Starting a business can be overwhelming. There are so many things to think about. Which kind of legal structure will you go for? What kind of product will you market and how? Should you get an office right now and buy some stock or wait until you get interest from potential clients, at the risk of looking unprepared? How will you finance the whole project? It is all about taking the maximum amount of calculated risk.
Applying for business loans when you start a business might be a good idea, as it allows you to have access to a larger amount of cash, that is not your savings of a lifetime. Of course, we are hoping for the best here, but lets say all goes south and your business doesn’t work out. It will be much easier to repay small monthly instalments than to have no more emergency savings.
Because on top of being a business owner, you probably are a partner to your significant other, maybe a parent, etc. and you have other financial obligations to meet every month while your business takes off.
As part of “the responsible thing to do”, you should also look into insurance, healthcare and retirement. Yes, you are strapped for cash right now, but you want to be properly insured, should something happen to you or to your business, that might compromise things. You also want to have the proper health coverage for the same reasons. And planning for your retirement is paramount to your financial future. There are specific tax advantaged accounts for self employed people, and you should take advantage of that, since you don’t get a company match anymore. Try to contribute the maximum amount you can into these accounts, so you have a safety net for the future. As an entrepreneur, you are probably not too much into being safe and minimizing risk, but again, thing about the loved ones around you, and how you want them to be safe in the future.
Starting a business is stressful enough so you don’t want to have to worry about unexpected bumps on the road. You also should, if you can afford it, free up as much of your time as possible to dedicate to your business. By that, I mean hire an accountant, or an online ads specialist, if that is not your thing, so you can focus on what you do best, for example sales. If someone else can do the menial tasks without compromising your business, you should let them, and do what you are good at. That is a case of 80-20 prioritizing. You focus 80% of your efforts on the 20% of clients that make you the most money, or on the tasks that will bring the most revenue, and let the rest in the hands of other capable people. By providing a better service, your clients will be repeat customers or spread the word, and if you lose the other 20%, that won’t matter so much, as you will gain better quality and better paying customers.