It’s all there – you have the determination, the skills and the business plan. You know exactly what you can offer to the world and you dream of getting started running your own business, setting your own rules and changing the world. There’s just one small issue – money. Starting up on your own requires lots of capital expenses, and even if you secure funding you’re going to need savings to support yourself while you get your business off the ground. So, how do you get on top of your personal finances in order to benefit your start-up?
Understand All Your Expenses
Not many of us truly have a handle on what money we actually need to survive. If you’re just starting out, you’ll find plenty of unexpected costs popping up, so make sure you’re well aware of the ones you do expect. Start out by finding a budget planning template, get your last few months of statements up on the screen and work out exactly what is non- negotiable (ie rent, utilities etc) and what you’re spending on top of that. Work out the minimum amount you need to meet all your basics first. That is your bare minimum. Before leaving a job to concentrate on your own business, make sure you have a minimum of four or five months worth of this amount saved to support yourself before money starts to come in.
Get Rid Of Any Debt
If you already hold any debt, it should be your first priority to pay it down before you think about launching a business. Starting up may leave you with no choice but to apply for credit and funding, so you don’t already want a lot. Not only will this make it unsustainable but it may affect your credit rating meaning you can’t access finance on the best terms. Consider a service like debtconsolidation.co to pay off your loans and get a clean slate before you launch your business.
Track All Your Spending
Good financial management means keeping an eye on your situation at all times. So make sure you get into good habits. Monitoring your daily expenditure means that you become aware of any little habits that add up, like a daily takeout coffee. Small expenses can really add up in the long run. Tools like mint.com connect to your accounts and allow you to assess everything in one place.
Look For Ways To Save
Once you have a clearer financial picture, become proactive about seeking out ways to cut costs and put the money into savings instead, to put towards your new business. From buying pre-packed lunches you could learn how to creatively use leftovers to instead. Or you could explore buying second-hand clothing rather than paying out for new stuff. There are always items that we can either save money on or cut out to make savings.
Business financing is notoriously tricky, so putting yourself in the very best financial position before you start out will be a decision that will stand you in good stead. If you manage your own financial situation well, you’re likely to be able to extend those healthy practices to your business finance too.