Becoming an entrepreneur is extremely rewarding, but it can also be tough. In the beginning, you often must do everything yourself, which is exhausting. You work long hours and juggle many things. With so many responsibilities, sometimes it is hard to even stay focused, or motivated for that matter. But, for those who persevere, there is a reward ahead – both emotionally and financially. However, Freedom Debt Relief reviews of entrepreneurship show that as the business takes off, it is critical to have a solid financial plan. Here are some tips on how to manage the financial challenges that entrepreneurs can face.
Separate Personal Financial Goals from Business Financial Goals
Goals are important. They keep you on track and remind you of what you are working towards. However, when you own your own business, there is often a tendency to lump your personal financial goals in with the goals of your business. Freedom Debt Relief reviews of these practices show that it is really best to keep these two separate. Otherwise, you put yourself at risk for a myriad of problems.
For example, let’s say you have a personal goal of buying a new home. If you use your business as a means of funding it, what happens if the business fails? No one likes to think this way, but it is important to consider. A better way to think about it, and keep the two separate is to ask yourself this: How much do I need to generate from the business to afford a house and also manage my business obligations? Additionally, set up personal savings and investments that are separate from the business.
Track Your Business Expenses
It is important to know how much you are spending on your business. It may seem like an insignificant amount of money when you buy gas to go meet a client or treat a prospect to coffee, but it all adds up. Freedom Debt Relief reviews of spending have shown countless times that people may be spending much more on their business than they realize. Each time you buy a book, sign up for a class, or purchase supplies, keep a record of it and save your receipts.
Monitor Your Personal Spending
When you own a business, and it is doing well, it is easy to start spending the money – living the lifestyle you dreamed of. And it is tempting to withdraw money from the business. After all, it is your business. However, this can be detrimental to both your business and your personal finances.
Freedom Debt Relief reviews of personal budgets show it is best to keep them separate. Yes, you can pay yourself from your company, and it can be a substantial amount (if you can afford it). However, you should come up with an amount that works for you and doesn’t dip too much into your business account. Also, to help you stay on track, avoid carrying around a company checkbook. And make sure that payments from customers go to your business account rather than your personal one.
Maintain an Emergency Fund
Keep a personal emergency fund. Freedom Debt Relief reviews of the average person’s expenses reveal that you should put aside at least three to six months of expenses in savings. That way, if you have a true emergency, you can withdraw from this fund instead of dipping into your business funds.
By putting these practices in place and keeping your personal and business separate, you can achieve greater success with both.