Starting up a business can be a tremendous strain on your personal finances. It can take six months or more before your new venture is profitable and can provide financial support for you and your family. Before going into a business, it's always wise 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 it is vital to your success that you have the resources to maintain your household expenses while your business is growing. Any strain on your personal budget can also put the financial success of your business at risk.
It is also a good idea to check your personal credit situation. Too often, entrepreneurs think that their business credit and personal credit are separate, but business credit is built upon the owner's personal credit. 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 you will be perceived by potential lenders and suppliers. You should know what appears on your credit report because you may find errors that you will want to have corrected. You can get a copy of your personal credit report from one of the three major credit bureaus: Equifax, Experian, or TransUnion.
In addition, it is very important for business owners and entrepreneurs to make sure their business credit report is accurate before they submit a loan application. To get copies of your business credit report, contact one of the business credit reporting agencies. We recommend starting with D&B eUpdate.