I just made my first thousands of naira in my business. This was accompanied by that familiar feeling of success, that feeling or sense of euphoria that normally comes with knowing that your idea is paying off. It does not matter how little is the return; what matters and makes every difference is that your sweat is not a waste.
The first question that came to mind was: “what can I do with this money?” The answer was very easy: “reinvest it, use it for more strategic planning!” That however is not the thrust of this piece. You know why? I have encountered many small business owners that did the opposite. Yes, they personalized their earnings and debt-financed their businesses to keep it running. If you ask for my professional take, this is the sure detour to running any business to the ground or keeping it stagnant, absolutely motionless for years.
There is no doubt that financial management is a very rare skill, rarer than the appearance of a shooting star, if you ask me. Only a few young entrepreneurs possess it. It becomes even quite tricky when it is the same business that provides all the basic needs of the entrepreneur – when there is no sale, there won’t be food on the table. The following tips will however help you do better:
YOUR MONEY IS YOUR BUSINESS MONEY AND YOUR BUSINESS MONEY IS YOUR BUSINESS MONEY.
“My proceeds from the PayPal acquisition were $180 million. I put $100 million in SpaceX, $70m in Tesla, and $10m in Solar City. I had to borrow money for rent.”
–Elon Musk
Success is a struggle tottering between two extreme ends: our immediate desires and long-term gratification or accomplishment. Until we decide to act on the future by looking at the bright side of it, silencing the tempting voices of our immediate and more outspoken desires, we might never get it right. The bottom line is: try to define your priorities. If your business is your priority, it will be your primary consideration, I.e., first before any of your personal needs. However, if your primary consideration is your personal needs, the one-way advice is: stop frolicking around, stop wasting your time and bolt the door as you leave entrepreneurship to find other better things to do with your time and productive years.
An entrepreneur that wants to grow his business must be able to channel all his resources to the business. There is no commitment whatsoever until your business owes you a debt. Deploying such financial practice, you consolidate your ideas and move to break even with the business without minding the occasional bumps on the way.
SEPARATE YOUR PERSONAL NEEDS FROM YOUR BUSINESS
“The difference between successful people and unsuccessful people is the successful people do all the things the unsuccessful people don’t want to do. When 10 doors are slammed in your face, go to door number 11 enthusiastically, with a smile on your face.”
– John DeJoria
So many entrepreneurs use their personal accounts as their business accounts. While there is nothing wrong in that, tracking your business’ cash flow will hardly be feasible. When a business is unable to track its cash flow, it often leads to myriad of challenges, such as cash shortages, poor business decision making, poor risk management, and loss of business opportunities, among others.
FINANCIAL DISCIPLINE IS THE KEY
“Success in business requires training and discipline and hard work.”
–David Rockefeller
The truth is that we all love enjoyment. I also do. In fact, I want to go to the restaurant, order for the creme de La creme of refreshment and services available. It’s the money that does the job, nothing more – just money. But to what end? It only runs your business out of its steam, just as it does to your pocket.
One strong financial principle I have held so dear to my heart is to get my immediate needs and leave others for posterity to judge. If I make am, I go get am, but I no go follow crowd, our life plans are designed differently.