Ad­vice for en­trepreneur­s


The Citizen (KZN) - - Business - Shirley Smith

Don’t let per­sonal fi­nances crum­ble while mak­ing busi­ness fi­nances sound.

One of the trick­i­est parts of own­ing a start-up is learn­ing to man­age fi­nances. You have to con­trol cash flow as you (hope­fully) edge to­wards mak­ing a profit, stick to a bud­get, and build an emer­gency fund for lean times. But it’s also im­por­tant to en­sure your per­sonal fi­nances don’t crum­ble while you’re mak­ing sure your busi­ness fi­nances are sound.

Here are tips to help you stay on top of your per­sonal fi­nances while your start-up takes off.

The most im­por­tant tip is this: be very strict about keep­ing your per­sonal fi­nances sep­a­rate from your busi­ness fi­nances. It’s im­por­tant to treat your­self as an em­ployee who earns a set monthly salary, and not to use the busi­ness fi­nances for your per­sonal ex­penses. If you al­low your busi­ness and per­sonal fi­nance bound­aries to blur, and your busi­ness goes bust, you could be held per­son­ally li­able for debts.

You should fore­cast your fi­nances, doc­u­ment your ex­penses, have a bud­get, know what you’re spend­ing on. Look at how you are bring­ing in money and how you can make the most of that money.

Find ways to pay off your debts.

Make sure you have a solid credit his­tory and don’t get into any per­sonal fi­nan­cial trou­ble. You might need a busi­ness loan to ex­pand your busi­ness in the fu­ture. Start by tack­ling those credit ac­counts with the high­est in­ter­est rates. If you have mul­ti­ple, smaller loans, look into debt con­sol­i­da­tion (but make sure you un­der­stand all the risks and red tape).

This fund should have three to six times the amount you live off each month. This is use­ful for liv­ing and for your busi­ness, should you have months that don’t go ac­cord­ing to plan. It will also en­sure salaries are paid and out­stand­ing pay­ments are met. When look­ing at sav­ings ac­count, look for those that of­fer higher in­ter­est rates.

It’s im­por­tant to di­ver­sify your port­fo­lio. With ev­ery new ven­ture comes the risk of fail­ure so it’s im­por­tant to spread your wealth over many dif­fer­ent in­vest­ment op­tions.

Shirley Smith is chief op­er­at­ing of­fi­cer at Old Mu­tual Fi­nance

Pic­ture: Shuttersto­ck

DON’T RISK IT. Don’t al­low your busi­ness and per­sonal fi­nance bound­aries to blur. If you do, and your busi­ness goes bust, you could be held per­son­ally li­able for any debts.

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