Watching your dreams transform into reality in the form of your new business is quite an amazing thing to experience. However, in the beginning stages, it can be a challenge to launch your business off the ground financially, depending on the capital you already have.
Of course, you may be looking for some great funding options for your business, in the form of a Small Business Loan or a Start-Up Loan. However, before you venture into borrowing investment funds, take a look at your financial situation and make sure you are set up for success in the best way possible. We have some basic tips that you may already be familiar with in regards to your personal finances, but it is important to make certain that you are integrating these principles into your business’ financial strategy.
- Create a Fantastic Budget
Don’t just create a satisfactory budget, dig deep and really detail out your plan. Managing finances can be incredibly intimidating for a new business owner, but that is why you need a plan, and your budget is just that. Not only will this budget allow you to scrutinize your monthly income and expenditure, but you can also be financially prepared to tackle unforeseen events such as unanticipated expenses or investment opportunities.
You can simultaneously manage your personal and business expenditure by following these steps:
- Work on your business expenditure: This mainly includes everything from rent, payroll, and office supplies to the interests on loan that you pay off every month.
- Work on your taxes: You must always determine the tax rate. If not, then you’re likely to find yourself in trouble with the law and of course it’s a situation we will avoid being in at all costs. It is in your best interest to either hire an accountant who knows about the constantly changing laws and rates, or get yourself well-versed with the taxes.
- Work on your revenue: Once you have figured out the taxes and operating expenses, the remaining amount is considered “net profit.” From this point, you can make a decision of giving yourself a fixed income, which can be budgeted easily.
- Enhance Your Credit Rating
Time and time again, we see references to credit ratings and credit scores. There is good reason for all that attention – your credit rating is responsible for whether or not you can receive additional funding for your personal or business finances. With a bad credit rating, you may end up paying high amounts in interest, or worst-case scenario, you will be denied access to business loans. There are a number of ways to enhance your credit rating, mainly including paying bills in a timely manner, and keeping debt as low as possible. You can also reach out to a number of agencies who specialize in raising your credit score.
- Set Up an Emergency Fund
Once you begin to develop and open your business, you will find that many unforeseen circumstances will arise and demand your immediate attention. Equipment breaks down, contracts fall through, staff become sick… you never know what will be around the bend. That is why you should always plan ahead and prepare for the unexpected. Within your business financial plan, as you would with your own personal finances, you should always have a system in place for setting aside an emergency fund. Whether you use an app to automatically withdraw a small amount from your account, or if you prefer the old fashioned method of stuffing bills in a sock – find a method that is best suited for building that emergency fund.
nnnnnnnn- Trim Down the “Debt-to-Income” Ratio
Many consider your debt-to-income ratio as a means of measuring personal finance, where you compare the debt that you already have to your overall revenue. Loan providers will determine your ability to handle and repay funding by this ratio. If you are not sure what your ratio is, you can calculate it by simply dividing the sum total of your recurring debt by the monthly revenue.
The two basic methods of trimming your debt-to-income ratio are; reducing the recurring monthly debt and raising the monthly revenue. Of course, this can also present some challenges, but taking the time to assess your spending will give you the opportunity to search for alternatives in your spending. For instance, if you are in need of an office space, you can look at renting a space instead of buying one. If you are already renting, you can look for more affordable options.
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Unsecured Finances has over 10 years in the consulting business! We specialized in educating and assisting clients on acquiring Unsecured Business Loans and Start-Up Business Specialty Loans including; Unsecured No Documentation (No-Doc Stated Income) Loans, Unsecured Business Loans, and Unsecured Start-Up Business Loans and Lines of Credit from $10,000 to $500,000 without Assets.
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