The basic idea is that you only spend money that the business has already earned. That way you aren’t risking any personal assets.
For example: You want to start a handyman business. You do a few of jobs for friends and neighbors in your free time. You take the money from those jobs and upgrade your tools. Do a couple more jobs and set up your LLC Do a couple more jobs and set up Bond and insurance Eventually you get enough work that you quit your day job and turn this side hustle into your full time career. Grow the business enough eventually you hire assistants, etc
But the whole time, you keep your personal money separate from your business money. They way you are never risking your personal stability. Worst case scenario, the business implodes for some reason but your personal assets are fine. You still have your house, your retirement savings, etc. And you have to go back to a 8-5 job.
Obviously this method would make growing a business slower. But it would also give you a chance to gradually learn how to run the business as it grows.
I would really like to hear anyone else thoughts and perspective on this kind of business strategy.
The main thing is not getting into debt. That’s where all the risk is if the business fails. At the start you may have to use some of your savings to get up and running, successful businesses spend time and money preparing before launching. I spent about $3000 over a few months of my personal money getting my business set up which is really nothing in the grand scheme of things. Just DO NOT get a loan.