The entrepreneurial journey is characterized by multiple aspects of business management. Typically, these include strategy, operations, marketing, finance, human resource and other functional aspects that play a major role in building a lucrative business.
When it comes to money matters; be it personal finance management or handling business funds, it is important to develop good financial habits especially as an entrepreneur and make well informed choices. Financial management is an indispensable factor that can not only help boost your finances but also propel your business to grow drastically.
You do not have to be a finance expert to invest in your future as an entrepreneur. What you need however, is to develop financial management skills that are aligned with your business goals.
‘A leader is one that knows the way, goes the way and shows the way’- John C Maxwell
We have put together a list of proven money habits that will support you and help you thrive as an entrepreneur:
Whether you are a new business owner or an established entrepreneur, it is always a good idea to track where you spend most of your money and create a budget around major financial priorities. A good place to start is by reflecting on this question - Do you think you can cut back on costs that are not high up on the priority list? If yes, then get budgeting!
We understand that you must spend money to make money as an entrepreneur. But, adapting a savings mindset can help you build capital for your business and also provide financial backup to fall back on. To start saving, review your business budget and try to set aside a fixed percentage of revenue towards savings every month.
Monitoring the cash flow, which is essentially the money that comes in and goes out of your business, can simplify your finances and help you manage wealth effectively.
The best way to get your cash flow in order is to evaluate negative and positive cash flow. You can assess this by organizing the income and expenses of your business and divide them into distinctive categories. You can also cut down on extra costs, pay off debts in time and sell any assets that are not being used in order to further streamline the cash flow. Once record-keeping is made a priority, it will get easier to take control of business finances.
One of your top priorities as a business owner should be to manage your business credit line mindfully. Maintaining a good credit score can be a great source of help should you need some extra funds in the future. But with the rewards and cash flow on business credit cards, it has become quite easy to overextend yourself and land up with a bulk of high-interest payments down the line.
You can create good credit habits by clearing your payments on time, avoiding penalties and late fees and paying out high-interest amounts first, to keep any payments from piling up.
It is always beneficial to be aware of the short and long term vision for your business. Based on this vision, start by establishing goals you want to accomplish. This could be anything from generating more revenue and improving margins to reducing production expenses and increasing the company’s share in the market.
Being aware of your business goals will give you a clear financial picture of what you need to achieve as an entrepreneur. Perhaps you need to start building more capital or budget your cash flow.
In terms of business, the best investment scheme is one that can stimulate growth, boost business profits and make sure that this stream of revenue is secure at all times. Being an entrepreneur, investing profits back into your company can be incredibly fulfilling for your finances.
Choosing the right investment instruments that you can consistently tap into can do wonders to stabilize and can keep you from making financial mistakes. If you are looking for investment tips to make accurate investment choices for your business, check out Dezerv- an expert-led portfolio management platform tailored to help you with a long-term approach to maximizing your finances.
We understand that embarking on the entrepreneurial journey can be incredibly challenging and yet rewarding at the same time. But do not let the challenges wear you off! Set yourself up for success by adopting these 5 money management practices that will guide your business to the path of financial success.