7 Personal Finance Tips Businesses Should Ignore
Finance is the heart of any startup and it does not matter that the startup is for personal life or professional life. The thing which matters is that the financial tips that best works for your personal life will work for your business as well? The answer is no because the financial methods which seem fit for personal finance often work opposite to your business success.
Therefore, we have gathered 7 personal financial tips that are great for improving your finances but impacts negatively on your business.
- Earn Extra Money:
It is generally recommended to go for a second job to supplement one’s financial budget for a better survival. However, the opposite of this advice is healthier for your business. Instead of investing time in a second job, business owners can use that spare time on working strategies and plans that ensure making smart financial decisions for the company and satisfaction of clients as well as its workers resulting in a successful and fruitful company.
- Divert Your Funds Towards Investment:
Many financial advisers tell their clients to invest their money to grow their capitals nest instead of letting their funds stay idle. But as a business owner, letting your cash invested in stocks, market, bonds, etc. eats up all your cash flow and nothing is left behind for rainy days. It is advised to siphon off a proportion from your profits to build an emergency reserve fund. An emergency reserve fund is your business’s important buddy that can help it to stand steady in case things go upside down and protects it in an uncertain situation.
- Keep Track Of Your Finances:
It is advised to keep track of your spending in your personal life which is an essential tip in business life as well however, it is not enough to keep track of your expenses, profits and manage financial statements in the business world. It is important that every business should have an accountant who is aware of all the business financial patterns such as profit and cash flow; manages and tracks all the basic financial information, and maintain a detailed financial record of the company. This savvy step will help your business to grow without overspending.
- Work Extra Few Hours:
Working extra hours to open the doors of money opportunities are appreciated in the Personal Finance world. However, this tip is fundamentally flawed in the business world because; pressurizing yourself with too much work will increase mental stress and reduce productivity at work. Rather than burdening yourself with a workload, focus on discovering ways to improve your resources and staff efficiency for profitable returns and mind relaxation.
- Taking Loans:
Many financial planners advise individuals to go for a loan to reach their financial goals. However, as a business owner inclining towards large loans just because a bank is willing to lend you money is not at all good for your business as it involves a high level of risks and stress. What if you borrowed a large amount of money and suddenly your business starts wavering? Therefore, it is wise for business owners to be careful with loans and borrow as much they need with a complete repayment plan.
- Keep Your Credit Utilization Below 30%:
To avoid your personal credit score from being hit with a bad ding, you should use your credit below 30% of your total available credit. Nonetheless, the same practice is not true for your business. Consuming your available credit is a better option to create more money which can be used to pay off your credit cards to improve the debt-to-income ratio that helps you shop loans for your business in better rates.
- Fixed Costs:
In both your personal and business sphere, fixed costs are the expenses you pay monthly like rents, maintenance bills, salaries, etc. In your personal life, you are earning a paycheck to paycheckhence, it is easy to pay for the fixed costs. On the other hand in business, it is a struggle to pay for these fixed costs because maybe you don’t get a client for a month or two disrupting your accounts. Therefore, during the startup of a business, it is suggested that businesses should keep their fixed costs as low as much as they can.
Managing your Personal finances efficiently and keeping your business in view is essential for a business with fruitful profit, running a business and satisfied clients. It is definitely not a stroll in the park but it needs to be done.