Is it just me or is being an entrepreneur the hottest job in the business world right now? Every profile I come across, whether it’s on Twitter or Tinder (when looking through accounts of friends), nearly everyone boasts that they’re the founder of something-or-other, or a work-from-anywhere business owner and entrepreneur. I should know, I count myself amongst the same group of people. Lucky for me, I’ve been in this boat long enough to know that it’s (quite often) not as glamorous as it seems to be.
Not only have I worked for myself for the past four years, but I was raised by two self-employed parents and have almost always worked for small business owners throughout my adult life. This is up until I quit to pursue my own dreams full-time.
Capital One Canada and Credit Canada Debt Solutions (Credit Canada) have teamed up for the 13th year in a row to bring Credit Education Week to life during Financial Literacy Month. It serves as a great reminder to think about your personal finance goals. I wanted to share some tips and advice around dealing with debt and your finances when you work for yourself.
This year’s Credit Education Week theme is #MyMoneyVision. It’s all about opening up a conversation about money and working together to take tangible steps towards a healthier financial future. If you’re dreaming of quitting your day job to work for yourself or build a business full-time, below is a list of business truths I’ve learned along the way.
You Need Money In The Bank
Before you consider taking the leap to work for yourself, plan ahead and ensure you have money saved in the bank (that isn’t your life’s savings, unless you happen to be in a situation where your basic living costs are covered like, if you still live with your parents, or can move back in). You’ll need to make sure you’ve got enough money saved to help keep you (and your business) afloat for at least the first six months, if not longer.
If your #MyMoneyVision goal is to work for yourself in 2020, start planning now to see where you can cut costs to save more and build up the funds you will need. Whether you’re planning to leave your job or not, one tip from Capital One that I especially love is to keep or create an emergency fund. This way, you’re better prepared for unexpected events that happen in that so-called thing called #life. Without an emergency fund, your best efforts to save up could be derailed by a sudden, unexpected circumstance.
You Might Need a Loan
Depending on the type of business you’re planning to start, or open, there’s a good chance you might need a loan. This is especially true if your business requires and heavily relies on big ticket items like a brick and mortar storefront, renovations, special machinery or staffing. Although I’ve never applied for a loan for my business, I’ve definitely worked for businesses that have – especially when there’s significant overhead involved. Getting a loan can be incredibly beneficial for your business to help you reach certain milestones and levels of success. It is helpful to have a solid plan for how and when you repay the loan. This goes hand-in-hand with the financial responsibility that’s required for running a business. I love that Credit Canada has a free Money Management & Budgeting Guide that you can download through their website to help you with tips for managing both your business and personal finances.
Credit Is Key (But Be Careful)
Lines of credit can have a lower interest rate than credit cards, but they too must be used responsibly. Trust me, I tap, tap, tap away daily, and know all too well how easily a seemingly endless credit limit can all of a sudden get maxed out. While having access to credit can help a small business owner manage cashflow and expenses, as an entrepreneur, you’re no-longer receiving a steady paycheque to pay it down. In fact, one of the toughest parts of being an entrepreneur is seeking payment for past due invoices. Unfortunately, this happens very often.
Before starting your own business, ensure you have access to credit, especially for emergency situations. According to a Capital One and Credit Canada survey, paying off monthly credit card debt is the top financial goal set by Canadians. Even if you aren’t able to pay down your entire balance every month, be sure to make your credit card payments on time to build habits that can help improve your credit score.
Get Help When You Need It
Staying on top of your finances (and all the responsibilities that come with it) is integral to the health of your business, and your personal wealth (and well-being). A key piece of advice is to ask for help when you need it, and don’t wait until it’s too late. The survey revealed that 86 per cent of Canadians say people who are struggling with their finances are suffering in silence.
Surround yourself with a network of people you can depend on during times of hardship to provide emotional support and seek professional help for managing your finances or paying down debt if you’re concerned or inexperienced as an entrepreneur.
To learn more about available resources and tools to help you take control of your finances, please visit the Credit Canada website.
(Story by Editor-In-Chief, Gracie Carroll)
*Please note that this post has been brought to you in partnership with Capital One Canada, all opinions are our own*