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Personal Preparation Personal Finances
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Regardless of whether you plan to fund your mobile car wash and detailing business yourself or apply for a small business loan, you need to spend time evaluating your personal finances.
If you plan to start your business with your own savings, you will obviously need to know how much you can afford to put into the business. Keep in mind that you will need to leave enough of your nest egg alone to cover living expenses until your break-even point.
If you don't already have one, you should take the time now to prepare a personal budget. While it can be a bit of a tedious process, working through your personal and family spending trends is key at this stage.
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In addition to identifying areas where you can cut back on personal spending, your budget will highlight exactly what you need to maintain your standard of living while you build your business.
If you plan to start your business full-time (i.e. leaving your day job cold turkey), you should plan to have between six to nine month's worth of savings to cover living expenses for this type of business.
If you plan to apply for small business loans, your personal finances are especially important as well. In addition to your business plan, banks and lending institutions will look at your net worth, savings, credit scores and credit history when evaluating you as a potential candidate for a loan. Spend the time up front to get your finances in order. Be honest with yourself at this stage. If you need more time to strengthen your financial situation, by all means take the time to do it. Nothing will destroy your small business dreams more quickly than a shaky financial foundation.
When applying for a business credit card, you will most likely be asked to cosign the application as an individual. This means that both you and your business are responsible for covering your business debts. Since your new business will not have a credit history, banks will look entirely at your personal credit history to evaluate your credit worthiness.
You absolutely need to get a business credit card to be successful in starting and running your small business. Make sure your personal credit is as strong as possible to make the application process go smoothly.
Point to note: You should always use a business credit card for your business expenses. If you use your personal credit card to pay for all of your business expenses, this could cause a really big issue in the event of a lawsuit. We will cover this in more detail shortly.
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