Think Starting a Business Will Save Your Personal Finances? Think Again.

Did the entrepreneur light bulb go off in your head recently after you received the umpteenth bill you cannot afford to pay? You probably started thinking, “Why put up with my miserable, low-paying job when I could earn real money with my own business?” And now you spring out of bed late at night with your brain buzzing about all the cool things that would make your product or service highly coveted — and thus make you millions.

Portrayals of success stories like Daymond John (Founder of FUBU) and Sara Blakely (Founder of Spanx) are often romanticized and we do not consider the details of their strategic planning and the arduous journey that took them to the top. If you never heard, 50% of startup businesses fail within 5 years. This statistic is not intended to be a dream-killer, but rather a call to action.

Starting and operating a business successfully is not a cheap, easy or quick endeavor. Most likely, you won’t be getting rich overnight as many might believe. In fact, you probably will not earn a profit from the business for at least a year.

So, should you give up your dream now? Or better yet, should you max out your bank account and credit cards to pay for startup costs? No, neither option is recommended. Particularly for people from low-income communities, owning a successful business is a powerful way to create generational wealth, and that is critical to all our well-being.

Keep aiming for the stars, but stabilize your personal finances before, or at least simultaneously, with the startup of your business. Starting a business probably will aggravate your personal finance struggles further. However, your chances of eventually seeing those millions in your bank account can increase dramatically with informed and structured plans to address both your personal finances and the financial strategy of your business.

You can arm yourself with the following knowledge and resources so you are not left on the negative end of the statistics.

Personal Resources

Credit counseling

Online courses:

Meed app, particularly its SocialBoost feature

Business Resources

Small Business Development Centers

Small Business Administration

Business Financing:

Seek mentorship from a successful entrepreneur in your industry