Starting 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 business, it is always wise to get your finances in order.
Write a monthly household budget (PDF file) that accounts for your income and your household expenses. Be as conservative as possible, because it is vital that you have the resources to maintain your household expenses while your business is growing. Any strain on your personal budget will 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. A business' credit is built upon the owner's personal credit. As you have not established a business credit history, lenders and suppliers will use your personal credit history to determine your terms.
Your credit report determines how you will be perceived by potential lenders and suppliers. You should know what appears on your credit report, since you may find errors that you will want to have corrected. To get a copy of your credit report, refer to one of the three major credit bureaus:
- Equifax
P.O. Box 740241
Atlanta, GA 30374-0241
(800) 685-1111
- Experian
P.O. Box 2104
Allen, TX 75013
(888) EXPERIAN (888-397-3742)
- Trans Union
P.O. Box 1000
Chester, PA 19022
(800) 916-8800
For Additional Information:
What is Credit Scoring?
Fair Credit Reporting
Federal Trade Commission Consumer Protection
Fair Isaac FICO Scoring
