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How to stop business failure from impacting your personal finances

How to stop business failure from impacting your personal finances

These are some actions you can take to prevent your business from impacting your personal finances.

When you put your heart and soul into running your business, a downturn can hit you hard, especially if it affects your personal finances. After all, it’s likely you started your business to give yourself more freedom, not less.

Here are some ways to get back on track.

1. Seek advice

First, try to give yourself some breathing space. When you’re under pressure, even small decisions can feel huge. A financial counsellor can help you to create an action plan and give you objective advice. The Australian Securities and Investment Commission (ASIC) has a list of places on its MoneySmart website where you can access free financial counselling. You might want to consider talking to your accountant or financial planner.

2. Separate your finances

If you haven’t kept your business and personal finance separate, now is a good time to start. If your business has debts you’re repaying with personal funds, contact your creditors. In many cases, financial providers have a responsibility to work with you to get your debts paid off, such as by providing repayment plans.

3. Consider another source of income

If you think it may be some time before your business gets back on its feet, consider getting another source of income, like a part-time job or contracting work.

There may be government or small business grants that you’re eligible for that could cover some of the shortfall you may be experiencing.

4. Set new goals

When enough time has passed, think about setting new personal finance and business goals. It’s likely that you’ve learned a lot about your business and the way you operate that will strengthen you for the longer term. Experiencing a downturn may prove to be an invaluable experience that sets you up for more success in the long run.

Next up: Managing an unexpected bill or business expense

This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. As this information has been prepared without considering your objectives, financial situation or needs, you should, before acting on the information, consider its appropriateness to your circumstances. Taxation considerations are general and based on present taxation laws and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information.