Page 85 - The UnCaptive Agent

58 THE UNCAPTIVE AGENT

or commission. If you make that decision, you’ll always
have money in the business to deal with unplanned
contingencies, opportunities for expansion, and so on.
But it will make your first year or two as a business
owner personally more difficult.
How will you pay your personal bills? One way, which
is the preferred method, is out of personal savings. Or
perhaps you have a spouse with an income—and by
economizing and being careful, you can live for a period
on one income. Perhaps you can borrow some of this
money from family and friends. Just remember that the
bigger the hole you dig at the beginning, the harder and
longer it will take you to climb out of it. Maybe you
can work part-time for a business in the evenings or
on the weekends to earn additional money while you
get your business off the ground. While this may seem
like a lot to go through, you may need to ask yourself
how badly you want this.
There are many ways to solve this problem. What’s
important here is that you have a solution—and that you
have come up with it before you open your doors. An
excellent safety precaution you may want to consider is
setting up a line of credit with your new banker. A line of
credit is a prospective loan where the bank underwrites
you for a loan but doesn’t actually loan you the money.
The line of credit is there for you to borrow against
should you need cash for something. That something
could include a cash flow shortage. When you establish
a line of credit, the bank will charge you a fee for doing
so. The fee is usually 1 percent of the line of credit
maximum. If you borrow money on your credit line, you
will be expected to make monthly interest payments but
not necessarily monthly principal payments. Do keep
in mind that banks expect principal to be reduced, even
though it isn’t required at any particular time. If you