When it comes to setting up your own business, there’s actually a lot of tips which you can carry over from your personal finances, especially when it comes to personal budgeting. If you become a good money manager and very organised in your private life, then those skills can carry over into running a successful start-up. Businesses usually require some capital expenditure to get going, so you’ll find yourself needing to arrange financing in order to get off the ground. If you’ve been able to manage your personal budget well, it’s just a question of scaling it all up. Here’s how..
Sort Out Your Personal Budgeting
Just as you’ve been used to working to a personal budget in your own life, so you will need to keep a close eye on the business finances – not being consistent with looking after the accounts will quickly cause damage. Budgeting properly, just as in your private life, gives you more information to make better decisions with and helps to cushion you against adverse circumstances. Make sure that you are allowing proper provisions for tax – this may be a new area if you’re used to being someone else’s employee – so that the end of the financial year doesn’t come with any horrid surprises. Work out what your net profit is after tax and deducting operating expenses, and from there determine what you can afford to invest back into the business and to pay yourself.
Cut Your Debts
Your debt-to-income ratio is important both personally and for your growing company. Don’t think of all debt as inherently bad – but rather as a tool to manage your finances with, providing that it is used correctly. In your personal life, it’s a good idea to try to consolidate and pay down any debts that you have – so for example, move any credit card owings onto a new card with a lower rate of interest or 0% APR introductory period, and look into services such as http://www.refinancestudent.loan/ to help you get more favourable rates. In your business life, apply the same logic. Use it to find costs you can streamline such as business unit rental terms, printing facilities or marketing budget – areas which can be adjusted to make sure you’re more in the black.
Ensure You’re Covered
In your personal finances, hopefully you will have arranged adequate insurance cover to give you peace of mind and cover expenses and loss in the face of something terrible occuring. And as an entrepreneur, you will need adequate business insurance policies, such as public liability insurance or policies on your property to ensure that you are covered against a disaster.
Be A Savvy Shopper
In the day and age of the smartphone, where the latest information is only ever a swipe away, it’s almost criminal to be a lazy shopper. Just as you should be finding the best price on any personal purchase, so too can you become a great business shopper as you procure goods and services.
Compare not only price but quality and terms and conditions to ensure that you really are getting the best deal available. And if you aren’t, don’t be afraid to use your negotiation skills to arrive at something that is more acceptable. Interest rates on financial products, in particular, are a great area to negotiate, to try and improve on and can save you thousands over the mid-term, all for the sake of a little upfront legwork amounting to a few phone calls.