(ThyBlackMan.com) When you make the decision to break free from the corporate world and start your own business, you’ll likely use at least some of your own money to get started. While you may have some income from friends and family or early investors, you’ll probably end up footing much of the bill yourself. You’ll need to be in firm control of your personal finances so you don’t set yourself up for financial disaster. Here’s how to do it right.
Have an Emergency Fund
This is a common piece of financial advice, but it is more important for entrepreneurs than anyone else. Especially in the early days of your business, you’ll have a lot of expenses, and if you’re covering costs yourself, it can quickly become difficult to make ends meet. Aim to have at least six months of living expenses in easily accessible savings, preferably a year, including your rent or mortgage payment, utility bills, grocery costs and any other regular expenses you have. This will help keep you afloat if times get tough. 
Use Debt Wisely
While it is not wise to take on debt you cannot handle, when used strategically, a personal or business loan can give you the funding you need to continue growing your business. For example, if you have received a large purchase order for your products but can’t afford the production costs, a loan, like the ones offered at PersonalMoneyStore, can push you through until the invoice is paid. On the other hand, if your business is struggling with no end in sight and you need extra cash just to keep the lights on, a loan could set you up for disaster when the money runs out and you still can’t pay the bills. Take care to evaluate your situation to make sure you are taking on debt for the right reasons.
Don’t Expect to Take a Big Salary Right Away
It is every entrepreneur’s dream to pull in six figures a year or more, and this is definitely an admirable goal. However, unless your small business goes viral and achieves success overnight, this is unlikely to happen for at least a few years. In the early days, you might not be able to take a salary at all, as you’ll want to funnel as much money as possible back into your business to help it grow. Of course, it’s natural to want to take some money out for yourself, but be sure you are not doing it to the detriment of your burgeoning business.
Balance Attracting Customers with Improving Your Offerings
When you first start a business, it can be tempting to keep fine-tuning your products or services until they are absolutely perfect. However, it’s important to understand the difference between perfect and good enough. Of course, it is important to deliver high-quality for your customers, but it is just as important to have customers in the first place. Once your product reaches the stage where it functions as it should with minimal errors, it’s time to shift your focus to attracting new customers. Once customers start making purchases, you can use the income to fund future improvements.
Keep Your Personal Accounts Separate from Your Business Accounts
The importance of this cannot be understated. Although it may be easier to use the same bank account for everything, this is a dangerous trap to fall into. Merging your accounts will make things infinitely more complicated come tax time, and it also puts you at risk personally if something goes wrong with your business. For example, if your business goes under, creditors may come after your personal finances to cover your debts, potentially bankrupting your family.
Know When to Call It Quits
No one likes to think about the possibility of their business failing, but it is more likely than you think. According to Forbes, 8 out of 10 businesses fail within the first 18 months. It is important to be honest with yourself about your business so you know when it is time to pull the plug. Don’t let this discourage you, though; 2 out of 10 succeed, so think positively, and do everything you can to solidify yourself within that number.
Staff Writer; Craig Moore
