Personal Finance Lessons for Small Business Owners with Bad Credit
While there are many talented business owners out there who have successfully managed to grow a business with bad credit, often without the benefit of conventional small business loans, personal finance is another subject that they may not have mastered in relation to their business.
Your salary should be separate from your business’ s cash flows. A business is not a wallet, and it’s usually the case that more people depend on it’s success than the owner alone. Bad credit issues can arise for a number of reasons, as well as linger long after a problematic event, making it so that expenses unrelated to a business can pile up. Even in this case a business should not be treated like a personal rainy day fund. Even with the best of intentions, if you borrow from your business and it becomes a habit, then your main source of income becomes dangerously jeopardized.
Limit your spending by reducing unnecessary costs. How can you identify unnecessary costs? If you don’t need something in order to remain in your home, stay fed and healthy, and provide for your dependents, then technically speaking it is not necessary. In the real world, it can be difficult to find areas where you are willing to cut back. Luxury items that you consume regularly should be either done away with or replaced with cheaper brands, and habits such as taking cabs or purchasing meals from expensive restaurants can be replaced with public transportation and meals eaten at home. While reigning in what may be an already reasonably frugal lifestyle might be tough, it can be necessary to avoid taking funds out of your business that could be used to make more revenues.
Adopt better energy policies within your home and small business location. One area where bills can quickly pile up is in the energy bill. If you leave lights on, heat blasting, or air conditioning turned on, it can seriously affect your finances at the end of the day, and you will have paid for a product which you did not actually use.
Limit your use of monthly services. There are a million things that you can wind up paying for without ever remembering that you are paying for them in this day and age. Automated payments for services can have you spending more than you should without even realizing it. Examples of services that you might be renewing include subscriptions to digital marketing tools, premium media channels, or print and digital publications. Be sure to look for recurring payments in your monthly statements.
Bad credit business loan alternatives can provide working capital for business related projects. Small business owners, even those with bad credit, can grow their business operations with responsibly allocated capital. Merchant cash advance providers are able to offer business owners capital that is less reliant on credit for approvals, and more based on the strength of a business’s cash flows. This means that business owners with bad credit are also harming their chances of gaining funding if they treat their business like their piggy bank, and should promote better personal finance strategies for their personal and entrepreneurial well being.
Photo Credit to Mario Bollini on Flickr