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Improving Your Personal Finances So You Can Start A Business

Do you know that personal debt is more than four times bigger than government debt in the UK? The average household has over £50,000 of debt, and it is likely that this number will continue to rise.

So if you live in the UK and you have personal debt, you’re not alone – but your debt could cause lots of problems if you want to start a business. Bad credit can ruin the possibility of a loan or financial support, and this can make it impossible for you to get the revenue that you need to get started.

Thankfully it isn’t all doom and gloom; it is entirely possible for you to improve your personal finances so that you can start a business. Here are three ways to improve your personal finances so that you can start your dream business.

Consolidate Debts

Debt is one of the biggest problems if you want to start a new business. This is because debt repayments and high interests mean that you have less financial flexibility – and this is a problem for most UK adults, as seven out of ten adults have an average debt of around £6,372. If you want to get rid of your debt quicker, you may want to consider a personal loan to consolidate your debts.

A personal loan is an easy way to consolidate all of your high interest credit debt, and as personal loans tend to have lower interest rates than credit cards it is much easier to pay the debt back. It also means that you only have to pay one debt (and one interest rate) each month, so it is much simpler than paying back multiple debts individually. This means you will have more time to focus on launching your business, rather than worrying about your debt.

Reduce Your Expenses

Starting a business can be fairly expensive, so it can be useful to reduce your expenses beforehand. It is also worth noting that most business owners don’t generate a profit for a while, so they have to rely on savings and secondary incomes. For this reason you should try to cut your personal spending by at least 25%.

Start An Emergency Fund

Every business owner should have an emergency fund before they launch a new business. This money can be used as a buffer if your business doesn’t earn money for a few months, or if the business goes under. Try to save at least six months of expenses so that you are covered for a while.

Starting a business is a challenging, fun project if your finances are in order, but it can be nearly impossible if you have debt. For this reason it is important to sort out your personal finances before launching a new business.