You may have a great idea for a business, but coming up with an innovative concept is only one part of successful entrepreneurship. The other part is effective financial planning. According to a 2018 survey of more than 2,000 entrepreneurs conducted by Xero, a company that offers cloud-based account software, 65 percent of participants cited that financial issues were one of the leading reasons that their businesses failed. And while any business can experience financial hardship, you can give yourself a better chance at success and increase your likelihood of weathering those inevitable storms by laying the proper financial foundation from day one. Here are 10 steps to get started.
Start with clean books from the beginning
First and foremost, commit to keeping your personal finances and business finances separate, advises Brittany Davis, Accredited Financial Counselor (AFC®) and host of Freedom Focus podcast.
“If you’re serious about starting a small business, go ahead and open a business checking account and use it to start saving for your business expenses,” Davis told MadameNoire. “There’s nothing worse than starting your business and having to clean up your books because you’ve mixed personal finances with business finances; especially around tax time. Make things easier by starting and keeping business and personal finances separate.”