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Financial Tips for Entrepreneurs

Posted on 07 Aug 2014 by Shammika Munugoda

Financial Tips for Entrepreneurs

Like most entrepreneurs, when you tell people what you do for a living, you're probably used to seeing their ears perk up. Their eyes might get a little bright and they typically express how envious they are or talk about the plans they have for pursuing the same line of work someday in the near future. If they only knew, right? Being an entrepreneur looks great on paper-and, sure, it definitely has some perks- but the truth is that this path is an arduous, challenging and sometimes downright terrifying one. This is especially true when it comes to matters regarding money. There never seems to be enough of it and what little there is always seems like it has someplace better to be. It doesn't have to be this way, though. Try the following tips for a little breathing room and a chance at better finances.

Track Everything

Everyone out there should have a budget and be tracking every penny they spend, so they can refine their financial schedule in the future. However, this a million times more important for an entrepreneur. One of the defining terrors of this line of work is that the well will one day magically dry up. It happens all the time. Out of nowhere, a client disappears, a market gets saturated, a supplier leaves the business, etc. Any of these possibilities could leave you without a large chunk of your check.

So you absolutely must create a budget and then track. This means tracking what you bring in and tracking where it goes (i.e. savings or what you've spent it on).

Plan for Rainy Days

Part of your budget should include savings. Most people keep this category for a number of reasons, one of which is "rainy days." As we just covered, you need to prepare for rainy days. So your "savings" category needs to be substantial. Most financial advisors recommend having enough money on hand for six months of living expenses.

Keep in mind we're talking about the bare essentials. If you lost all your business tomorrow, how much would you need to keep your roof, the lights on and from staying hungry?

Make Sure You Get a Salary

On the other side of the spectrum, be sure your budget accounts for your own personal salary. A lot of entrepreneurs make the mistake of simply pouring their profits right back into their business and just taking what they need along the way or covering expenses with their savings.

Unfortunately, that's not how good budgets work. You need to be specific about everything, including how much you're going to be making. Obviously, this is also a good way to measure the health of your business. Plus, there's something to be said for feeling like a certain chunk of money is all yours and that you're free to spend it as you please.

Automate as many processes as you can

As an entrepreneur, your days are probably busy enough. So all of this may seem like a headache-worthy amount of extra work. It doesn't have to be though. Always keep abreast of the newest tools out there for helping you get the job done—entrepreneurs should already be doing this for their work.

Popular examples include:

  • MailChimp.com
  • Salesforce.com
  • Desk.com
  • ZenDesk.com
  • Zopim.com

Look for tools that provide you a free trial period, so you're not spending money you don't have on something you may not need. Just be absolutely sure you know when your trial period is over or you'll end up getting hit with fees.

Consider Every Opportunity

On the one hand, as an entrepreneur, you should consider every possible opportunity out there that could result in cash flow. You probably already know that though.

However, truly considering an opportunity means being sceptical too. Time is money when you're an entrepreneur. Is pursuing this opportunity actually going to be worth it? Could that time be better invested? Perhaps there's another opportunity that needs it more. It might make more sense to reinvest that time into your business and handle some pressing matters.

The point is that not everything that seems like an opportunity actually is. Keep a critical eye or your finances could suffer.

Being an entrepreneur can be one of the most rewarding experiences of your life. Part of the reason is because it will also be so challenging. One challenge you need to take especially seriously is your finances. Keep the above in mind, though, and you should be able to overcome it with relative ease.

"Entrepreneurship is living a few years of your life like most people won't, so that you can spend the rest of your life like most people can't".

Shammika Munugoda

Shammika Munugoda

Founder and CEO

Software engineer Shammika Munugoda is the founder and CEO of Boomeringo.  In 2005 Shammika arrived in Melbourne as an international student from Sri Lanka. Being an international student meant Shammika was only allowed to work a maximum of 20 hours per week. His years as a financially strapped student were an influencing force in the development of Boomeringo. Shammika’s vision is to make financial management simple, easy and accessible to everyone in Australia.