How Starting a Business Might Affect My Personal Finances

When I started my business in the fashion industry, I knew I would need to be open about learning factors of the business world. As a new business owner, I did not know very much about owning a business. I never dreamed that starting my own business would affect my personal finances, besides making me money, but it does. It is important to understand every factor involved in creating your own business, including how your personal finances can be affected. Below I will describe how I was affected and how you can avoid making financial decisions that could be of harm to you in your personal life.
Budgeting
First, you must consider budgeting. You have to know how much money you have to invest in your new business as well as how much money you can contribute to help your business grow each month. With my business, I have to have money for clothing purchases, fabrics, marketing, etc. You need to have a list of items you will need to get started with your business as well as monthly expenses. It is best to hire an accountant to have help on the financial side of things. This way, you can avoid using any personal finances to fund your business. If you must use your own money, you may end up spending too much and get behind on your personal bills, such as mortgage or utility bills.
Using Savings
I never dreamed I would touch my savings account but soon after starting my business, I needed extra money for my store rent. I had to use savings to be able to cover this amount until I had more sales coming in. If you have a savings account, bear in mind that you may have to use it to be able to pay for certain items as you begin your business. It is smart to have a separate savings account that you can use for business needs and keep your personal savings separate.
Planning out long term goals
Take time to plan out your long term goals. Do you want to have a storefront that is successful or are you creating a product that will be sold in department stores? For me, I was creating my own clothing in which I would sell in my very own store. I wrote down my goals and considered what I needed to reach them. Once that was done, I could take time to work towards each goal. Make several long and short term goals, working towards them all but meeting the easiest goals first to gain a sense of accomplishment.
Avoid taking out loans on personal property
One of the big no-no’s when starting your own business is taking out a loan on your personal property. Never get yourself so caught up in your new business that you have to put your home up for a second mortgage or use personal property as collateral. While this is a method that many people use, you may end up with no home, no vehicle and no business.
Never start a new business without a plan of action. When you work out the details ahead of time, you will know how much money you need. This way, you can save up to start your business without putting your personal items up for sale. You want to still have a home to come home to at the end of the day. You will be putting much at risk if you decide to use your home or vehicle as collateral to start your business.
Be smart when becoming a new business owner so that you can be successful and still remain in good standing with your personal finances.

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