As we approach the April 15th tax deadline, why not consider doing something different with your tax refund this year? Why not take the funds normally allocated for buying a new TV, car, home decor or vacation, and leverage a portion of the money to launch your very own business? In addition to the future tax benefits, starting a business gives you an opportunity to invest in yourself, while potentially creating financial freedom for your family.
In dealing with a number of my previous clients, I’ve learned there are two major reasons why some people never launch their dream business. The first, and most challenging, is fear. There is something about the uncertainty that causes people to remain in their shell. However, with the proper education and guidance, this obstacle can be conquered.
The second major reason some people never start a business is money. With the economy causing people to tighten up financially, finding enough discretionary income to start a business can be challenging. This is where a tax refund enters the picture. For a number of people, a tax refund is the one opportunity where they can get their hands on a lump sum of money. According to a survey shared in USA Today, the average refund in 2014 was more than $3,000 at the time the survey was conducted. Your tax refund can be used to jumpstart your business without interrupting your day-to-day household cash flow.
Let’s look at 5 ways you can use $3,000 to get your business started:
- Register Your Business – According to LegalZoom.com, the cost to register an LLC is $149+ state filing fee, while the cost to register a corporation is $149+ state filing fee. Using your tax refund to register your business helps to legally protect you in the event something happens. Establishing the proper business structure is mandatory so you protect your personal and family assets. Cost: $300+
- Purchase Marketing Materials & Advertising – Unfortunately, a number of businesses fail because no one knows about them. You can have the perfect product, office furniture, and smiling staff, but if no one knows about your products/services, you will eventually fail. Allocating a portion of your tax refund to purchase marketing material (e.g. business cards, brochures, flyers, online ads, etc.) will help to get the word out about your products or services. Business success is directly tied to bringing awareness to your desired customer. With the advancement of technology, customer acquisition has become a lot less expensive for companies. You can advertise via Facebook, Twitter and/or Google for just a few dollars per day if you’re getting started. Cost: Free – $3,000+
- Invest in Training & Development – Successful entrepreneurs and business owners understand the importance of training and development. Keeping abreast of latest trends and resources is key to giving you an edge over your competition. The options for training and development are diverse in nature, but you can choose online courses through a university, select training classes through resources like Lynda.com, or attend boot camps and in-person conference to learn about a particular area(s) of interest. Cost: Free – $3,000+
- Create a Website – One of the most underestimated areas of impact, a business website provides the first impression for people doing research on you and your company. With the ever-increasing use of search engines, people are researching businesses and making decisions on whether or not to do business with you before ever picking up the phone. Creating a website doesn’t have to break the bank, but it’s an absolute must to create one that’s effective. Companies like Wix, GoDaddyand Web.com provide low-cost alternatives to web designers. Cost: $5.99/month to $3,000+ (depending on your business need)
- Hire a Business Coach or Consultant – One of the reasons people use business coaches or consultants is because doing so can drastically reduce the learning curve. When clients register for my coaching services, they know I am someone who can assist them with brainstorming business ideas, help them register their business, help with establishing a social media presence, provide web design referrals, and more. Business coaches or consultants range in cost, but even one session can be enough to propel you forward. Cost: Free – $2,500+
I hope you can see how leveraging your tax refund can assist you with getting your business off the ground. Imagine investing in yourself this year, so you can reap the benefits and satisfaction of being a business owner for years to come.
Don’t fret if you are already a business owner, you can still leverage your tax refund to re-invest in your business. Marketing, training and development, website upgrades and coaching are areas you can regularly evaluate for your business.
If your return happens to fall below the $3,000 average, or if you need additional funding, consider a working capital loan from Kabbage. Visit www.kabbage.com for more info on the resources they have available for businesses.
Kenny Pugh is a Life & Relationship Strategist, Author of ‘Can You Do It Standing Up?’, Speaker, HLN Contributor, a sought-after speaker on finances, singleness, relationships and life. He is also the visionary behind KTP Financial, LLC (www.ktpfinancial.com). You can find more information about Kenny at www.kennypugh.com. Also, follow him on Facebook at www.kennypughfanpage.com, on Twitter @mrkennypugh and on Instagram/YouTube at Kenny Pugh.