Before starting your small business, consider this key financial advice
If you're thinking of opening a small business, these four pieces of financial advice offer guidance for pre-planning and early start-up:
Create a business plan. Even if you're funding your business entirely on your own, it's never wise to skip the business plan, which challenges you to dive deeply into defining your product or service and your market. The act of creating a business plan can help guide you in your early decisions.
Find your capital. To get your business launched, financial author Suze Orman recommends starting with one full year of operating expenses, apart from your own retirement savings or home equity.
New business owners are actually in much better shape than they were just a few years ago during the economic recession and financial crisis, which made access to capital hard to come by for small businesses. According to Forbes, chances are that as long as you have good credit and a sound business plan, you're a good candidate for a line of credit or a loan from a bank. Utilizing equity that you may have in your home or other personal assets is also helpful to finance a new business.
Always think of the return on your investment. In your start-up years, it's nose-to-the-grindstone time–the majority of financial advisers recommend that you start your business lean. Don't waste money on the top-of-the-line equipment or lavish business trips. Always think of the return on your investment when making your purchasing decisions, says SmallBusinessComputing.com.
Prepare for hard times. Much like you try to do with your personal finances, creating a rainy day fund is a great idea for a new business to protect yourself from unforeseen emergencies. Also, make sure you are armed with tax knowledge so you don't get any unwelcome surprises–an accountant's services can be a wise investment to make sure you are covered.
Equal Housing Lender