Want to start a business? Work on your personal finances first

For many immigrants, the idea of launching a business is part of the dream of independence and success. After all, the entrepreneurial drive runs deep—in a recent TD survey, half of newcomers said they were interested in starting a business even though 62% said they lacked enough information about financial products that support business owners. 

That gap between ambition and readiness isn’t surprising. Building a business without first securing your personal financial footing can leave you vulnerable, however, not just to economic uncertainty, but to stress and burnout.

In this article, I explore why it’s important to establish personal financial stability before launching a business, and offer actionable advice for newcomers who want to build a resilient financial base first.

Why personal finances matter before starting a business

When you’re self‑employed or running a business, your income can fluctuate wildly, especially in the early years. Without a solid foundation—such as savings, manageable debt levels, and an established credit history—you may find yourself tapping expensive forms of credit or compromising your long‑term goals just to keep your business afloat.

And newcomers already face financial challenges: more than half (55%) report having difficulty managing their finances since arriving in Canada, with many struggling to understand the Canadian financial system.

This isn’t just about money; it’s about confidence. The same survey found many newcomers lack a clear understanding of how Canadian banking, investing, and personal financial planning work, which contributes to anxiety about taking big financial steps like starting a business. 

Without confidence in your own personal finances, it’s easy to delay business plans indefinitely or, worse, launch prematurely without the cushion you need to weather the early uncertainty of entrepreneurship.

A personal perspective

When my family and I moved to Canada, we were ambitious and optimistic. I had entrepreneurial experience from overseas, and I dreamed of building something meaningful here. But our first priority wasn’t launching a business, it was laying down a foundation: understanding the Canadian banking system, building credit, creating an emergency fund, and learning how taxes and retirement plans work here.

In those first years, I had to learn lessons the hard way. I was frustrated when my Canadian credit history didn’t reflect my financial past. Even with my background, I was initially approved for a low-limit credit card and had to slowly build trust with financial institutions. Over time, as my credit improved and I understood tax planning better, I gained the necessary confidence and structure to consider business ownership.

That foundation gave me stability. When I finally did start my business, I could focus on growth, not survival.

Seven ways newcomers can build their financial foundations 

Here’s a practical road map to help you build a financial base you can be confident in before you make the jump into entrepreneurship.

1. Create a personal emergency fund

Before your income becomes unpredictable, save for at least one year of basic living expenses. If possible, aim for two. There are mixed messages out there on what the ideal rainy-day fund should be; some say three to six months but, as a serial entrepreneur, I always recommend erring on the side of caution. This fund offers breathing room when things are uncertain, and it prevents you from turning to high‑interest debt.

2. Build and monitor your credit score

A strong credit history is often needed for both personal and business finance. In Canada, newcomers frequently find it hard to build credit, even when they understand its importance before arriving here. In fact, according to the survey I quoted earlier, 79% of newcomers who applied for credit said it was difficult to start building a credit history. 

Start small, use a secured credit card responsibly, pay off balances each month, and regularly check your credit reports. This will help when you eventually need business financing or better loan terms.