Should you use your personal finances to start your small business? Starting a business can be a tremendous strain on your personal finances. It takes time before your new venture turns a profit and provides financial support for you and your family. Before starting a business, it is important to get your finances in order.
To get started, write a monthly household budget that accounts for your income and your household expenses. Be as conservative as possible because maintaining your household expenses is vital to the success of your business. Any strain on your personal budget can cause a financial risk to your business.
It is also important to check your personal credit history. Because you have not established a business credit history, lenders and suppliers will use your personal credit history to determine your terms of credit.
Your credit report, which is issued by a credit bureau, determines how potential lenders and suppliers will perceive you. You should know what appears on your credit report because you may find errors to correct. You can get a copy of your personal credit report from one of the three major credit bureaus: Equifax, Experian, or TransUnion.