Countless people start businesses every day, but if you’ve read any of the countless articles, you know that most companies don’t make it past the 5-10 year mark.
There are a myriad of reasons why people shut their doors but the most vital factor is the financials. Too many business owners are perplexed with accounting and blow it off or let someone else handle it. They lose important documents that cost them thousands of dollars, or they grow so fast that they cannot keep up with demand.
I have done bookkeeping for entrepreneurs and have learned from their success. They are great at what they do. They talk to their customers, they get stuff done and their products and services were top-notch. However, when it came to the finances, you could see the difference between the ones whose books were easy to do and the ones whose books made me want to crawl under a rock and never come out again.
Many of them let me handle some of their personal finances. The ones who had their personal finances under control also had their business finances under control as well. They kept up with their personal and business paperwork. They had a filing system; nothing complicated, but they knew where they kept things. They treated their personal finances like a business.
Think about it: a business wants to bring in more cash than they pay out. When you earn an income at a job, you also want to have some money that stays in your bank account that you can use to buy assets to provide future income. Start treating your money like a business:
- Use the technology you have in your hand to save your receipts
- Don’t wait until your bank statement comes in to reconcile your accounts
- Make constructive changes if you don’t like what you see on your statements
- Make it inconvenient to spend money; plan your purchases
- Set aside a generous amount based on your situation for fun stuff
- Reward yourself for saving money and borrow from yourself first
If you want to start a business or if you already have one, make sure that you have your personal finances under control and use that mindset and those habits to ensure that your business doesn’t become a statistic.