If you were asked, would you know how many Americans run a small business? According to Pew Research, around 10% of Americans work for themselves in a mind-boggling range of niches and sectors, and 3.4 million of them also employ others. But as many of these small business leaders will be able to tell you from bitter personal experience, it’s possible to have an amazing idea with high market demand – and yet find yourself failing at the first hurdle because of problems with your personal finances. With the Harvard Business Review reporting that the long term trend shows a drop in self-employment, here are some tips on how to avoid falling out of entrepreneurship and keeping your business afloat.
Enjoying the benefits of a float
When it comes to working for yourself, it’s likely that you’re going to have some upfront costs of one kind or other to deal with at some point on your entrepreneurship journey. As Forbes reports, corporate companies have trillions of dollars of cash reserves that they have built up for future costs, such as crucial online advertising or paying for lawyers if a contract goes wrong. While you won’t have this luxury as a one-man band, if your personal finances are healthy you’ll usually have a pool of savings you can invest in your business even at its early stages.
Health of your credit rating
Credit ratings can be a baffling topic sometimes, but it’s really quite simple once you get your head around it. By finding out what credit score range means and how to improve your own personal score, the impact on your business will be strong. That’s because a good credit rating can increase your opportunities: for example, it can give you the chance to get that crucial start-up loan or making you eligible for a business cell phone contract. And, as the Huffington Post says, it also means your interest rates may be lower – which will directly save you cash.
Priorities in order
Those who enter self-employment with strong personal finances enjoy a benefit that many entrepreneurs don’t. By having enough to cash on hand to not need to worry about how food will be kept on the table or how rent will be paid for a few months, all of their energies can go into devising strategy and hustling for the business. This focus and drive gives the personally-secure entrepreneur a competitive advantage, and is in many ways the biggest business opportunity of all.
Entrepreneurship is a dream that many people hold. While the process of self-employment is notoriously hard, the challenges of working for yourself are often outweighed by the luxuries this mode of employment offers. And by taking some time to get your personal finances in order through improving your credit rating or building up a savings float, you’ll be able to maximize your chances of success.