Hello and welcome to #MondayMarket where we shall be discussing ‘My Money vs Business Money’.
For Mrs. James, a textile trader, it’s always drama when it comes to issues of money in her business and her emotions. She has been in the textile business for over 18 years & always complained about her inability to meet financial obligations. One would expect that, with her years of experience in business, she should have overcome certain money challenges but it’s been the same story for many entrepreneurs, they can’t separate their personal money from the business funds.
Mrs. James’ struggles to pay her shop rents, year in, year out & is always indebted despite her good daily cash flow. The truth is, she doesn’t seem to have a handle on her business’ finances, just like many entrepreneurs. She allows her money-led emotions to get in the way of common sense. Businesses don’t survive this way. Whenever she has personal money problems, she takes from the business and it’s never returned nor accounted for. She fleeces her own business whenever there are personal or family money needs.
Yes, all businesses are started by funding by the entrepreneur. It’s called ‘seed capital’ which could be from savings or borrowed. This becomes the equity contribution of the entrepreneur to the business along with some other additional resources.
From the very beginning of business, an account should be opened for the business. It is separate from one’s personal accounts and the two accounts should never be mixed up, no matter what.
For many, the business’ money is their money. Technically, this may be true but it doesn’t work that way. Every business is an ongoing concern & it’s an entity on its own & should own its life & space.
Just like human beings have internal systems & organs, so should a business have structures & systems. When something goes wrong with the human systems & organs, it often becomes terminal and so it is for businesses. Your business’ financial system is one of such vital organs. Once it goes wrong here, it may be terminal for the business.
So, get professional help from your accountant. He/she will help you put in mechanisms in place to help the business. Stop dipping your hands into business funds for personal use. Your business money is not your personal money. Put yourself on a monthly salary, just like other staff members of your enterprise and live on that pay.
Audit your accounts & look into your books periodically; it’s like a medical scan on your systems & structures. This way, we’ll build influential, extraordinary & successful businesses that can outlive us & our generation. Enjoy the rest of your week.