Date Posted: 10/18/2012 1:10:08 AM
Posted By: saucer Membership Level: Gold Total Points: 4885
To entrepreneurs the most important part of the business is the starting point. The way you approach will determine whether your business will succeed or fail. Therefore you must take every precaution and get all the facts before taking a leap into the business. You must be ready for the ups and down associated with running a business and you must know that not every moment will be a profit making one. Sometimes you will have to incur losses to sustain your business. It is nothing personal its just business. No matter how good an entrepreneur you are you will at one time or another get to the lose stage. Here are some of the ways to safeguard finances before venturing into new business territory.1) You must keep a cash reserve. Stash away for a rainy day. You will need this money to finance business operations lets say when the money in the bank isn’t enough or the buyers have defaulted in payment. This emergency fund will keep you going through the rough times and sustain your business.2) It is good to separate your personal finances from your business finances. This keeping track of your expenses will help plan better and make better business decisions. In the event where your personal and business finances are together you will an unrealistic vie of the business finances because when you withdraw money for personal use, when going through the finances later you will assume that that was an investment (bought goods for the business) with this information you will not make the best business decisions.3) Give yourself a salary. Paying yourself is important. You will also need to see that you are benefiting from your business other than the profits which may fluctuate in some rough times. A salary will be constant and you will plan how to use it. Pay yourself for the work you do for your business.4) Minimize on the debt sector. You have to learn how to keep the debt to income ratio low. This will help in the growing of the business and profit determination. Set an effective plan to pay back your loans over the shortest period to avoid big interest rates. Also borrow money when you have no better option. This is in a bid to keep the debt to income ratio low. Do not loan money for unnecessary expenditure.5) Do not invest all of your money in one business. The business which you put all your money in could be making losses and you will lose everything. It is good to be risk taking but at the same time take the necessary precautions. Do not be a fool and put all your money where your mouth is because of a hunch. 6) Seek financial assistance. Seek help from professionals who will help p you keep track of your finances. They will tell you whether you have enough money to venture and if the particular business is good for your finances. They will offer you with an appropriate payment formula for your loans according to your finances.
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