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Money and Business: Starting your own business…even with debt.

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This is an update from a previous article because I have gotten so many great questions from those that want to start their own business.  Many have great ideas, but want to make sure they are doing it the right way so that the business will be successful. Here are a few common yet, important questions:

1.) What should these newly successful entrepreneurs be doing to make sure that their personal finances are in order?

2.) How do you market your business so that potential consumers know you are out there?

3.) How to handle employees?

4.) Bumps/Mistakes?

5.) Can you even start a business if you are in debt?

 

So let’s get into it:

Small businesses are booming with new entrepreneurs leading the charge. After the 2007/2008 recession and housing debacle, and a still sluggish job market, many have turned side hustles into their main job or just decided to make a go of starting a new business and they are very good at it, to the tune of 52.6 billion dollars in revenue. With all of the money being generated what should a successful entrepreneur being doing with their money?

Make sure you have the right team around you. From an accountant to a contracts and trademark attorney, make sure that your house is in order. Be sure that all documents related to your business that need to be filed are filed and please, pay your taxes!

Also, before you buy any sort of congratulatory gift for yourself from a car to a new handbag, make sure that all of your personal finances are handled and that you have reinvested in your business. The best gift you can give yourself is financial peace of mind.

Next, marketing. It is so great to have a business during a time when you can do a lot of the marketing yourself. Starting a business in terms of the tools is so easy now: Your LLC, business bank account, website, business cards and social media and you are up and running!

But here are a few points: Be sure that everything you put out there is professional. Your website should be professional, free of spelling errors, all buttons should work, your contact info should be accurate and it should not look like you did it yourself. This may have to be your first investment.  Your website is your storefront; make sure it looks like you are serious about your business.

What happens if you hit a bump in the road? Tax debt, lawsuit, customer complaint… To answer this question I interviewed Tony Hudgins, a former lawyer that left the practice of law to start a restaurant and hospitality company. With his partners, they have successfully built well known establishments in Washington, DC such as The Gryphon and Policy. Three things that he said really resonated with me:

1.) Each time he and his partners opened a place it filled a need or a hole in the market in DC. 2.) Everything he learned about being a business owner was by trial and error and hard work and 3.) You can typically come back from anything if you pivot correctly.

What does this mean to you: Make sure your business or idea fulfills a need or provides a necessary service, understand that you won’t know everything going in and when you hit bumps (and you will), you can come back from them.

Debt, yes debt.  I get asked all the time, “ I have credit card debt, I have student loan debt, can I start a business right now?” The answer is yes, but be cautious. You can definitely start a business, but make sure that your bills will still be paid during the ramp up time.

This may mean staying in your day job a little longer or before you leave, making sure you have a savings account with at least 18 months of those expenses saved; making sure that you have a very real client signed to a contract with a monthly retainer or even contacting your student loan provider and arranging a forbearance.  Bottom line, yes, you can start a business if you have debt, but do it in a smart way so that 6 months down the road you are not left without a way to pay those bills.

And finally, employees. If you get large enough where you can bring on paid staff, congrats! Your business is growing and successful. But be careful here. You want your employees to be professional and vested in the business just like you are. To that end, I would avoid relatives, kids of relatives looking for a job or anyone that has a “This is just a job or I just need a job” attitude.

And the other side of that, you as the business owner need to be as serious and professional as you want your employee(s) to be.

Use these tips and your business will be thriving in no time!

 

Continue the conversation by following me on Twitter @JStreaks and for more of my tips check out my new book Thrive!…Affordably on Amazon.

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