5 Ways Your Personal Bank Account Can Help You Succeed in Starting a Business
Starting a business is tough work. The uncertainties that come with launching a startup aren’t for the faint of heart. They say it takes money to make money, but who has money these days? If you’re just starting out, chances are you’re barely scraping by on your personal finances.
If this describes you, then I’ve got good news: You can probably use all the help you can get from your personal bank account, and with a few small adjustments, here are five helpful ways to leverage your personal bank account — also known as your savings account — to help you kickstart your business.
1. Have a Strong Personal Credit Score
Your credit score is one of the first things a lender will look at when deciding whether or not they want to do business with you. So if you can keep your financial health in good shape, it will make it much easier for you to obtain loans and lines of credit at competitive rates.
If you don’t have good credit, it may be more challenging to obtain financing at all. A strong personal credit score is an essential first step toward successfully starting and running a business.
2. Use Automated Savings Features To Help You Fund Your Business In The Early Days
Startups need capital, but many entrepreneurs don’t realize that they can often access funds from their own bank accounts before turning to outside investors or loans. For example, suppose you have an excellent personal credit score (and some collateral).
In that case, you may qualify for a business credit card with high limits that you can use for expenses and other needs related to running your business.
If you’re planning on funding your business with personal savings, consider setting up accounts such as the Sofi online banking that allows automatic transfers from your checking account into a separate savings account dedicated exclusively for funding your business.
3. Be Disciplined When It Comes to Money Management
It’s not uncommon for small businesses to be short on cash. This experience can be especially true if you’re just starting out and don’t have any income yet. That’s why it’s vital to maintain discipline when it comes to managing your personal finances while you’re in startup mode.
While it may seem like a lot of work, keeping track of your spending and income will help you better manage your finances, leading to better financial decisions in the future.
4. Be Consistent With Deposits and With Bill Payments
One of the biggest mistakes people make when they start their own businesses is not making consistent deposits or payments into their personal bank accounts at regular times each month or week.
By doing this, you will avoid having large balances in your account at any given time, which could lead you to spend more than you should and end up needing to take out loans to cover your expenses until the next deposit comes in.
5. Connect With a Financial Advisor to Help You Stay on Track
Finally, if you’re worried about your cash flow, it can be tempting to veer away from the best practices outlined above. But to succeed in starting a business, it’s crucial to take advantage of helpful financial resources online and do everything you can to stay on track with your finances.
If possible, try looking for someone with experience working with small businesses because they can help guide you through this process and help manage any concerns or questions that may arise throughout the year or when it comes time for tax season again next year.
Managing Personal Finances Is a Good Way to Learn About Managing Business Finances
To be clear, you don’t have to have a lot of money to start a business. But it does help to have enough of your own money on hand to secure your financial independence for the immediate future.
And at the very least, starting with a robust personal bank account will give you much more flexibility in your planning. The best way you can do that? Keep saving and being smart with your money every chance you get.