Being an entrepreneur is probably one of the toughest tasks in the world, especially if you own a small business. There’s this popular Tik Tok sound where the person said they quit their 9-5 because they thought being a business owner would be easier, but they now have to work 24hrs. I couldn’t agree more, especially because I was once a small business owner.
As important as it is to focus on growing your business and making money, you must also not forget to take care of your finances.
Tom Drake, a writer for the Canadian blog noted that “since many entrepreneurs have to deal with irregular income, it’s important to budget your personal finances around that to make sure that you have savings that you can draw from in the leaner months. You need to know that you can cover the essentials like housing, utilities, insurance, and food. So add up those critical expenses and put aside enough to cover at least a couple of months.”
How to Manage Your Finances As an Entrepreneur
Here are some tips I think are important when it comes to managing your finances as an entrepreneur:
1. Keep Your Business and Personal Funds Separate
This is one of the most important tips you must adhere to. Mixing both your business and personal finances will result in:
- A lot of confusion
- Debt
- Disorganized records that can lead to overspending
- Not meeting payment deadlines
- Missing out on growth opportunities
2. Diversify Your Income
I understand that every entrepreneur enjoys the fact that they are their own boss, but there’s a possibility that the business doesn’t work out as planned. This is why it’s important not to put all your eggs in one basket.
Jeff Rose, a financial analyst, mentioned that “By diversifying and placing funds into another side business, alternate investments, or just setting aside cash, you will give yourself breathing room if you end up calling it quits or need to pivot to another business”.
This reduces your risk exposure, and if your business yields great returns, all the better for you because it increases the amount of money you have coming in and sets you on a fast track to wealth.
3. Budget
You’re probably tired of hearing me mention the word “budget” all the time. I only do that because it is probably the bedrock of managing finances and it helps monitor your income to avoid overspending.
4. Reduce Debts
Generally, bad debts are a pain in the neck, even more so for an entrepreneur. Pay off bad debts as soon as you have extra cash, and if necessary, take out of your savings to clear them off.
5. Invest
It’s great to have multiple sources of income, it’s even better to put that money to work for you. There are several trustworthy companies in Nigeria like Cowrywise and Risevest that help you invest and get good returns home and abroad.
Conclusion
Finance is an important aspect of every adult’s life, and it requires a lot of discipline to manage it and make the most of it. If your business can afford it, you should invest in hiring a financial planner. If you can’t, the above tips are a surefire way to go about it.
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