Have you been considering starting a business? If you want to be your own boss but have personal debt clouding your credit report, you may think you don’t have a chance. However, the opposite is true. While there is no magic pill to erase your personal debt, it doesn’t need to be a downer on your business endeavors. 

The Law Is on Your Side

The law is on your side in terms of personal debt and starting your own business. Simply put, your local government can’t withhold licenses or permits for a business simply because you have personal debt. Considering the average household in America has nearly $16,000 in credit card debt alone (that isn’t even including student loans and mortgages), almost nobody would start businesses if a law were in place to prevent it. However, some types of funding do look at your personal credit report, so keep this in mind as you seek loans or investors for your business project.

You Should Understand Your Budget

It’s true there are no laws preventing you from starting a business, but that doesn’t mean you should jump right in if you have a large amount of personal debt. Budgeting is still important. If you can’t afford to pay your monthly credit card bill, you probably can’t afford to spend the money you’ll need for the legal fees required when building a reputable business. Personal debt can complicate your business plans in other ways as well. If you take on a large business project with your limited personal funds and that project fails, you could find yourself even more stressed out. Furthermore, even if you create a successful business, it isn’t likely to take care of your personal financial woes in one fell swoop. After all, you’ll still need to pay any employees, vendors, or lenders, which may not leave a lot of take-home pay for yourself when you’re first starting out.

Choosing How To Start Your Business

If you decide on starting a business while you’re still in personal debt, start out small. You want to ensure you can pay you minimum personal bills each month before you start putting money into a business. It is especially important to pay down any large credit card debt if you can because doing so will make you appear more responsible to business lenders. Consider your audience as well. You don’t need to go “all in” at once. For example, if you intend to sell handcrafted jewelry, you can make a few pieces and sell them to friends and family members or on sites such as Etsy. As word of mouth spreads, you can make more pieces and put more money into your business.