One of the biggest perks of being an entrepreneur is being your own boss. You are not answerable to anyone and are free to take your own decisions. Whatever ideas you have, you can put them into practice and have the contentment of seeing your business grow from strength to strength. You will have the power to direct any of your employees to work according to you and also will be the final authority to sign off on any future plans. Being an entrepreneur allows you various benefits that would not be possible as an employee. Sounds really good, doesn’t it?
But always remember that with great power comes greater responsibility. Being your own boss and getting to do things your own way is undoubtedly a bonus but then you will have the added burden of being answerable for every action of your employees. The stakes are high for you and you also face the risk of losing your whole investment with one wrong decision.
So, it becomes imperative that you stop acting on impulses and plan your future course carefully. The financial future of your company will be the ultimate measure of your success or failure as an employer. As such, Budgeting and Funding decisions assume greater significance for the continued success of your business and require your undivided attention to make sure that every decision you take is carefully contemplated and well thought. You need to keep a tab on the financial pulse of your business to be able to take Business Loans whenever the situation demands an external source of finance.
Here are the best budgeting and funding tips that you must follow for the financial well being of your business:
- Open a separate account for your business
Always make a point to have a different current account for your business and do not conduct your business transactions from your savings account. Not only is it recommended from a taxation point of view but also from the ease of accounting.
Most of the time what happens is that you are too involved in your business and forget to have separate accounts considering the company as a part of your identity. But this would stop you from having a clear picture of your business finances, so make it a point to have a separate account for your business right from day one.
- Always take your salary
It is true that the business is like your baby and a part of you, but you also have a family and expenses to take care of. So, make it a point to always take a monthly salary and manage your personal expenses from that. Do not use your business account for your personal expenses as it would create a lot of problems later on while you are preparing the final accounts.
- Project your cash flows
Most of your business plans would depend on the projected cash flows that you anticipate. Note that it is different from actual cash flow projections. Keep the estimates realistic and do not inflate your expected inflows otherwise, you will be facing problems when the reality hits you. Prepare the cash flows periodically for every quarter, half year and then for the whole year.
- Overestimate your expenses
Although it may seem messed up, overestimating your costs is better than underestimating them. When you have made provisions for increased expenses, you will budget accordingly and try to save money for upcoming expenses. But in reality, when the expenses would be lower than what you anticipated, you will be pleasantly happy. It also gives you a margin of error.
- Create a contingency fund
You never know when an emergency might hit your business and you may be left wanting. In order to avoid such a scenario, you need to create a contingency fund for any eventuality. You can start by saving 5% of your total receipts every month and then slowly build your emergency reserve to meet any financial exigency. Otherwise, you would be left asking yourself the question “Can I get a Business Loan?”
- Assess various credit options
Eventually, a stage will come when all your personal funds have dried up,and you need money for your business expansion or payment of bills. Your best option in this situation is Applying for Business Loans which are being offered by many financial institutions. Business Loans can be secured and unsecured depending on your company profile. They are also a good way to acquire any new asset without straining your finances.
- Prepare a budget
It is imperative to have financial discipline when you are running a business. This discipline can be achieved only if you have prepared a budget for all your proposed expenses. This step will help you keep all your costs under control and take necessary corrective actions when the situation arises.
As a business owner, you have significant responsibilities to take care of. So rather than getting carried away by the powers that the position bestows on you, it is better to keep your feet firmly grounded and work responsibly towards making your business a success.
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