If business consultant Alessandro des Dorides has one tip for small business owners, it’s not to lose sight of your own money. Here are some of his great personal finance tips to help you keep track of your own money while you manage your business’s.
Plan for an emergency
Who could have foreseen that a flu pandemic could affect each and every one of our businesses here in the UK? Closing down for 12 weeks could ultimately be the end for some small businesses who do not have the funds to see them through.
Ever heard of a rainy-day fund? You’ll be wishing you had one now. It’s always a good idea to get together a pot of money for emergency happenings, so that you can cover food insurance, utilities and other essentials.
Keep an eye on interest
Be aware of interest rates at all time. If you are paying off credit cards, pay more off the ones with the highest interest rates first. Get 0% interest deals wherever you can.
Develop good habits – get direct debits set up with your bank so you never miss a repayment. This will save you cash in the long run so it’s well worth it.
Set up a retirement fund
It’s never too early to think about the future. If you’re a PAYE employee your company should enrol you into a workplace pension, but you have to make your own plans if you’re self-employed.
You need to be prepared for retirement as no one knows what will be in store for us by the time we’re old enough to finish work. The national statutory pension could be abandoned at any time and then would you have enough savings to get by?
Do your research on some retirement funds and see how each plan can help you meet your retirement goals. If you’re unsure on how to do this, it’s time to make an appointment with a financial advisor who can guide you through the process.
Diversify your investments
Diversifying is a great idea for small business owners because entrepreneurs tend to reinvest their personal capital totally in their business. Investing in your business will help you grow but you should never put all of your eggs into one basket.
Try allocating your funds into other types of businesses or perhaps a side line you’d like to set up. Then if you do decide to shut your main business – or worse still, you’re forced to – not all of your personal assets will be nailed into the one business.
Automate bill payments
If you’re spending every waking hour managing your business’ finances, it can be easy to overlook your own obligations. It may be that you have several credit cards or loan payments to make, as well as finding cash to pay a mortgage and nursery fees.
One top tip is to set up rules for fixed amounts and set up alerts so that you never miss a payment. The last thing you want to do is lose your right to 0% interest credit card because you failed to make the basic repayment, for example.
Find a good accountant
Finding a good finance consultant is key when March 31 comes knocking. A good accountant is worth their weight in gold as they’ll know exactly how to avoid over-paying when it comes to a tax.