Download
1 / 28
280 likes | 437 Vues
Nigeria s newest and freshest business blog providing information in entrepreneurship, business startup, legitimate money making and wealth creation
E N D
As entrepreneurs our financial and emotional well-being are often tied up in the performance of our ventures. Entrepreneurial ventures offer no guarantees, so when there are financial highs and lows, our emotions often jump on for the ride.
Achieving financial success in business doesn’t come quickly or easy, but it is not unachievable either. As strange as it might sound, if your business is going through a rough patch, there is no reason why your personal finances should be disrupted.
In the past I’ve struggled to separate the value of my businesses from my own net worth, and self worth. As an entrepreneur this is natural, as you work often becomes your identity. It’s all part of the entrepreneurial and business startup mentality. I see this as a good thing.
Nobody cares more about your business than you do, but when it comes to your finances, this type of relationship isn’t always sustainable or financially healthy. Trust me, this is one of those business management tips I learnt the hard way.
To maintain stability and clarity between your personal and business life, you must separate you’re personal and company bank accounts.
This allows you to stay calm when your business is experiencing a rough patch, makes it easier to decide what you can and can’t deduct at tax time, and it will also make it easier to grow your business or even sell it.
I’d still recommend adopting this approach during times of financial success and stability. But in addition to this, you should leverage your finances to secure long-term financial security.
Want to know how? Here are some of the secrets to becoming financially successful:
1. Setting up clear financial goals: Like all good things in life and business, a clear business plan and goals help us stay motivated and focused. The same rule applies to finances as well. Before you can start dreaming of financial success, you would need to define what financial success means to you, and what it looks like.
When creating a financial plan, you would need to set clear and achievable goals for yourself. For example, in 5 years time you may aim to earn $20,000 annually in passive income. You may see this as a way of supporting the life that you dream of. This is why setting up a goal with a clear plan is essential.
You can divide your goals in three categories – short-term, mid-term and long-term financial goals. But your job does not end with setting up these goals. You should also determine the actions required to enable you to achieve them.
2. Assessing your present financial situation: You cannot plan the future unless you are fully aware of the present, and past. In order to realistically plan your future financial success, you should evaluate your current financial situation, and determine what you need to do to reach your goals.
Are you walking on the right path, or do you need to make some changes? When assessing your financial situation, you must consider two aspects:
Stocks – Some of the large organisations in the world are divided into millions of shares. Buying one of these shares means you have the ownership of a small yet significant share of the company. You will receive money from the dividend payments. You can also make a good sum by selling the share at a higher price.
Bonds – As a bondholder, you will be lending the government or a company some money. Organisations issue bonds when raising funds. Usually, the bond holder receives the principal or the par value when the bond matures. You will also receive interest while you are still holding the bond.
3. Creating a plan for spending and saving: One of the essential steps before starting a business is to understand your funding streams. This should be an ongoing process. Once you have thoroughly evaluated your present financial situation, it is time for you to create a plan for your spending and savings. This plan should show how you plan to spend your money in the future.
How much you spend on clothing, on groceries and on retirement fund – all should be included in the list. While you are planning your expenses, remember to swear by the golden rule of finance management, your expenses should never go past your earnings. You can start with the Cash Flow Worksheet. If you have a negative cash flow, you will have to make adjustments to lower your expenses.
4. Setting up an emergency savings fund: If you operate a startup business in Nigeria, I’d recommend that you setup an emergency savings fund in order to survive financially difficult times. Although business is booming in Nigeria, business in Nigeria can still be volatile.
Because of this entrepreneurs should at least plan towards having a savings fund as a backup. Let’s face it; no matter what kind of financial hardships you are going through, there are certain obligations that you cannot avoid. An emergency savings fund will help you keep up with the financial obligations without any hassle.
5. Investing wisely and diversely: While you are focusing on building your investment fund, don’t forget to invest your savings wisely. Investing the right amount of money in the right places can help you generate significant income in the future. This earning will only add as bonus. Here are two of the primary types of investments that you can consider making:
Net worth – Everything you own such as cars, house, furniture, certificates of deposits, savings and checking account, stocks, bonds etc. has a monetary value. These things are called “assets”. Liabilities, on the other hand, are monetary obligations that you need to fulfil. You may have liabilities such as car loans, mortgages, credit card debt, student loans, personal loans and so on. When you deduct your liabilities from your assets, you are left with your net worth. Positive net worth means when you have more than owe.
Cash flow – Cash flow includes both in-flows and out-flows. In-flow includes your paycheck, along with investment earning, alimony, child support, government benefits, gifts, rent and so on. Although most of us able to keep a track of cash in-flows, many forget to keep a tab on their cash out-flows. With expenses increasing everyday due to inflation, it may hard to know where you spent every penny. That is why having a Cash Flow Worksheet is essential to keep a track of both incomes and expenses.
So these are just a few of the ways you can pave your path towards long-term financial security. You may add to this list depending on what financial success means to you, and how you want to achieve it. I’d always recommend that you consult a financial professional to advise you of the current legal requirements, and the most suitable financial products available.
To know more details, visit us http://mynaijanaira.com/
