Thinking about starting your own business? While you may be passionate about starting your own gig as a writer, designer, baker or photographer - or you're a new grad who is freelancing while looking for that first job - the financial aspects are just as important as the work itself. If you're considering going out on your own, here a few tips to help get your financial house in order.
#1 - Get Out of Debt
Without debt, you can pour your creative energy into building the business, rather than dealing with the stress of how you will make payments each month. Paying off credit card debt and building savings (see number three) gave me the freedom to leave a salaried job and strike out on my own.
#2 - Don't Borrow Money
Just say no to people who tell you that you need to borrow money or find investors. When I started my company more than 10 years ago, I bought a new computer and a comfy desk chair - and paid for it out of my cash flow. I know a 19-year-old who saved up the cash to buy her own small-town barber shop. It can be done.
#3 - Build Up Savings
Sock away at least six months of living and business expenses - even more if it will take longer for your business to generate sufficient revenue and cash flow. If you can start your business while you still have another job - an option I did not have - even better. Just don't quit until you are earning enough to make it.
#4 - Remember: It's a Business
Graphic design or blogging may be your passion, but being a business owner means you constantly have to tend to financial matters (marketing, invoicing, taxes, etc.). Get organized immediately, and make this a regular part of your work flow. You may even discover that, like me, you get just as excited about the financial side of things as you do the creative projects.
#5 - Get Help
You may need to consult with an accountant and attorney to set things up correctly. Don't skimp on this area. Dotting the i's and crossing the t's from the beginning will lay a solid foundation for success.
If you own your business, what financial tips would you offer?