Financial discipline for entrepreneurial success
“Always learn, always question and surround yourself with passion- Anna Lecat”
Being an Entrepreneur can be an emotional ride filled with ups and downs, joys and disappointments. When it comes to achieving financial discipline for entrepreneurial success, a large focus should be based on startups. It is one thing to start a business and another thing to sustain it. Anyone can start up a business but in order to successfully sustain one, it is critical to look at the financial structure, marketing strategy, administration and so much more of the business. The major challenge with starting a business is in the first five years, when the business owner is occupied with attracting customers and doing most things alone. Mistakes and failure are inevitable but before building a business, an entrepreneur needs to avoid certain mistakes.
Eight financial guidelines for entrepreneurs
1. Have the Right Mindset: When building a business as an Entrepreneur, it is important to start the business with the right mindset. A lot of individuals see business success as an escape route to the kind of lifestyle they want to live, or a way to feed their ego.
2. Avoid Using Personal Account as Corporate Account: The word company is defined as the fact or condition of being with another or others. Ideally, a commercial business should involve two or more persons running the affairs of the company and its account. So, when an entrepreneur is running a company like a one-man army, it becomes a job and not a business. Every entrepreneur needs to learn the importance of separating business finance from personal account and should ‘pay himself’ at the end of the month rather than spend company’s money on personal expenses. The question now is, how do you know how much salary to pay yourself when you are still struggling to keep your business on the right track? For long-term financial growth and to keep track of on-going expenses and taxes, ensuring that your business and personal capital are separate, is essential.
3. Develop a High Selling Skill: When it comes to sustaining living expenses, an important key thing every Entrepreneur should note for his/her business is the ability to develop a high selling skill other than that business. Psychologically as an Entrepreneur, there is need to get to a point where you have to adopt delayed gratification, which is mentally delaying your wants in order to focus on your needs and build it.
4. Always Take Inventory: Once everything is in place, the next step is to take an inventory of the current cash flow of your business (how much money your business is making and how much is going out). Your finances should not be based on assumption but on the reality of your business. This is why it is important to know exactly how much money is flowing in and going out.
5. Query Your Expenses: One way to query your expenditure as a business owner is by identifying costs you can outsource and those to bootstrap (starting a business without external help or capital). For example, the first thing a hair stylist on a tight budget needs to do is not to get a shop, but to start from his/her house by using a room as a salon. At the end of the day, the extra rent which would have gone out as store rent could be used for other expenses. This way, the hair stylist can use one rent to sort out two important needs. In as much as cash is king, one needs to be able to put all cash to good use.
6. Create a Well Defined Structure: A major mistake many entrepreneurs make is on structure. No good entrepreneur can run a business without having a solid structure. Each person in the business should have a specific role, know what they are in charge of and should follow their tasks judiciously. One person should not have too much power and responsibility; there should be a chain of command.
7. Diversify your Income: As an entrepreneur, you should be able to diversify your income, most especially at the point where the business is making lots of profits. For example, an investment management company which started in purely traditional assets management could over time spread into real estate, hospitality and more. This is because, hiccups are bound to occur in businesses and the business owner(s) should be able to have somewhere else income flows from.
8. Insurance: A lot of entrepreneur, especially in our environment, do not believe in insurance. Insurance is very important because when these risks which are inevitable occur, they can be transferred to the insurance company who will cover whatever setbacks suffered. When a company is properly insured, losses are only temporary instead of permanent. More so, the freedom from worry and fear of loss that insurance brings can improve a business owner’s productivity.
In the end, it is important to bear in mind that even with adequate capital and a perfect plan, anything can happen. However, what makes a good entrepreneur is the ability to keep pushing in times of challenges, rather than giving up easily.
This article is an excerpt from BE ALL YOU CAN BE With The Catalyst, a radio show hosted by Lanre Olusola on The Beat 99.9 FM, Saturdays at 9:30am. To fully maximize your potential and identify what makes you exceptional, sign up for our upcoming Life Coaching and NLP Combo Class billed for 14th – 20th of May, 2018. To register, please call 08077077000 or email email@example.com.