{"id":134774,"date":"2023-11-07T18:58:57","date_gmt":"2023-11-07T18:58:57","guid":{"rendered":"https:\/\/fin2me.com\/?p=134774"},"modified":"2023-11-07T18:58:57","modified_gmt":"2023-11-07T18:58:57","slug":"two-things-to-master-if-youre-thinking-about-starting-a-business","status":"publish","type":"post","link":"https:\/\/fin2me.com\/economy\/two-things-to-master-if-youre-thinking-about-starting-a-business\/","title":{"rendered":"Two things to master if you\u2019re thinking about starting a business"},"content":{"rendered":"

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There was a great video circulating on social media a while back. It was captured by the security camera of a small boutique shop, looking over the front counter.<\/p>\n

You see a customer walk in and buy something. Suddenly, as the customer leaves the store, the ladies behind the counter burst into a happy dance, celebrating the sale they just made.<\/p>\n

<\/p>\n

Mastering money is key to creating that financially successful business you always dreamt of.<\/span>Credit: <\/span>Simon Letch<\/cite><\/p>\n

It\u2019s a nice reminder that behind every small business is a business owner with a dream.<\/p>\n

But after years of wearing too many hats, trying to keep up with expenses, figuring out how to get more customers, and surviving economic turmoil, it\u2019s often a dream that is battle worn.<\/p>\n

Recent research by MYOB found that in the last 12 months, over 50 per cent of small business owners said running a business had a direct impact on feelings of anxiety or depression, with nearly half reporting that anxiety was largely caused by financial and cash-flow concerns.<\/p>\n

So what can small business owners do to create more financial security?<\/p>\n

If you don\u2019t know how to manage the money coming into your business, you\u2019ll always be on edge.<\/p>\n

1. Understand that you are not your business. <\/b>This can be a tough mindset to adopt because often, business owners put everything into their business. However, it can be helpful to view yourself and your business as separate entities.<\/p>\n

Yes, this holds true even if you are the face of your business, you are running a personal brand, or you operate as a sole trader (without a separate tax and legal structure, like a company).<\/p>\n

As a business owner, you\u2019re responsible for managing two financial entities: personal and business. Viewing these separately is important for several reasons.<\/p>\n

First, you\u2019ll get clarity on how each entity is really operating. If your personal and business finances are mixed it\u2019s hard to see what\u2019s actually going on. Is your business making as much money as you think, after expenses? Maybe the problem is actually your personal expenses? How much do you need to pay yourself to cover your personal expenses?<\/p>\n

You\u2019ll get clarity about all these questions by separating your business and personal finances.<\/p>\n

Second, viewing your personal and business finances separately starts to train you to have some boundaries around your business. If they\u2019re separate, that means there are opportunities for your personal finances to succeed, regardless of what\u2019s happening with your business.<\/p>\n

This could mean getting a part-time job during the early stages of your business, or prioritising paying yourself superannuation. It could also mean having healthy boundaries around how much of your own money you\u2019re willing to put into the business.<\/p>\n

If you create a habit where you put your personal money on the line every time your business needs extra cash, you will never feel secure in your personal finances. You\u2019ll always worry about the next business emergency that you might need to fund out of your own pocket.<\/p>\n

At first, this boundary will be scary. You\u2019ll worry whether the business can succeed without unfettered access to your personal funds.<\/p>\n

But over time, you\u2019ll notice this boundary pushes you to get more creative about coming up with cash in ways that don\u2019t require you to deplete your personal savings. It will also push you to operate the business on whatever cash the business has available to it.<\/p>\n

It will essentially force you to make a financially viable business. This brings me to my second point:<\/p>\n

2. Your financial skills are critical to your business success. <\/b>When you started your business, you probably saw an opportunity to provide a product or service you felt you could offer really well. Maybe it was cupcakes. Or hairdressing. Or social media management.<\/p>\n

Whatever it was, unless you\u2019re a financial professional, there\u2019s a good chance you didn\u2019t start your business with a burning desire to learn about the finances. In fact, you might find that to be the most dread-inducing part of the job.<\/p>\n

Well, I have some tough news for you. If you want a financially viable business, this is one of the most important, non-negotiable skills you have to learn.<\/p>\n

It doesn\u2019t matter how much your customers love you, how creative your brand is, how many followers you have on social media, how much better your product is than your competitors\u2019.<\/p>\n

If you don\u2019t know how to manage the money coming into your business, you\u2019ll always be on edge, worried that one or two bad months could put you in the red. The good news is I\u2019m confident you can master this skill pretty quickly.<\/p>\n

Why am I so confident? Because you\u2019re a small business owner. Learning new skills is basically the definition of the small business journey. You\u2019ve probably already learnt many new skills over the years \u2013 marketing, sales, hiring, firing to name just a few.<\/p>\n

Finance is just another one, and one that is key to creating that financially successful business you always dreamt of.<\/p>\n

Paridhi Jain is the founder of SkilledSmart, which helps adults learn to manage, save and invest their money through financial education courses and classes.<\/strong><\/p>\n