In order to succeed in their professional careers, entrepreneurs will need to develop their ability to manage money. Managing money in a business context is different to a personal context, but many of the same principles can be applied. Crucially, regardless of whether you are trying to better manage your own personal money or that of your business, you will need to be able to exercise self-discipline.
Any business owner who has done enough hiring and firing will be able to attest to the fact that self-discipline is not nearly as common as many of us think. Self-discipline is a skill that needs to be practiced and nurtured if it is to become automatic and second-nature. There is no denying that it takes time and effort to build up your self-discipline, and your financial management skills more generally.
The good news though is that you can work on both of these things without having to make much effort. By practicing good financial management at home and taking gradual steps to change your behaviour over the long term, you will soon find that these tips and techniques come to you naturally and you no longer have to consciously think about it.
Find the Right Tools
We are now seeing the first wave of entrepreneurs born this millennium maturing. This is a generation that has grown up with technology and computers surrounding them from day one. These young adults have grown up with access to a unique set of tools for managing their finances, and yet remarkably few of them seem to have done so.
One of the most powerful sets of tools open to this generation has been apps. Apps make managing personal and business finances easier and more convenient than ever before. Having the right tools for your individual financial situation will make managing finances considerably easier. Have a look through the respective app store for your smartphone and pay particular attention to user reviews. You also might want to look for relevant online communities and ask other people in a similar situation to you to weigh in on what has helped them.
There are apps, services, and other pieces of software which are designed for highly specialised and specific services. There are also apps for managing your personal finances, and finances more generally.
Remember that having the right tool is important; the wrong tool might not be any better than no tool at all. It can be tempting to download the most highly reviewed and fully featured software package out there. But it is quite possible that you are paying for a number of features that you will never use. You can save yourself a lot of time, money, and stress, by outlining your requirements and identifying the best piece of software to meet them.
Hire a Professional Advisor
Managing your personal finances better doesn’t necessarily mean that you are trying to stop spending money, or even that you are trying to spend less money. After all, the old adage about needing to spend money to make money rings true; it is a fundamental tenet of business. The key is in how money is spent and what kind of return it is generating.
Every financial decision you make involve some kind of trade-off. When you buy a stock, you are gaining shares in a business in exchange for money, but you are also taking something else on – risk. Similarly, when you invest in a new project you might have to part with your money up front. You will receive nothing initially, but your money will be put to good use. When you are paid back, it is more than what you put in.
A financial advisor is someone with the experience and qualifications to weigh up the risks and rewards of any financial transaction that you are considering. You can think of a financial advisor as tipping the odds in your favour. Investment is not an exact science. In fact, it can sometimes feel akin to gambling. However, unlike with gambling, investment is not a game of pure chance.
Financial advisors are, to the investment world, what a card counter is to blackjack. Financial advisors have access to the same information, but they know how to use it and interpret it to inform decision making.
They won’t come cheap, but they will help you to manage everything else more effectively. For example, click here to take a look at a site offering online credit loans. A financial advisor can talk you through all of the legalese to ensure that you understand it.
Do not fall into the trap of thinking that the best entrepreneur is the one who is most willing to show self-sacrifice. Not paying yourself a salary is something that should only be done out of necessity, not out of a display of masochism. Not paying yourself a salary doesn’t make outside investors think you are dedicated and selfless. It makes them think that you don’t know what you are doing, that either you cannot afford to pay yourself a salary or you are too inept to realise that you should.
Everyone needs an income, so it can even look suspicious if you aren’t drawing a salary from your business and don’t have another obvious source of income. It might make it seem like you are freely dipping into your business piggy bank for loose change when you need it!
It is also a case of self-respect and the image that you project to others. By giving yourself a formal role and paying yourself a salary to complete it, you are showing both that you value yourself and that you respect the business enough to work for it, just like the other employees.
The better you are at managing your own finances, the better an example you will set for those around you. No entrepreneur is an island. You might invest on your own, but you will be one of many shareholders. You will inevitably have to learn to work with others in a variety of contexts and so personal financial management skills are essential.