African-Americans are starting new businesses in record numbers. If you’re planning to launch a company in 2012, you need a financial game plan—as well as an operational one. Follow these seven economic dos and don’ts to help ensure your entrepreneurial success.—Lynnette Khalfani-Cox
1. Do plan to start with your own money, not someone else’s.
“Unless you win a business plan contest or inventors’ competition, for the most part there’s no such thing as finding a grant to start a business,” says Melinda Emerson, author of Become Your Own Boss in 12 Months: A Month-by-Month Guide to a Business That Works. “The money to start your business will come from your right or left pocket. In fact, there are three pools of money you should have before your start a business: an emergency savings account, enough budget to go from 12 to 24 months without a paycheck, and the first year of operating capital to run your business,” she says.
Thinking of buying a franchise? “There are some franchises that provide funding,” Emerson notes. “But 20 percent to 30 percent of the loan must come from your resources.”
5. Don’t feel compelled to buy everything.
Ask yourself: Do I really need to purchase equipment, furniture, computers, etc? You may be able to get by, temporarily, by bartering, or even by renting and leasing equipment. And that’s OK!
7. Don’t “bet the farm.”
Smart entrepreneurs don’t “roll the dice” and risk everything. They take risks—but they’re calculated risks. Don’t gamble everything: 100 percent of your savings, your credit, putting your home up, etc., in the hopes that you’ll create a successful business. Be willing to invest in your business of course, but not foolishly and not at the expense of everything else.
Making the leap from employee to entrepreneur is a challenging feat. But you can make your transition a lot less financially stressful and a lot more realistic by following these tips and preparing yourself for economic success.