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As a small business owner, you know that it\u2019s wise to put a lot of effort into ensuring your business finances are running smoothly.<\/p>\nAs a small business owner, you know that it\u2019s wise to put a lot of effort into ensuring your business finances are running smoothly.<\/p>\n
Without keeping a close eye on business turnover, particularly during the early stages, you risk damaging or even losing your company before it can begin to reach its full potential. In fact, cash flow problems are the biggest culprit contributing to the fact that nine out of ten start-ups are destined to fail in their first year.<\/p>\n
However, what you may not be aware of is that your personal finances are more important to your business than you think.<\/p>\n
We\u2019ve listed the main ways your personal saving, spending and borrowing habits can affect your company.<\/p>\n
Even if borrowing money for your business isn\u2019t in the works just yet, don\u2019t write the idea off for the future. You never know when your small company is going to need some fresh funding to implement new strategies and ideas to give your customers exactly what they want from your brand. If you plan to get any future business funding from a high street bank, you\u2019ll need to watch your own personal finances and credit score closely. A poor credit score can leave you with fewer options when taking out a business loan since your personal financial circumstances will also be taken into account by lenders.<\/p>\n
Even if you\u2019re not considering borrowing a huge amount of money for your business, short-term funding is a great alternative option if you need a small amount of cash to cover expenses quickly. In business, you never know what each month is going to bring \u2013 even when you look at the facts to come up with realistic predictions, running a small business can also be unpredictable and you\u2019ll need to be ready. For example, if most of your clients are late paying invoices one month, will you still be able to afford to pay your regular business expenses? Looking after your personal finances will make it easier for you to get short-term funds from Bonsai Dinero<\/a> if your company finds itself in a financial emergency.<\/p>\n One of the biggest mistakes that small business owners make when it comes to their finances is merging their personal and business funds. Whilst this may be fine if you\u2019re a freelancer working online in your spare time, if you want to make a life out of entrepreneurship and head a widely recognizable brand, your first step should be to open a designated business bank account<\/a>. For your personal funds, pay yourself a realistic and affordable wage into your own personal account. This will not only help you avoid dipping into different funds for other expenses, but it\u2019ll make filing your tax return and keeping an eye on business turnover a lot easier.<\/p>\n Even if it\u2019s just a few hundred Euros, having an emergency fund<\/a> that you can turn to in times of financial need is extremely important for entrepreneurs. Never let yourself spend all your earnings for a month, as you don\u2019t know if you\u2019re going to do as well in the future. Saving up some emergency cash to fall back on if you find yourself in a tricky situation will give you peace of mind and help to alleviate stress levels. As a result, you\u2019ll feel calmer and more focused on your work, which tends to lead to better results! Hopefully, you\u2019ll never feel the need to use your emergency fund, but it\u2019s always nice to have one.<\/p>\n Beyond cash reserves, consider low-cost final expense life insurance<\/a> to protect your family\u2019s finances if something happens to you. Policies are designed to cover funeral and related costs, so burial expense coverage doesn\u2019t force loved ones to tap business cash flow or liquidate assets. Level premiums and simplified underwriting make it practical for owners who want predictable protection without a medical exam.<\/p>\n Whether you\u2019re in student debt, paying off credit cards, or committed to a mortgage, having debt is just another normal part of life for any citizen today. Borrowing money has become something that most people can\u2019t afford to do, and there\u2019s no denying that in some cases, the ability to use a credit card, take out a short-term loan or pay for something in monthly instalments can make affording the lifestyle you want more achievable.<\/p>\n However, for entrepreneurs, struggling with high levels of debt personally can quickly ruin your business. Not only will you need to ensure you\u2019re earning enough to cover all your repayments, being in debt can be seriously stressful and may cause you to become anxious and unmotivated, affecting your productivity levels.\u00a0 Keep in mind different states and localities have different rules\u00a0for debt collection agencies<\/a>, which can greatly impact a business’s ability to maintain cash flow and repay debt.\u00a0 If you\u2019re worried about debt, speak to a financial advisor today about what you can do to minimize it quickly.<\/p>\n If you struggle to live within a personal finance budget and are always paying your bills at the last minute, chances are, this pattern is going to overflow into your business and cause issues. Instead, make the effort to change your habits and get into a routine of getting and staying on top of your personal finances. It\u2019s good practice to set aside an hour or so every week or month to pay all your bills, work out how much money you have for spending on yourself, and set aside cash for your savings or emergency fund. You may want to consider using a smartphone app to track your spending; this will make it easier for you to see where most of your money is going and come up with strategies for cutting back. Improving your budgeting and money management skills with your personal finances will have a positive effect on how you handle your business\u2019 money.<\/p>\n Lastly, don\u2019t struggle with your personal or business finances alone. There is much help out there for anybody who needs it. This doesn\u2019t always have to be a person, either \u2013 there\u2019s a great selection of reasonably priced software programs and apps which are designed to help you manage both personal and business funds. For business finances in particular, you may find it useful to work with a mentor, who can help you make better financial decisions for your company.<\/p>\n Have your personal finances had an effect on your small business? We\u2019d love to hear from you in the comments.<\/p>\n","protected":false},"excerpt":{"rendered":" As a small business owner, you know that it\u2019s wise to put a lot of effort into ensuring your business finances are running smoothly. Without keeping a close eye on business turnover, particularly during the early stages, you risk damaging or even losing your company before it can begin to reach its full potential. In… How Your Personal Finances Can Impact Your Small Business<\/span><\/a><\/p>\n","protected":false},"author":17,"featured_media":3520,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"neve_meta_sidebar":"","neve_meta_container":"","neve_meta_enable_content_width":"off","neve_meta_content_width":70,"neve_meta_title_alignment":"","neve_meta_author_avatar":"","neve_post_elements_order":"","neve_meta_disable_header":"","neve_meta_disable_footer":"","neve_meta_disable_title":"","footnotes":""},"categories":[1],"tags":[],"class_list":["post-3519","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general"],"_links":{"self":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts\/3519","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/users\/17"}],"replies":[{"embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/comments?post=3519"}],"version-history":[{"count":5,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts\/3519\/revisions"}],"predecessor-version":[{"id":15852,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts\/3519\/revisions\/15852"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/media\/3520"}],"wp:attachment":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/media?parent=3519"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/categories?post=3519"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/tags?post=3519"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}3. Keep Personal and Business Money Separate<\/strong><\/h2>\n
4. Have an Emergency Fund<\/strong><\/h2>\n
5. Decrease Your Debt Levels<\/strong><\/h2>\n
6. Stay on Top of Budget<\/strong><\/h2>\n
7. Get Help<\/strong><\/h2>\n