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Managing finances is a challenging task for many. The underlying principles of learning to manage your finances can come at an early stage for some. But for others, it becomes a skill that one learns in their adulthood. In managing your business finance, it is no different from how one manages their personal finance. It’s important to know that how you handle your personal finances can easily help you in ultimately managing your business. Here are three key principles:
Be budget focused
The same way that you as an individual creates a budget to monitor your monthly expenditure, you should treat your business in the same manner. This does not mean combining your personal and business finance, but using the same principles to manage them separately. As a small business owner, understanding the different components of your financial statements is key to keeping track of where the money is coming from and going to. This is similar to how you manage your personal finance but keeping in mind that your personal budget is not as extensive as the business one.
Keep personal accounts separate from business accounts
In managing your finances, it is important to keep your business bank account separate from your personal. This ensures that you’re able to track your spending and that the two accounts do not overlap and cause confusion. Many make the mistake of combining these accounts when starting out because it’s easier to use what you already have to run your business. It is important to educate yourself on basic accounting principles as it will help you in managing and tracking both personal and business expenditure.
Seek professional help
The first few months, maybe even years can be challenging in ensuring that your business remains afloat. Therefore, always ensure that you tap into your networks if need be and seek professional assistance. When starting out as an entrepreneur, it may be expensive to hire a finance or accounting professional. However, you may want to consider hiring someone on a part-time basis to assist in overlooking your financial statements. You must also ensure that it is someone you trust.
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