Starting your own business is exciting, exhilarating, and downright terrifying all at the same time. The thought of finally being able to quit the rat race and be your own boss is one that proves all too tempting for many, yet that doesn’t mean that it is necessarily the right decision for you and your financial situation, at this precise time at least.
Creating a business from scratch costs money. Depending on the sort of business that you want to launch, you will need capital for premises, to order stocks or materials, to pay staff and so much more. This is daunting enough, but if you have personal debt that needs to be paid off too, you run the very real risk of not being able to survive even the first six months of going it alone.
There are steps you can take to help put yourself in a better financial situation so that you can start your new business on as strong a footing as possible.
Keep reading to discover if you can afford to start your own business this year, plus, how you can make yourself more financially stable as a potential new business owner.
Are you passionate about your startup?
Did you know that an estimated 90% of small businesses fail within their first year? Shocking but true. There are several reasons why this happens, including entering an industry you have no prior experience in and a lack of demand for the product or service you are selling. Of course, having knowledge in your chosen sector and the products you choose to sell is crucial but arguably as important as having an unwavering passion for the business you are in.
How can you expect both your employees and your customers to have faith in your business if you don’t have it yourself? During the hard times, and there will definitely be hard times in the first few years, it will be your love for your business that sees you through.
Do you have credit card debt?
Did you know that the average American’s credit card debt is $6,194? Although you can start a business with a credit card and other debts, it is strongly advisable to make sure your debt is manageable before you embark on becoming an entrepreneur.
One of the easiest ways to make your debt manageable is by looking into loans for debt consolidation. The beauty of debt consolidation is that you can take multiple, overwhelming debts and transform them into one monthly payment.
Do you have a good credit score?
If you want to start your own business, you need to have a good credit score. Anything lower than 700, and you should work on improving your score before you launch your new business.
Learn how to check your credit score for free here.
Do you have savings?
As well as looking to lower any debt you have, it can be a good idea to have enough savings to cover your business’ operating costs for a full year. This may seem like a lot, but if you want to ensure your new business is in the 10% that survives its first year, you need to have a contingency fund.
If you do not have any savings at the moment, simply put your new business plans on hold for 6 months or a year while you start putting money aside. This may be frustrating, especially if you are eager to launch your business sooner rather than later, but it could mean the difference between your company folding or flourishing.