Utilizing your own funds when starting a business can be a smart move. It allows you to have full control over your business without involving third-party investors. However, it is important to assess your risk tolerance before tapping into your reserves. Keep in mind that cash alone may not be enough to cover all your business expenses. Lastly, always have a reserve of cash on hand to prepare for any unforeseen expenses that may arise. Here are key points regarding about utilizing checking & savings:
- Recognize the advantages: These include the simplicity, speed of deployment, lack of credit check requirements and debt avoidance.
- Consider your risk tolerance: Do you see tapping into your reserves as riskier, or do you see taking on debt (perhaps secured with your home) or potentially giving up some equity as more risky?
- If intending to use cash alone: will it be enough to fund the start-up all the way to profitability? Consider a burn rate (or cash runway) calculator. Often, money is available until you need it – so keep some in reserve.