Starting your own business is a dream for many. Being your own boss, having responsibility and building a career you’ve always dreamed of are some of the perks as a business owner. Of course, beginning a new business venture can bring stress, especially financial; whether you are building a startup business or investing into a franchise, managing a business is no small feat — it requires advanced planning, resources that last you throughout the first few years and flexibility.
No matter how strategically you plan, surprises will occur. It’s difficult to predict the economy, your evolving 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 out financial tips to use when you start planning for your business. They may not solve every problem that arises, but they’ll help you better succeed in managing your financial stress.
Create a Budget
If you have not already started budgeting, we recommend you get a head start; it allows you to manage your money and plan for your financial goals and dreams. If you are paycheck to paycheck, budgeting is critical. If you are saving up for a dream vacation to Hawaii, budgeting is critical. With an expense as large and possibly long-lasting as beginning a business, your budget will ease you into the financial transition that is inevitable.
Try making a budget without your business expenses, and see what you can cut. When starting a business, your income may be unstable; before that occurs, cut as many discretionary expenses as possible which will help create room in your budget for new and sudden expenses.
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 saved before you start your business will give you a safety net in the event of an emergency. If you are still employed elsewhere prior to and/or when you start your business, decide on a set amount to contribute to your savings account for each paycheck. If you save $100 from each check for example — and are paid biweekly — then you will have $2,400 at the end of the year. Invest those funds into a high-yield savings account or certificate and you will see that money rise even faster.
Fund Your Business
From business loans to crowdfunding sources, there are many ways you can finance your new business. While you might withdraw from your personal savings to help start this new venture, the funding doesn’t have to entirely come from your cash flow. 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, MSU Federal Credit Union has a Business startUP loan designed specifically for entrepreneurs in the tri-county area. If that doesn’t fit your needs, then take a look at our other loan options.
For more resources and information on how building a business and your 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 in making your dreams a reality.