Advice for the Finances of Entrepreneurs
If you are an entrepreneur and want to achieve success in your business project as well as in your finances, you must be clear about the following concepts and how they work in the economy, both in your company and in your finances.
Achieving control of finances can be a challenge but not an impossible goal, identify the following concepts and distinguish how they work in your finances.
The collection is not your salary
One of the most frequent bad practices is to think that collection is your salary, using the collection money for personal expenses before paying suppliers and direct business expenses can put your venture in the red. Assigning a salary according to the growth stage of your company and adjusting your expenses to this (temporary) salary can be the difference between growing your business and leaving it without oxygen (money) to grow.
Settle your debts
If your business is your only source of income, then your finances are directly related to the flow of your company, so having personal debts can force you to take more flow than you should take as salary, businesses require at least one year to prove that the idea is a good one and 3 to achieve a sustained growth rate. Pay debts before starting or if you are already active with your business, avoid them. Remember that the debts derived from raising the lifestyle are not a good investment.
Keep your personal budget separated from your company’s
A monthly budget with a yearly projection is a great exercise to see the big picture of what your finances look like over the next 12 months. This includes what the expenses are and how the collection will occur. Your company’s budget will allow you to be clear about how the expenses occurred and thus determine if the salary you have assigned is adequate or if you are getting the flow of business into trouble.
Saving for personal contingencies
One of the main reasons for losing the balance of the business treasury is to “borrow” for emergencies or contingencies, this is when saving for emergencies (a saving equivalent to 3 to 6 months of your expenses) is the best ally that will get you out of trouble instead of borrowing money from the flow of your business.
Shield your economy
Insurance for medical expenses, cars, and life, is one of the three most popular insurances among businessmen since with them they solve issues of hospitalization, theft, or automobile collision and ensure your family in case of permanent disability or loss of life. One of the most important points to take care of when you are on your way to becoming a successful businesswoman is to shield your assets, that is, what you already have and you have managed to protect against losses or unforeseen events.