Starting one’s own business is a dream for many; being your own boss, having responsibility and building a career that you’ve always dreamt of are some of the perks to becoming a business owner. Of course, beginning a new business venture can bring stress, particularly financial, as well. Whether you are building a start-up business or investing in a franchise, managing a business is no small feat. It requires advanced planning, resources to begin with that will last you throughout the first few years and flexibility.
No matter how strategically you plan for your new business, you can always expect that surprises will occur. It is difficult to predict the economy, your customers’ needs and wants and how your business will pan out in general. To help you plan for those unexpected twists and turns, we have listed financial tips to use when you start planning for your business and as you run it. They may not solve every problem that arises, but they will help you better succeed and manage your financial stress.
1. Create a Budget
If you have not already begun budgeting, we recommend that you start now. Regardless of your income, budgeting better allows you to manage your money and plan for your financial goals and dreams. If you are living from one paycheck to the next, budgeting is necessary. If you are saving up for a dream vacation to Hawaii, budgeting is also necessary. With an expense as large and possibly long-lasting as beginning a business, your budget will be your companion and ease you into the financial transition that you will inevitably experience. Try making a budget without your business expenses and see what you can cut. When starting a business, your income may be unstable and less than you received previously. Before that occurs, cut as many discretionary expenses as possible, which will help create room in your budget for any new expenses.
2. Establish a Safety Net
When you begin cutting expenses, use the additional income to start a savings account. You may already have one, but any extra money that can be saved before you start your business will give you a financial safety net should any emergencies occur. If you are still employed elsewhere prior to and/or when you begin your business, decide on a set amount to contribute to your savings account for each paycheck. For example: if you save $100 from each check, you will have $2,400 for one year. Invest those funds into a high-yield savings account or Certificate and you will see that money rise even faster.
3. Fund Your Business
From business loans to crowdfunding sources, there are many ways that you can finance your new business. While you might withdraw from your personal savings to help start this new venture, the funding does not entirely have to come from your own cash flow. For small businesses especially, there are special grants, loans and other types of assistance that will provide you with the money you need to get things running. For example, MSUFCU has a Business startUP Loan that is designed specifically for entrepreneurs in the tri-county area looking to begin their business. If that doesn’t fit your needs, take a look at our other loan options; we have a diverse group of products to help you with your business.
For more resources and information on how building a business and finances go together, visit our website at msufcu.org/business. There are sure to be twists and turns as you get started, but we want to help you financially and personally succeed with your business dreams.
Deidre Davis is the Vice President of Marketing and Communications at MSU Federal Credit Union. MSUFCU’s headquarters are at 3777 West Road East Lansing, MI 48823. Contact Deidre at email@example.com or (517) 664-7877.