Starting a New Business After Experiencing Financial Setbacks? 4 Things You Need to Consider

If you are a prospective entrepreneur who has faced financial setbacks in the past, it is wise to be somewhat cautious when launching a new business. After all, according to Business News Daily, starting a home-based business costs an average of $2,000 to $5,000. If you are planning to open something even larger than a home-based business, startup costs can quickly skyrocket to tens of thousands of dollars. To avoid running into financial trouble in the future, Coin Counselor shares the four things that every soon-to-be entrepreneur should consider pre-launch.

Go back to school before launching your new endeavor.

Not sure if this is the right time to start your new business? Lacking confidence in your business ownership skills? Those who are hesitant to launch their new endeavor may want to consider moving their dreams forward in a different way.

No matter how much education you’ve received up to this point, consider going back to school to earn a business degree. Whether it’s an undergraduate or master’s degree, investing in your education can help you build your business skills and learn more about managing business finances. You can even opt to specialize in a specific area of study, such as marketing, business management, or management and leadership. Taking just two to four years to acquire the skills you need can ensure that your business idea is solid and help you develop a business plan that is likely to be successful.

If you choose to head back to the classroom do it without loans!

Prevent future financial setbacks by creating a solid financial plan.

When you are ready to start a new endeavor, planning is the cornerstone of long-term success. Before you start designing your website, creating a logo, or building a marketing strategy, you should create a solid financial plan.

What does a financial plan look like for a business? This part of your master business plan contains elements such as an expense budget, a cash flow statement, and a sales forecast. It is an absolute must to have if you are applying for a loan or planning to attract investors. This plan also reveals whether or not your business can succeed on the resources you’ve already allocated.

Having an honest, fact-driven look at your financial picture is one of the best ways to reduce the risk of future financial setbacks. If your business idea is proven to be viable, you will know what you can spend, what a financially successful month looks like, and how much you can pay yourself and your employees/freelancers.

Pay off as much debt as possible.

In addition to stabilizing your business financials, getting your personal finances in top shape is a wise idea. This means paying off as much debt as you possibly can before officially starting your business. Reduce balances on credit cards; student, car, and personal loans; and even your mortgage.

When your monthly payments are small (or nonexistent), you don’t have to stress as much about paying yourself. This is especially helpful during lean months where sales aren’t as good as projected. Having few monthly financial commitments will give you even more breathing room, further shrinking your chances of financial hardship.

Reduce your business-related expenses whenever possible.

Business expenses can rapidly escalate out of control if you are not intentional with every purchase you make. Before signing contracts or buying anything that isn’t completely essential, ask yourself why you want to make each purchase. Filtering your purchases through this mindset will be extremely beneficial over the long term and could potentially save you thousands.

As you work to launch your new business, remember that you are now a different person than you were when you encountered financial difficulties. By not letting these setbacks define you, you can put yourself in a better position to start a thriving company.

Coin Counselor dishes out reliable personal financial advice. From tackling debt to creating a plan for retirement, learn everything you need to know to be financially savvy.