How to manage personal finance for entrepreneurs successful who are starting a business?
The start-ups business owner needs to check their business finance and personal finance.
For start-ups, what advice they should follow?
Let me share my journey when I started a blog business. Honestly, it is challenging to manage my finance because of the skeletal workforce in the company.
Hello, it is me! Eileen, and welcome to my blog 🌸
This website specializes in how to start up a business for beginners. And educate them to be financially independent.
What is Personal Finance
What are the personal finance for entrepreneurs you need to prepare? Let me give you the lists and find out if you have it all.
- Insurance – this insurance is your income protection, health, and property protection. The example is life insurance, HMO, and Philhealth.
- Cash – This is in the form of your salary, business profit, and cash sales.
- Investment – this finance gives you double interest earned. These are the mutual fund and trust fund.
For start-ups business owner
full-time freelancers, and
for marketers (sales agents),
this topic might interest you, for you are managing the business.
Below is the advice on how to manage personal finance for entrepreneurs successful.
Separate personal cash from the business
The importance of personal finance for entrepreneurs is managing his money.
Personal cash is your salary, interest earned, and your business shares.
Business cash is cash sales, receivables, interest earned, and working capital.
How to track cash flow?
Record on a google sheet or create a task sheet for the intention of tracking the cash flow. Separate the business cash from your personal.
Why is it necessary to separate them and track the cash flow?
Cash is King. It is the currency or coins that used to exchange goods, pay the loans, or give a tip for efficient service.
It is necessary to record their cash to know how much money they have.
Thru monitoring your cash flow in the business, you will get an idea if you want to grow it. If your purpose is to maintain, then record it and remark to know of where your money goes.
You will not appreciate it, but soon, if your business is shrinking, this will be your guide.
Another personal finance for entrepreneurs is to track his budget.
*Pay personal credit card and record on the company’s expense.
You can borrow money to pay your loan, but it is not a good reason to record it at your company’s expense. The advantage of having a business is you have the power to get money for personal reasons. Mishandle money, or your operations do not have the working capital to revolve.
*Borrow money for personal use
A loan for more working capital in business is a good credit. If it is for personal purposes is bad credit.
*They do not have a budgeting plan for their business and personal use.
Preparing a budget is a challenging part of managing money.
You have this plan, can track the lists of your expenses.
Reduce the expenses which are not required at this moment and can wait once you have cash in your wallet.
Buy the non-assets, which is not profitable.
Non-Assets such as Land gives you an appreciation value, and you can earn a million pesos profit.
If your reason is for nothing (relax, unwind), then it is ok. But if your reason is for investment, better to think twice and study it well. It is most of the pitfalls for beginners.
What are the samples of Non- Assets?
- Business vehicles
Write your spending and your saving.
You have a budget plan.
You have a savings plan (which I mention before).
These two belong to the planning stage.
You have already known how much you want to save.
Lists all the spending and reduce the expenses.
All the expenses for a day must record in the disbursement book for the company. For personal, your friendly google sheet ready to guide you.
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For a company, they have an account title in the expense category. The bookkeeper categorizes as a payroll belongs to the expense category.
Same with savings, business owners compare the plan versus actual savings. They make a report which including how the saving and spending matters.
It will give the result of spending is smaller than savings or vice versa.
Hospitalization is the best example of an emergency. Go somewhere, look for an ATM to withdraw cash, and buy immediate medicines.
Write your plan of savings and the actual that helps you conclude if you need to increase savings.
Prepare an Emergency Fund
The best advice I could give to manage personal finance for entrepreneurs successful.
As we all know, Emergency Fund comes from the word emergency.
It is an immediate expense in an uncontrollable situation.
Some expenses are controllable. It is not wise to withdraw your investment money. It is better to save money for emergency funds for like the case loss of a job. You have separate pay from your company, but this is not enough to stay for six months.
It is already nine months, and almost in the hospitality business cannot recover from this pandemic outbreak.
So you are experiencing this recession. So next time, already have the knowledge and have enough emergency funds.
The questions, how much for the emergency fund?.
For personal consumption, if your expenses are P50,000/month, times it to six months, then you need P300,000 in your fund.
You still have an emergency fund for your business to avoid getting the money from your savings. The business owners gain their profits within two years.
This protection comprises:
*life and property insurance both for your home and business building.
Life insurance is income protection when a business owner dies. Your loved ones will not face hardships because you buy protection from them.
The Social Security System (SSS) urged the business owner to apply their staff for this is mandatory. And if it happens, the field officer will surprise visit to your store, so you have no choice but to pay the penalty and charges.
Other employee’s benefits shoulder by the company: Philhealth, HDMF, and HMO.
This expense needs accuracy in recording a disbursement book.
*Insurance for your employees.
The Social Security System (SSS) urged the business owner to apply their staff for this is mandatory. And if it happens, the field officer will surprise visit to your store, so you have no choice but to pay the penalty and charges imposes by them.
Other employee’s benefits shoulder by the company is Philhealth, HDMF, and HMO.
This expense needs accuracy recording in a disbursement book.
As an entrepreneur, separate your personal finance from your business. Your advantage of owning a business is you can borrow personal money immediately. Remember, strictly follow payback to your business.
Finances are your cash, investments, and protections that you need to manage it well to avoid negative cash flow and charges.
A bookkeeper is a good choice hire because she is the one who records all your transactions from day-to-day operations, prepares financial statements, and helps you to track your cash inflow and outflow.
Questions in bookkeeping related?
Need advice on your financial planning?
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