Budgeting Tips Every Aspiring Entrepreneur Needs to Know
It all used to be fine in a day job, where the calendar would turn 31 or 1 and you would get money credited to your account. There was hardly any forecast, estimates or survival hacks you had to figure out with the money you had in hand. But then one day, you decided to startup and realized your real stand in life when it came to finance and money management. All of a sudden, money kept getting over sooner than it came in and you had absolutely no idea on how to manage it well and save a little out of it.
Most of us have been through a similar situation. Especially startups that are bootstrapped go through it every month, when they have to prioritize on expenses and decide what to spend and most importantly, what not to spend on. For those of you facing a similar concern, here are our tips on budgeting you need to know and follow today.
Separate Your Personal Account from Your Business Account
This is one of the primary tips you should follow. If you are using the same account for your business and for your personal transaction, you need to separate them out today. By having the same account, you are not giving space for clarity on your business transactions to set in. You won’t understand the complications on taxes and documentation it would have in the longer run.
Or in a more practical sense, you would end up managing both your personal and business expenses badly, going broke too soon. When you have a separate account, you can note down things from scratch and better allocate money to each of the requirement your business calls for.
Get Paid and Don’t Pay Your Business
One of the wisest things to do – apart from being an entrepreneur of course – is first directing your funds to your business account and then getting paid from it every month as a salary. You can be flexible on the time of your payment but for better operations and management, we highly recommend transferring any fund from your business to its account and not the other way around. This way, you can sustain your business for a longer time and adjust your lifestyle to do more and be more with less. As you keep stocking money, you will eventually find yourself in a position to draw more as your salary.
Differentiate Between Needs and Wants
Most of us need instant satisfaction or gratification. That is why we end up being broke because of our expenditure on things that were not required in the first place. Every entrepreneur has two options in front of him or her – go for what is absolutely necessary or go for what is wanted. The latter won’t get you anywhere and would be just an expense. The former would add value to your business and help you in the longer run. Unfortunately, we think otherwise and settle for things we did not want in the first place.
If you had revenue coming in and you had to differentiate between the expenses on paid advertising and a virtual assistant because you always fancied in having one, we recommend you take the interest of your business into consideration. All your wants can wait!
As entrepreneurs, most of us live on the edge and on irregular income patterns. To make your coming month smooth in terms of survival and operations, make sure you have an income estimate in hand and work on it. Your goal should be in increasing this estimate every month to actually grow. Push probable clients into the pipeline, make sales, cut down on expenses, hire a freelancer an include anything that would influence your income for a following month to be as clear as possible on your revenue. A clear idea on this will solve most of your concerns.
With all these said, the most difficult part of budgeting comes with sticking to it. The more you follow a balanced budget, the better it would help your business. If you think we have missed anything important, share on your comments.