Of all the hard work that goes into a business, from developing the product to finding the right staff members and the million and one things in between, we can neglect ourselves, the entrepreneurs, in the process. When you are growing your business, it is the unwritten rule that you need to pay yourself last. As a result, this can throw up considerable problems. While being an entrepreneur offers a lot of freedom in a personal sense, being in a business that you have an extreme passion for, as well as being your own boss, and getting the rewards when the company is successful, these gratifications can be a long way off. Before you get to this point, you’ve got a lot of mud wading to do. As a result, you can feel the pinch, in a personal and financial sense. So, if you are worried about what the future holds for you, especially when you are working hard at growing your startup, how can you maintain a sense of financial stability, not just for the business, but for yourself?
Keep Things Separate
A Business Is Not Your Personal Piggy Bank
It is vital to segregate your work finances from your personal finances. The temptation can be when you see your baby struggling, to put a little bit of your own money into it to ensure it goes over one of the many bumps in the road. But there are so many bumps in the road, and if you keep putting a little bit of cash in, you are going to find yourself out of pocket very soon. And it might not even solve the problem, where in fact, you could just be firefighting a larger problem. If you have the common sense at the very outset to separate your personal finances from the business ones, you will save money for yourself in case major problems arise. If you end up in trouble legally, or wind up with a lot of corporate debt, by separating these, you are protecting your personal assets. So, by treating your business as a separate entity, this provides a metaphorical separation. As the owner, the temptation can be to protect it with kid gloves, but this can be particularly detrimental, not just in a financial sense, but if you are too protective of your business in the grand scheme of things, you might not let it develop in an organic manner. But as far as giving yourself that segregation between the two, this will help you to maintain a noticeable difference between the two entities.
Understand Your Financial Goals
Following on from separating your business and your personal finances, if you have an understanding at the very outset of what your own personal financial goals are, this is going to reflect in your individual bank balances. Ultimately, when we go into business, we are armed with the best of intentions, but this means that things don’t always go according to plan. Having an exit strategy in place is important, just in case everything heads south quicker than expected, but also, you remain unscathed. And while, on the surface, this may appear somewhat heartless, you still have your own interests to protect, regardless of the outcome of the business. But to discover what your personal financial goals are, you need to undertake a thorough examination of your own circumstances. For example, setting a specific financial goal could include saving enough money to look after your family for a specific amount of time. Being self-employed and paying yourself could mean you might not prepare as well for retirement. As soon as you know exactly what you want from your finances, you can better prepare. The same applies to the business. Of course, the definitions are not clear-cut; growing the business tools and their specific categories range from marketing, to the product, to ensuring a good quality workplace culture. But all these require sufficient investment. And once you’ve got these two separate entities’ goals in stone, you will progress far more proficiently in a personal and professional sense.
Get A Mentor
Good mentors do more than just motivate, they help drive results and business growth.
The best way to gain an understanding of your business finances, and where the common trappings are, is to the advice of people who’ve been there before you. Getting a mentor is one of those common pieces of advice that is dished out a lot, but when it comes to every aspect of your business finances, a mentor could provide you with the vital piece of information that could save your business. The great thing about having someone in a professional sense to call upon when in times of trouble is a lifesaver. Not only can a mentor help with the big problems that they will have in their knowledge of how they overcame specific problems, but because they’ve been there it will come with a certain morality tale attached. When it comes to investing back into the business, for example, there may be ways around the problems when finances are limited. If you find yourself traveling around a lot, to get the attention of clients, and set up specific meetings, knowing the best business credit cards for travel rewards is something that you might not have considered. But, it’s not just about the business aspects of saving money, but some personal approaches help too. And these mentors can provide insightful information on how they save money over time. At this point, when you’re starting your business, every penny counts. So finding certain ways to shave off a few pennies here and there will all add up. A mentor provides so many vital pieces of insight that it would be foolhardy not to progress without one.
Pay Yourself Appropriately
This is a double-edged sword. On the one hand, you should be paying yourself last, after all of your overheads had been paid off, but you still need to give yourself financial gratification based on the role you’re doing. A lot of entrepreneurs will only pay themselves what they need to survive, especially at the very outset, but this can develop into a more dangerous habit because you are not only putting your personal finances into considerable problem areas, it could bleed into your business and how it is perceived. As a result, other clients might not get the right impression of the grandiosity of your business, but rather you look like you are scraping by with the bare minimum in every aspect. When it comes to paying yourself, how much should you pay? First things first, you need to look at the market and see what you have can actually cover the basic expenses, but also gives you the opportunity to save money. But when you are starting out, it’s far better for you to have more capital in your back pocket. Ultimately, when it comes to paying yourself, if you enough money saved, and you are paying yourself pittance, your life won’t be affected outside of the work environment.
Keep Yourself Up To Date
March to Your Own Beat: Your Career as a Freelancer Begins Here
This is something that you might not consider as an essential part of the financial process in keeping a business afloat, but if you keep yourself up to date as far as your skills and certifications are concerned, those skills won’t just help you with the day-to-day running of the business, but if the business goes under, you will need to still keep yourself afloat. When running your own business, it’s quite easy to get sucked into a vortex, where you aren’t keeping up with industry trends and acquiring the most up-to-date qualifications. Because you are so consumed by helping your company to survive, you are going to fall behind in other areas. Not only is it detrimental to the business, but if the business ever fails, you will be starting again. Looking for employment and potential employers seeing that your business didn’t amount to anything, but you also didn’t learn, will work against you. As a result, earning that all-important crust for yourself is going to be nigh on impossible.
Of course, starting a business means a lot of money being plowed into it that you will never see again. And if you are concerned about the risk, the only real way to acquire that piece of mind at the very beginning is to have more personal finances than you think. It’s a cliché that entrepreneurs after work long nights and weekends to realize their dream, but this is true. During the first 12 months, you will be working on developing contacts and improving the product, as well as for going out the most beneficial ways to cut costs. As the financial burdens become bigger, the temptation to put your own money into it is very real. But, your business needs to be a self-sustaining entity and has to be a money earner without you bailing it out. The more you get into this habit, the worse it’ll be in the long run. It’s far better for you to ensure that you’ve put the stops in place to make the business progress over time. It’s difficult, because it’s your baby, so you want to protect it. But at the same time, you need to be aware of the impact it can have on your life if you are trying to be the business’ bank account.