For cash-strapped entrepreneurs, the idea of suddenly receiving a large sum of money may sound appealing. But with any investment or loan comes a very important question: how do you best spend the money when you're just getting started?
In a thread on Reddit, a user going by the name of deathbybears recently posed just such a question: "If you had $100,000 to start a business, what would you do?"
The responses included business ideas that ranged from the serious, such as a Jewish dating company, to the slightly off-topic--one user argued buying a house was the best move to ensure economic security first. But many users also pointed out that your background plays a large role in determining how best to spend the money. How much thought have you put into your business idea already? How much experience do you have in business?
Redditor jediknight, whose answer received the most upvotes, said "I would use half of that money to turn myself into a business man and half to start a business." Meanwhile, dan_jeffers says, "I would keep doing what I'm doing now. I would advertise my business a bit more, and probably hire someone to take off some of the grunt-work off of my partner and myself so we could add more value. I would advertise a bit in adwords and facebook, but would focus more on hosting meet-ups and events to get more extensive networking in person."
Before you spend any money, it's wise to analyze typical industry costs--both the obvious expenses and hidden costs, says Inc.com columnist Jared Hecht. One way to do that is to find a mentor within the industry who can give you a rundown of what to expect. That way, you'll learn upfront about costs you may not have thought about, such as licensing fees and taxes, Hecht says.
If you suddenly received $100,000 to start a business, what would you spend it on?