Over the last few weeks, we have been talking about the challenges and struggles facing self-employed people today. So far, we have looked at the issues surrounding "feeling lonely", "maintaining a work-life balance" and the "struggle to stay motivated at work".
This week we are going to look at one of the most important challenges you will face being self-employed and that is managing your finances...
Managing your Finances
Now let's be honest, not everybody is born to handle their finances properly. Effective financial management is vital for business growth and survival. It involves planning, organizing, controlling, and monitoring your financial resources in order to achieve your business objectives.
Most businesses don't actually fail because they don't have enough customers or, their customers stop dealing with them. Most fail because they simply run out of money! This shows us that business cash flow is one of the most important things you need to focus on when you are self-employed and in business. When I am talking to clients, I like to compare money in a business to the blood that runs through your body. Both are vital and when either stops, everything stops...
How do you manage your finances?
- Track your income. It's important to know how much you make
- Track and audit your expenses
- Keep a separate bank account for your business
- Pay your bill on time every month
- Cut back on recurring charges and reduce debt
- Make a budget
- Stay organized and plan ahead
And the most important one that is not on this list? PAY YOURSELF FIRST!
The first person you need to pay with your money is yourself. Many business owners that run businesses feel that paying themselves should come last or is a luxury; however, it is vital and a necessity for the success of your business and for both you and your business to survive.
Of course, if you are ever unsure or feeling totally lost, don't be afraid to ask someone. Seek professional help from your accountant, financial advisor, or business consultant. These professions can assist you with understanding and managing your financial finances. They can also advise you on the best business structure as well as your legal obligation relating to tax and accounts.
Next week we will look at the issue of selling yourself short. Many business owners I have worked with don't want to increase prices, or even charge more as they are scared of what their clients will think, and they will go elsewhere. They end up selling themselves shorting and not returning what they are really worth...
As always, I am interested in your feedback and what you have to say. Please feel free to drop me a line, or even make any suggestions about what I might have missed.