September 28, 2017
Like many, I have learned a lot about myself from being a startup founder. Some things were good (and fun) to discover, but others not so much.
From day one, it was obvious that my personal financial situation would change as the result of my business. However, like many, it took a bit of time to realize exactly what this meant.
Here are six hard truths I learned about personal finance from being a startup founder.
You Have to Risk Your Own Money
There is this perception that you can start a business without putting up any of your own money. This is very rarely the case. If you want to hit the ground running, all while maintaining control of everything you do, you need to risk some of your own money. For example, this can be as simple as taking money out of a savings account to pay for yearly expenses.
Credit Card Debt is a Way of Life
While there is no denying the fact that many Americans are dealing with credit card debt, this is not always the result of starting a business.
Personally, I found that the use of a credit card was one of the best ways to get my business up and running. Sure, I did my best to avoid overspending, but this definitely came to the rescue more than once.
This doesn’t mean you should rack up as much credit card debt as you can. It simply means that you will probably have to use plastic at some point. According to CreditRepair.com, you can boost your credit score in a timely manner if you make all the right moves. For this reason, you should never let a low credit score be an excuse for not having access to a credit card.
Skimp in Your Personal Life
If you want to achieve success with your business, it may mean skimping here and there in your personal life. For example, you may have to cut back on weekly dinners with friends so that you have enough money to grow your business. It can be difficult to skimp in your personal life so you have more money for your business, but it’s a hard truth that most startup founders learn.
Make Every Dollar Count
In a perfect world, you’d never have to concern yourself with how you spend your money. You know that there would always be more when you need it. In the real world, this isn’t the way things typically work. You need to make every dollar count, however, this is easier said than done.
One of the best things you can do is create a comprehensive budget that tracks every dollar you spend, both for personal use and your business.
It’s Not Easy to Get a Loan
Just because you understand the many steps you can take to get a small business loan doesn’t actually mean it’s a simple process. You may believe that obtaining a loan is the right answer as a business owner, but that doesn’t mean that lenders will come to the same conclusion.
Don’t be surprised if you have to apply to many loans or grants.
Money Doesn’t Always Flow Right Away
Starting a business is no guarantee that you will make money. You hope this is the case, but you may find yourself waiting quite some time to earn your first dollar.
Ask yourself: Do you have enough money in the back to get by during these early days? What steps will I take if you run out of cash, but want to push forward with the business?
It’s a tough pill to swallow, but generating money on day one is easier said than done.
Read more advice on managing your money at TechCo
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