All small business owners and entrepreneurs know that managing your personal finances when your startup business lacks sufficient funds can be a tough task. And, often the hardest part is finding sources of finance for entrepreneurs.
While there are numerous factors that determine the success of a startup or small business, entrepreneurial finance management is indisputably the primary factor. Similarly, a successful entrepreneur requires to be able to manage both – personal and entrepreneur finances in all situations. Even in cash-strapped situations.
Here are a fey key areas, entrepreneurs need to focus on to remain on top of the personal finance game:
1. Keep your personal and entrepreneur finances separate
The major key to managing your personal finances as a cash-strapped entrepreneur is to keep entrepreneur finances completely separate from personal finances. It will give you and your business some credibility and a sense of authenticity.
You can start by giving yourself a fixed salary every month. Avoid paying for your expenses from your business account. This will help you in organizing your finances in a better and more reliable way.
2. Pay attention to cash flow
Cash flow matters. If you want your venture to operate smoothly, you need to know what money comes in and what money goes out. This will can also help understand the sources of finance for entrepreneurs, lines of credit, and how to keep personal finances in order. You can start by reading the following:
- Financial Statements
- Balance Sheets
- Cash Flow Statements
- Statements of Shareholder’s equity
Being able to read and understand financial statements will help you effectively manage your finances.
3. Don’t let your expenses exceed your income
Just because you are paying yourself a salary, doesn’t mean you can let your expenses rise with no heed paid to income and cash flow. Stay on top of your expenses by keeping monthly budget discussions for your household. Use apps and make budget spreadsheets to keep track of your personal finances.
As per Parkinson’s Law, expenses rise quickly to meet your income. This is the precise reason you need to keep your expenses in check and stick to a budget.
4. Maximize your emergency and retirement savings
Emergency fund, rainy-day pay, 401 K, or IRA plans, call it what you will, but the bottom line is that these savings are going to give you a peace of mind knowing that it’s there, regardless of an emergency.
Doing so will also secure your personal as well as entrepreneur finances in case your venture fails or the cash flow of your venture gets hampered.
5. Seek help whenever necessary
Most entrepreneurs steer clear of getting external help because some boast of an MBA or some are just not too keen on taking advice from anybody. But having outside help with your personal finances can be better for deciphering tax and accounting concerns.
Letting an advisor take care of financial concerns will give you a more unbiased and objective view of what to do differently to have a cash flow even when your business lacks sufficient funds.
There you have it – Entrepreneur finances tips for entrepreneurs with cash-strapped. Managing personal finances even in cash-strapped situations is all about striking a balance between both your personal as well as entrepreneurial finance management skills.
— One Solutions (@one_solutions1) 2 de noviembre de 2016