Many people start their first business as a way of dealing with personal, financial issues. It is an attempt to pull themselves up by their own bootstraps. As a metaphor, it doesn’t work very well because most people don’t wear boots, and have no idea what bootstraps are. Further, if you literally tried to pull yourself up by straps on the boots you happen to be wearing, you would immediately fall down.
In reality, we seldom are able to lift ourselves by our own power without a helping hand. We need help. When we try to do it all by ourselves, we often fall down. This is what happens to businesses that don’t have the backing of third-party financing. It is expensive to start a business and we usually need a substantial loan to pull it off. If things turn sour, we need more help to turn things around. No one is pulling themselves up by their own bootstraps. If you try to go it alone, there are a number of circumstances in your personal life that can adversely affect your chances of being successful in business. Here are a few that you should prepare for in advance:
If you are just getting your business off the ground, you probably don’t have a company car to run all the errands required to keep things running smoothly. This is where your personal vehicle comes in handy. If you set up your taxes just right, you can deduct those business trips and get a nice tax return. Naturally, that calculation has to include insurance.
If you picked up a car either new or used, it lost quite a bit of value before you drove it off the lot. If you get into an accident that totals the car, your gap insurance is what pays the difference between what the car is worth and what you owe on the car. If you pay off the car early, you might ask about a gap insurance refund.
In most cases, that is not going to happen. It is like term life insurance If you survive the term, you don’t get your premiums back. But you still absolutely need that gap insurance because if your business depends on your car and the insurance company determines you only get half the amount of what you need to pay it off, your business is in big trouble. Having the right personal car insurance can help protect your business against the unexpected.
When you are doing ecommerce on your personal computer, you are taking a bigger risk than you might have imagined. Most people do not have the best security protocols for their home and mobile computer setup. When running your business from a personal system, it is not just your data at risk. It is all the data entrusted to you from your clients. There is a good chance your usernames and passwords are already being traded on the dark web from your various internet accounts. Don’t take a chance of adding your clients to that list.
Fortunately, you can get tax breaks for work equipment like computers. The safest thing you can do is purchase a separate computer and smartphone for work and use them only for work. Once you have them, lock those devices down as much as possible. As it stands, digitally mixing business with personal tech is a recipe for disaster.
Expect your first five years of being in business to be rough. It always is. You can never see everything coming. It is crucial to have an emergency source of funding you can tap to keep things going. That usually involves a flexible line of credit. Before your business is fully established, you have to rely on your personal credit worthiness. Bad credit can stop you, cold! A low credit score means high interest rate loans. That is if you can get any loans at all. Without that emergency source of financing, you are just one disaster away from closing your doors for good.
Starting a business is not the cure all for challenges in your personal life. When you start your business, be sure to sort out your auto insurance, your technology situation, and your credit score.