Congratulations on becoming your own boss! While the benefits of being your own boss are evident, i.e. control of your own time, making your millions and possibly a lot more quicker than when you are employed and just the flexibility that comes with it are attractive; there is however another side to being your own boss. The lack of certainty for your next paycheck, lack of employee benefits ie Pension fund, medical aid etc. Being your own boss can be tricky. Below are a few tips on how to manage your money in your new role:
1. Get organized
It’s easy to get caught up in the rat race of chasing your next invoice and trying to get new business. You need to have systems in place for administration (which I have to say, I loathe!), your personal finances and your business finances. Get an accountant involved early on so you don’t miss any important steps that might slow you down later, i.e. your business and personal taxes.
2. Know exactly what it costs you to run your life (Income Vs. Expenses)
I know a lot of entrepreneurs who use their business account as their own personal purse. While I know that the lines between personal and business can be blurred as a start-up, try build the discipline not to use the business card for personal use. Imagine an opportunity arises for you to either partner with someone or be bought by another company and voilà there on your bank statement, a purchase of a red glass of wine at Tashas on a Friday afternoon! It just doesn’t look good for any investor!
Rather, pay yourself a salary that goes into your own personal account. Let your business card be just for that, business. Know what it costs for you to live, so do your budget and stick to it.
3. Don’t put off saving or investing
It is so tempting to put off your investments when you embark on your entrepreneurial journey! It’s easier to say I will continue with my investments once I start making the big bucks!
Instead of putting investing/saving off altogether, reduce your contributions to the minimum until you can get back to the level where you feel comfortable with. Remember the two ingredients to successful investing: starting early and/ compound interest.
4. Get insured and stay on a medical aid.
I don’t know why insurance is such a grudge purchase for most people but when a bad situation happens, it is exactly what you need. As a businesswoman, you need to insure you against those bad situations so they do not put you under a lot of financial strain should they happen.
5. Know your worth!
I speak to a lot of entrepreneurs who offer really great services and products. They put in the hours to hone their skills, expertise and knowledge but are afraid to charge a fair price. They often discount their services or products then they get frustrated. I know you have probably heard this but know who your ideal client is, speak his or her language and don’t try serve every single person out there. You will attract YOUR kind of client.
Are you an entrepreneur? What has been your experience with your own personal finances since becoming your own boss?
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