** Your current bills to live on are not currently met.

** The business has not shown a profit yet.

** There is not a reserve of cash to keep the business going without outside income.

** You are in debt even more because of the new business idea.

A small business startup is exciting and yet definitely challenging. When starting a home based business the first thing needed is (besides knowledge) enough money to get it up and running smoothly. One thing that ruins a small business startup faster then anything else I can think of is lack of funding. Now I am not proposing going out and borrowing for your business, but I am an advocate of being prudent with what money you currently have coming into your daily life.

When starting a home based business you are actually going to be the chief financial officer of your new small business startup. If you have not been able to keep your personal expenses and spending down, what makes you think you will be able to do it in your home business startup? If your savings account is at a low now, then what will change in the business? Remember you will be the same financial officer as the one running your personal expenses.

Current Bills are not Met Yet

One mistake many first time home business owners make is to expect their current bills to be met by their new business startup before it has even made a dime. If your current bills are not being met with the job you currently have, then you have too much debt.

I would suggest you cut your living expenses down first. Get rid of as much bad debt as possible (credit card, car payments, student loans etc.) These bills will go with you into the new business and that will mean not only will you have to pay for your personal bills but now you will have business bills that need to be address as well.

The most important part of a home business startup is proper planning not only at the beginning but through the whole business existence. Going into a home based business without the proper funding for its survival is why one out of three businesses closes the doors within the first 3 years.

My first home business startup was a real shocker when I realized that I had way too much personal debt to make the business work. In order for the business to succeed it needed double what I was making at my job just to keep up! That was not taking a profit out, it was just paying bills for personal and business expenses.

That is way too much stress for most people including me!

The Business has not shown a Profit Yet

So many times we get excited about our new home based business and believe that we can make money overnight. With this false belief we rationalize that it is time to quit our day jobs. We say to ourselves; "If only I worked the home business startup full time we would have all the money we need".

If you have not made any money working part time in your home based business then you do not have a base for your profit projections. Yet too many of us base our monthly money projections on a false premise.

Business is very rational, even if we are not. A business makes a profit, subtracts expenses and gives you a positive or negative cash flow. That is it. It is not a magic genie that will just produce money overnight. It needs to be built from the ground up.

No Reserve Cash

Many first time home based business owners make this major mistake. Reserve cash is needed for the survival of your business. If you do not have a reserve after paying all your personal and business expenses, what will happen if you had a few bad months of business? Will your personal and business expenses be paid? What about being able to promote your business? Where will the money come from for advertising etc?

If you have an income coming in from another job and you are not spending every dime to live on, this is where you will be able to start to focus on putting some money aside for a rainy day until your home based business begins to turn a profit.

More Debt because of Small Business Startup

A home business startup inevitably takes on more debt. You will have expenses that you may not have calculated into your new home business. To run a business you will need equipment you may not already have. Marketing, advertising, office setup and supplies are a few of the costs that come to mind.

Keeping your job and lowering your personal expenses will help you to pay for the small business startup as well as putting a reserve together.

Final thought: Only you will be able to decide what is right for you and your new home based business. I just wanted to give you a heads up from my own experiences.