There’s no doubt about it that being a successful entrepreneur requires a lot of expertise in a lot of different areas. Arguably one of the most important aspects to becoming a successful business owner is having your finances in order; after all, with no money, you’ve got no business. So how do you actually keep your personal finances (and cash flow) organized?
Keep them separate
It is essential that you keep your personal finances and business finances completely separate. Do not combine! Make sure you are paying yourself a salary (rather than paying your personal bills) out of the business finances as soon as possible.
Manage your personal finance like your business finance
The key to managing your personal finances is the same as for managing your business finances: Create a financial forecast. You need to understand your expenses, your cash burn, your potential cash inflows and potential unexpected expenditures.
You might have a background in finance; still get help for your personal finance. Having outside help allows you to have an unbiased view of your finances and be smart about them. Ask questions and discuss issues as they come up, rather than being bogged down in an echo chamber of your own voice.
Keep a track
Create Google Doc and track all expenses. This discipline will not only make you aware of where you’re spending but will also help you create a daily budget.
By diversifying and placing funds into another side business, alternate investments, or just setting aside cash, you will give yourself breathing room in the event that you have to call it quits or need to pivot to another business.
Plan for inevitable rainy days (or months)
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 your fundamental everyday expenditure. So add up those critical expenses and put aside enough to cover at least a couple months.
Make regular reviews
Every month isn’t enough! Nearly every week (or maybe more), you should check in on both: your personal and business finances.
There you have it – personal finance tips that will help you build the business of your dreams. Remember, success is all about striking a balance with your finances. If you are cheap, you’re not going to get quality results, but if you’re too extravagant, you’re likely to end up in the red and ultimately fail. Be smart, be frugal, and put money into things that will grow and you will be well on your way to success.
SwitchMe is a registered trademark of SwitchMe Technologies Private Limited. SwitchMe does not claim the right to use any logo/ trademark other than its own. SwitchMe does not represent any other company, bank, or organization in relation to its services.