So much of the entrepreneurial journey is navigated alone making it a very taxing undertaking. One of the areas that’s critical and that exudes the aura of incredible difficulty and complexity is the area of finance.
Here are 5 tips to get you started as you establish and/or streamline your financial operations depending on where your business currently stands.
1. Keep Your Business and Personal Finances Separate
This is especially hard because as an entrepreneur your business is extremely intertwined with who you are as a person. However, it’s critical that you keep your business and your personal finance separate and open a separate business account because it:
- Gives your business more credibility and legitimacy
- Makes it easier to keep track of your records and accounts
- Saves you a headache during tax season particularly when deducting business expenses
- Removes personal liability should anything negative happen
- Makes sure you’re not putting the burden of your business’s financials on your personal accounts
2. Keep an eye on the numbers
There’s an old saying, watch the pennies and the pounds will take care of themselves. In order to properly manage your money, you need to know three things:
- How much money you’re making
- How much money you’re spending
- How much money you’re saving
List all the money you have coming in, all the expenses you have and whatever is left that goes towards saving.
Also critical, know your fixed costs. Fixed costs are items like rent and utilities which you have to pay regardless of how your business performs. Keep your fixed costs as low as humanly possible.
3. Set Goals
This might seem obvious but once you’re in the daily grind, it’s easy to let it fall off the side as you put out fires and work to keep your business afloat. However, goals, personal and business, are key in guiding you and keeping your eye on the prize in the course of the moment to moment hustle. Make some time to set your goals.
4. Stick To A Budget
It may be difficult given all the many decisions you’re forced to make moment to moment and seemingly on the fly, however, failure to make a budget and stick to it is the leading cause of hemorrhaging money that in the beginning is usually a scarce resource as it is. The discipline of making and sticking to a budget is one that will benefit you throughout your business journey from the startup phase to an established business.
5. Get Health Insurance and a Retirement Plan
Perhaps one of the benefits of employment should you be fortunate to have a decent employer is a healthcare plan and retirement benefits.
We live in a country in which most people are one medical diagnosis away from bankruptcy and financial destruction. While we daily struggle to fix the problem and implement quality universal healthcare for all, if you can, get health insurance.
If you’re self-employed, make it a point of urgency to get a good retirement plan in place. It’ll give you peace of mind and save you from future hardship if and when you no longer benefit from the business.
Here’s hoping these finance tips or at the very least one of them resonates with you and is of benefit to you and your business. Let us know which one or which ones, whichever be the case.
Check out these finance and accounting app designed for startups.