Any budding entrepreneur will agree that setting out on a brand-new venture can be a very daunting experience. Many entrepreneurs will be forced to dip into their own personal savings in order to find the capital to start and then operate and scale their new business, and it is often quite difficult to separate personal finances from professional expenditures, although there are some ways to avoid the more common pitfalls.
One of the main reasons many new ventures fail is a founder’s poor management of his or her own personal finances. The use of credit cards to satisfy cash requirements can result in a growing level of debt that is not registered on a balance sheet, and a company’s credit history can be affected by any debt that is not immediately paid off. The general rule is not to use credit cards at all.
The right kind of insurance policy is another crucial point, and personal insurance should never be used in order to fund business expenses. Separate insurance for your venture is the right way to protect your business.