Undoubtedly, running a successful enterprise calls for expertise and strategy. While there might be several key competencies needed to make your business successful, financial management is vital, be that through financial management software or different means. Being an entrepreneur, albeit not very successful, I learned my lessons the hard way. I have always thought of giving back to other entrepreneurs who have to beat their own path in light of this. What does it take an entrepreneur to manage their finances? Here is my take.
I know you might have heard this from other “financial experts,” but this piece of advice rings true for any perceptive entrepreneur. Any entrepreneur should be wary that any entrepreneurial venture has higher chances of failure than success. It is no wonder that most new enterprises today never live to celebrate their first birthday. So I have to keep encouraging new entrepreneurs to diversify and have multiple income streams. In my business exploits, I have always had several ventures that are independent of each other. And this saved me a great deal when my business was struggling.
Any entrepreneur’s journey is marked with all manner of uncertainties. Dealing with income irregularities is not easy for most entrepreneurs, especially when you have many financial commitments. Looking at the business landscape dynamics, I always advise entrepreneurs to save for the leaner months. I have always observed that most young entrepreneurs fail to plan for the inevitable rainy days, a mistake that sends thousands of them back to the drawing board. As I gained some experience back in the days, I always ensured that I had put aside enough money to cover all critical expenses for several months. Business owners from all industries should be saving a little each month just in case, and there are plenty of resources available to guide you to how you can make this happen – those who own dental practices, for example, could listen to this podcast from a dental CPA firm to help them get their finances in check.
It is a good idea to think about the future. I almost missed the mark as far as planning for my future was concerned, overly focusing on my business exploits. One of the main reasons for this is that I had to work with fluctuating income during a large part of my entrepreneurial career. While I was able to cover up for the lost savings and investments, it is rather unfortunate that most businesspersons do not think about retiring. My honest advice to any entrepreneur is to save for retirement. Sheltering a sizeable amount will shelter a huge portion of the profits from the taxman.
When I started a business, I had to fund my dream of being an entrepreneur from my savings. While this was all that I could before I could access other capital sources, it subjected me to severe strain. As much as I did not take long before I could access business loans, the temptation to use personal funds was always there. After all, I did not have to pay myself any interest. Looking back, I advise entrepreneurs to avoid personal liability. Why? It makes you organized and cushions you from financial troubles down the road.
This might seem like some personal financial advice; it also applies in business circles. It is worth noting that business expenses will always be rinsing to meet the income. This explains why most young ventures struggle financially, even after making profits. While I understand that keeping expenses below income might be a challenge for a growing business, I always tell young entrepreneurs to be deliberate.
Most entrepreneurs overlook the need to invest to insure their most valuable asset, health. Young in business, I had a close associate who was decapitated at a young age. While this meant that he could not run errands anymore, he had disability insurance. From this experience, my take-home is that I always had to think about my ability to earn when I was disabled. A serious injury or illness could occur at any time and being able to perform your job, as well as earning a wage, could be taken away from you in an instant. In fact, it happened to my friend the other week. He’s a dentist and so he’s earning big-time money, but when he found himself in a car accident with serious injuries, he was facing a lengthy spell on the sidelines. Luckily, he had taken out the best dentists disability insurance plan a couple of months earlier which meant that his financial situation would be protected until he could return. And that only reinforces the fact that I had to find a way to still receive an income should anything happen to me. That’s when I knew I just had to get some disability insurance. So as I talk to entrepreneurs about making business decisions, I always advise them to go through disability stats. And gladly, most of them take action and go to places like Breeze (click this link) to have a look at what plans are available.
There you have it, business finance tips from an entrepreneur who has been there and done it all. As a rejoinder, the most important lesson is the need to strike a balance between business and personal finances. Be smart and invest wisely.