If you’ve got the itch to start your own business, you’ve likely got a lot of questions on your mind. One that’s probably bubbling near the forefront is regarding your finances, both personally and with your potential business. Regardless of whether you’re wanting to start a business as a passion project or for purely revenue purposes, you’ve got to think about money in order for your business to survive. So to help those just taking the leap with starting their own business, here are three personal financial tips to help ease this process.
Keep Things Separate
When your business is just in its infancy, you may still be unsure if it’s actually going to work out as a legitimate company. This may cause you to skip some basic financial steps that otherwise you would have undertaken, like separating your personal finances from your professional finances. According to Deborah Fowles, a contributor to The Balance, it’s vital that you create a separate business bank account for all professional finances in order to keep a distinct line between your personal and professional funds. By doing this, you ensure that no personal debt become professional debt and that no professional gains become personal gains.
Build Up Your Emergency Fund
Building a business from the ground up can be very risky. While there aren’t many ways you can minimize this risk in the grand scheme of things, you can be prepared for the risks you’re taking by making sure your personal finances are prepared for a worst-case-scenario, meaning you have a substantial emergency fund waiting in the wings. Jennifer Woods, a contributor to Entrepreneur.com, recommends starting your emergency fund with enough to cover three to six months’ worth of expenses. Keep trying to build this fund as much as possible to help ease your mind and take some of the financial pressure off of your fledgling business.
Don’t Forget About Your Personal Financial Future
For those who have grown their business out of a passion project, it’s easy to dump all of your money into this venture in order to continue fueling your dream. However, if you lose sight of your own financial future because you’ve sacrificed it for the present, you could really end up regretting that decision down the road. According to Murray Newlands, a contributor to Inc.com, it’s vital that you continue saving for your retirement even as an early entrepreneur so that you have something ready for you when it’s time to retire. Consider speaking to a financial planner to help you decide which investments will be right for your particular situation and how to begin planning for your future while you simultaneously prepare for the present.
If you’re considering starting your own business venture in the near future but are unsure about what you should be doing financially right now to prepare for that, use the tips mentioned above to get you on the right path.