Managing money—People don’t usually learn it in high school or college. You can learn all the accounting and financial skills, but if you don’t know how to handle your money, then all these lessons are just put in the bin. These lessons only serve as guidelines, and it is always up to you on how you are going to apply them. If you are an entrepreneur, the challenge is even higher for you regarding managing your money. Finance is the lifeblood of your business, so you need to be wise with money if you want to succeed.
The challenge is even higher if you are in a shared enterprise, meaning, you share ownership of the business with other people. When you are in a partnership, you may share different views with your co-owners and co-investors, so instead of putting all your talents into good use, you end up fighting over decisions.
But many shared enterprises also succeed, thanks to partners who share the same views, goals, and principles in business. More than their differences, they think, first and foremost, of the interests of the company. If you get to partner with these kinds of people, then you are lucky. But if your partners are self-centered and would always think of their interests, then you have a lot of things to consider to make the partnership work.
Based on the many success stories of shared enterprises, here are some tips to help your business reach its goals:
1. Plan expenses in advance
Think of yourself as the CEO and CTO of your company. How will you go about managing your company’s finances? Always think like a business owner, because this helps you get in the zone of being in charge of things you do. Even outside of business, think like a business owner. Think of budget, allocations, and expenses in advance for your finances. Or if all else fails, get the outsourced tempCFO accounting services to rescue from the challenge of crunching numbers. Nothing beats careful planning on how you will disburse cash or spend your money on so that you won’t go broke.
2. Closely monitor your accounts
Always do a regular check of your income statements and list of expenses. It will give you a clear picture of how much you have spent vis-a-vis how much you have earned. Keep an eye on your net worth which tells you how your income or earnings stand against liabilities and expenses.
Record each expense regularly, on a monthly or quarterly basis as much as possible so you can see how much you have spent for the previous month or quarter. It also helps you plan and budget for upcoming expenditures.
3. Take note of your tendency to invest on impulse
It is essential to identify which are your needs and which are just nice to have or which you can live without. Do not be tempted by attractive promises of growth and success. A lot of those ads are emotional marketing and cater to your deepest desires and wants. Before signing up for an investment plan, think twice. A lot of careless investors spend more than what they initially planned to spend because they fell to the bait. Be aware that advertising firms hire social scientists who are experts in human behavior and psychology in order to increase sales of products and services. Do not fall prey to these tactics. Be wise and aware of what you need.
Some reminders to help you be aware:
- One-day rule. It is best to always give yourself time at least twenty-four hours before deciding to buy something or invest in something. It will help you analyze the situation from a broader perspective.
- Keep in touch with your goals, so you avoid spending unnecessarily.
- Identify the emotions you feel when listening to sales talk. Ask: What is this ad selling?
- Use cash whenever possible for a sudden or unplanned expense. Buy on credit only for convenience purpose and pay on time and in full when the due date arrives.
- Delay gratification statements such as, “I feel good if I have it,” “If I don’t buy it now, I might regret it later.” Analyze the situation before delving into an important decision.
4. Plan to save for the future
Right after you assess your monthly income, save a fixed portion regardless of the amount and put it in a savings account. If you can devise a way to do it automatically, then do so. Go to your bank and inquire about auto-debit features or a particular type of savings deposit which automatically places a portion of your money to a higher-income savings account or investment. It will relieve you of the unnecessary stress of having to go to the bank each month so that you could withdraw and deposit to a high-interest savings account.
5. Don’t lose sight of your credit standing
Make it a habit to keep tabs on your credit score. The better the rating you have, the better chance that creditors and lenders will be friendly to you when it comes to approving your loan application or renewing your current one. The credit bureau monitors this and shares your credit information with other credit institutions, or used by prospective employers, insurance firms, utility firms, cable, and internet service providers.
It is possible to find success in a shared enterprise, but you have to be extra careful with how you manage your business’ finances. Do not get overexcited with additional investments that might blow up your capital. Focus on your goal, and that is to keep on improving your enterprise.