test out your business concept with money of your own and work toward building cash flow and good credit for more options later.


A side gig or small business needs some money upfront, so consider saving up a small fund to get started, and work on building great credit to qualify for a business credit card later.

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Dear Your Business Credit, 

I am looking to start a small audio production business. I have taken some classes in this area and created some demos. Currently I have a steady job, but I hope to go full-time in the business someday. I need an investor to help me fund the business, but I don’t have the right connections. What should I do to find the financing I need? – Riley

Dear Riley, 

I’m thrilled to hear that you have already gotten your feet wet in your new field. That tells me you know what you are getting into. Many people fantasize about quitting their job and starting a business that seems glamorous or creative but then discover they don’t actually like the work. You’re going in with eyes wide open.

Many people get caught up in the idea that they need to find someone else to fund their startup. Sometimes, I’ve heard entrepreneurs brag about how they only use “other people’s money” to fund their ideas, which perpetuates a myth that only chumps are using their own money to fund their businesses.

Check out all the answers from our credit card experts.

Ask Elaine a question.

See related: Should I max out my credit card to finance my startup?

Set the target amount you need

I’d recommend you ignore that line of thinking. Most of the successful entrepreneurs I’ve interviewed, and at this point, the numbers have to be in the thousands, have started out using their own funding. And often, their startup amount is very small, sometimes just a couple of hundred dollars. It’s hard to persuade anyone else to put money into a startup business if you’re not investing anything yourself.

Given that you are going into a field that requires equipment, you will probably need more than a couple of hundred dollars. I’d suggest researching the trade groups and Meetups in your area that audio professionals attend, and start showing up. Ask a few contacts what you realistically need to come up with.  That’ll give you a target amount you need to get started.

Then start socking away the money. If you need $2,400, for instance, auto-deduct $200 a month from your paycheck and put it in a bank account you don’t touch for anything else. If you find you’re impatient to get started but can’t take much money out of your pay and still keep up with your bills, try selling things you don’t use on Craigslist or Facebook Marketplace to raise the money faster.

Build credibility and good credit

There’s an important reason to build credibility and good credit. It’ll tell you if you are truly committed to going into business.

There are going to be many times in a business you have to come up with cash you don’t “have.” Maybe a client will pay you late and you owe money to your own vendors. You may sometimes have to dip into your personal funds to keep things rolling along.

If you find you just can’t bring yourself to do something like save up startup cash, that’s a good thing to know. It may be an indicator that you aren’t comfortable with putting your own money on the line, a risk you will have to take in business. Not everyone wants to do that. Knowing what’s in your own heart is important.

In the meantime, treat your personal credit like your most valuable asset. If you have personal credit card bills, pay them on time and keep the balances down. Excellent personal credit will make it easier to get a business credit card if you do decide to go into business. That’ll help you extend your cash on hand somewhat.

Good luck as you explore your options, and if you do start your business, please send me an update.

See related: 5 loan options to fund your small business, Funding a small business with credit cards

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