Personal Finances versus Business Finances
Starting up a business can be a tremendous strain on your personal finances.
It can take six months or more before your new venture is profitable and can
provide financial support for you and your family. Before going into business
it is always wise to get your finances in order.
Write a monthly household budget that accounts for your income and your household
expenses. Be as conservative as possible, because it is vital to your success
that you have the resources to maintain your household expenses while your business
is growing. Any strain on your personal budget will put the financial success
of your business at risk.
It is also a good idea to check your personal credit situation. Too often,
entrepreneurs think that their business credit and personal credit are separate.
A business's credit is built upon the business owner's personal credit. Because
you have not established a business credit history, lenders and suppliers will
use your personal credit history to determine your terms of credit.
Your credit report determines how you will be perceived by potential lenders
and suppliers. You should know what appears on your credit report because you
may find errors that you will want to have corrected. To get a copy of your
credit report, refer to one of the three major credit bureaus:
Equifax
Experian
Trans
Union
Source: U.S. Small Business Administration
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