6 Money-Management Tips For Budding Entrepreneurs

Starting a new business can be an exciting and rewarding experience, but it also requires careful financial planning and management – a key aspect of running any kind of business. Here are some tips to set you in the right direction:

Create a Business Plan: A business plan is a roadmap for your company and helps you clearly define your goals and objectives. Make sure to include your projected income, expenses, and cash flows. This will help you stay organised and make informed decisions about your finances.

Seek Professional Advice: Consider working with a financial advisor or accountant to help you understand your financial obligations and make the most of your resources. They can also help you access funding and investment opportunities that are right for your business, and help you identify the right type of loans and financial access. Starting a new business can be complex, and it's important to seek the advice of successful entrepreneurs if possible. A good option could be to enrol yourself in business forums/networking groups in your local area – these could even be WhatsApp-based, giving you access to a wide range of advice and perspectives from other business owners who’ve overcome the challenges you’re facing.   

Balance expenses and obligations with funds available: One of the most important things is to focus and prioritise your expenses and debts. Make a listing of your debts, beginning with the ones that have the highest interest rates. Then, make a list of your month-to-month expenses, beginning with the important ones. When you choose to spend your cash, always start with the things first on your list. Similarly, keep an eye on the funds you have available (including sources of credit) Ensure that they’re balanced and that you pay attention to not letting your credit repayments fall behind.

Keep Your Personal and Business Finances Separate: This is crucial for maintaining good financial hygiene and reducing the risk of financial mismanagement. Consider opening a separate business bank account and credit card to keep your finances organised making it easier to track your expenses. Additionally, having separate accounts will make it easier for you to understand the financial health of your business and make informed decisions about its growth path.

Invest for the future: Investing allows you to grow your money over the long run and provides stability as well as security to your finances. There are various ways of effective investment planning. You could start small, investing in simple banking products such as Fixed deposits and Recurring deposits, and then consider opening an investment account, sticking to safer instruments such as debt funds. Connect with a bank or financial planner to help you on this journey.

Stay on top of your credit education: Begin by being aware of your net worth – i.e. the total value of all your assets minus all your liabilities. Then get savvy about how to optimise utilisation of your available liquidity and credit - liquid assets are those that can easily be converted into cash in a short amount of time, they include cash (of course) money market instruments, and marketable securities. On the credit side of things, it helps to regularly self-monitor your credit worth. You can do this by subscribing to access your CIBIL Score and Report, and using the various features on the dashboard to build up your ideal credit profile. At the very least, as an entrepreneur, it helps to avail your annual free CIBIL Score and known what numbers most lenders in India refer to when they assess your credit applications (either for cards or loans)

As a business owner, it can be tempting to want to invest everything you make back into your business. Creating value for others is essential, but feeling compensated and appreciated for your hard work, are incredibly important for your personal financial well-being, and to prevent feelings of burnout or frustration.  Investing money into your business is an amazing thing, but also make sure you are compensating yourself for all your hard work and the effort running your own business. Include yourself on your “payroll” to ensure that you’re being compensated for the work that you do.