During the first few years of the business, it is common that your pocket suffers badly. Follow these tips to avoid it.

Putting all the money into the business is sometimes the only way to start. But as an entrepreneur, when much of your capital is invested in business, your personal finances can suffer badly. 

When he was 26, Brian Fox, founder of Confirmation.com, an online audit firm, found himself in that position. In 2011, Fox was a recent graduate of an MBA, owner of a promising startup... and a massive student credit debt. At one point, Fox remembers taking his car to an agency to ask how much they gave for him and so he could pay his employees. Fortunately, an investor's check prevented this from happening. 

"I was paying everyone with stock," Fox says. "It all ended up on my credit card. I deferred my student credit. My wife and I were asking for money from the family, and we moved the business to my grandparents' garage. " 

More than a decade later, that startup that caused so many headaches serves 10,000 accounting firms in the world and has annual revenues of $ 12 million dollars. We share five lessons of entrepreneurial finance with tight pockets during the initial phase of the business: 

1. Have a cash cushion

At first, Fox's personal fund consisted of $ 20,000 dollars in stock certificates from the bank where his grandfather worked, but The entrepreneur says that having greater reserves would have helped. 

Jason Paper, a stock expert in Silicon Valley, Recommends that entrepreneurs have the value of expenses of one year as a reserve in a separate account for any emergency. 

2. Reduce Your Costs

Fox started his business while he and his wife raised two children. Without having a considerable mattress, he focused on cutting costs such as cable television, reducing his telephony plan and stopping eating out at restaurants. Although the owner of business has personal savings, it is wise to decrease costs according to Paper. 

3. Accept help from your family and friends

During the first three years, Confirmation worked thanks to the loans from the Fox family, who made a change of company stock. Fox recommends that if you believe in your project, you leverage on your family and friends to get it out. 

Most importantly, beware of hand-shaking deals. "My advice is to keep things simple, but always written and documented," Fox says. Otherwise, having a disorganized capital structure can discourage investors. 

Dan Audit, the financial advisor, says it's also a matter of maintaining relationships with your family and friends. "If any member of your family is willing to contribute to your venture, you must make a clear understanding of what your expectations are," says Suit. The expert recommends asking these questions: Will they recover their investment, and when? Will they get interested? 

4. Do not give many actions from the beginning

Fox did not distribute significant amounts of shares to his relatives, friends or employees, As this would have reduced the percentage of their membership. And is that many entrepreneurs make the mistake of giving too much too soon. "If your primary goal is to make a lot of money, then you have to keep your position," says Papier. 

According to Fox, in a funding round, one rule is to offer investors no more than 20 to 40 percent of the company. The fewer shareholders are, the higher your income you will get as an entrepreneur. 

5. Consider Stopping Savings for Retirement

Fox did not have the luxury of saving retirement money during the early years of the company, a decision that personal finance counselor Peter Dunn said may be a wise bet.