#1. Set Financial Goals
As an entrepreneur it is very important for you to develop clear financial goals – short-term, medium-term and long-term.
Consider what financial milestones you want to hit in six months, a year, 5 years and 10 years from now, and write them all down.
Setting financial goals helps to guide and motivate you, and also helps you track your progress per time.
#2. Have a Plan of Action
Now that you have set your financial goals, the next thing is to have a plan for achieving those goals. Your plan should be clear and realistic enough to guide you on the necessary steps to take towards achieving your goals.
You could for instance have a ‘Daily Action Plan’ detailing what you must do everyday to enable you achieve your set goals.
Also review your plan from time to time and adapt as your situation changes.
#3. Always Have a Budget
A budget is a fundamental tool to help you reduce debt, save money, and plan for big expenses.
Make a plan for your money so you’re spending less than you earn.
Spending less than you earn is the very cornerstone of financial success.
#4. Track Your Income and Expenses
Keep track on how much comes into your business and how much you take out of your profit to sort other things in your business.
Tracking your business expenses would help you achieve your financial goals for your business quicker. In the absence of proper records, you would be surprised how fast little expenses here and there can ruin a business in the long run.
Make it a habit to write down everything you spend on and everything that comes in business wise.
#5. Save for the Future
“Saving is a must!”
But the amount to put aside should of course vary depending on your income.
Part of your budget should include saving money for the future of your business, as well as the future of your family and the two should be separate.
Savings in this sense means money you can run to and have without having to sell any tangible assets.
Now there are different kind of savings we need to have which is asides saving for a specific purpose.
– Savings for contingencies.
It’s ideal to have at least one to three months living expenses saved just in case.
– Savings for retirement (no matter how young you are this is very important) it is recommended to save 10 to 15% of your total income.
#6. Diversify Your Investments
It’s advisable to have other forms of investments asides your business to cushion the effect of risk.
You can invest in the stock market, real estate, agriculture etc. In the long run, you’ll earn some solid returns and you will be balanced financially.
You can choose to create an extra source of income every one to three years.
#7. Review Your Finances Regularly
Weekly and monthly financial reviews would be a good exercise in understanding the frequency and scale of your business operations and the rate and extent at which your business may be growing.
Also, to identify cash flow challenges before they become a crisis.