Starting a business is a way to increase your income and also pursue your dreams. However, what many people don’t realize is that your personal finances may impact your ability to grow a successful business for the following reasons:
- Obtaining a business loan and credit. If you are trying to apply for a business loan then the bank may look at your personal credit if you do not have sufficient business credit history or if you are a sole proprietorship.
- Funding your business. If you need to allocate a portion of your paycheck to help fund your start-up, then you will need to revise your budget to include business investments.
- Managing your business finances. How we manage our personal finances will impact how you manage your business finances. Are you organized and disciplined? Do you know how to develop and follow a budget? Getting some experience managing your personal finances will better position you to manage your business finances.
- Being a good steward of your increase. If you don’t manage what you have, then how can you manage what is coming? Showing that you can properly manage what you have will show God that you are ready for more. Once you have that more, not only will you be able to do more of what you and your children love, but you will also be able to work on achieving your financial priorities.
If you are starting a business, then here are 5 steps that you will need to take in order to make sure that you have a plan and a vision for how you will manage your money to support your business goals.
Step 1: Develop Your Vision
The first step to improving your personal finances is to develop your vision. This starts with understanding why you are embarking on this entrepreneurial journey and how this business will compliment and impact your life. Decide why this business is a must because this will help you to have the energy and the stamina needed to pursue your dreams when things get hard. Also, if you are self-funding your start-up using your income from a job, the financial sacrifices that you will make may seem daunting at times. Understanding your why and your vision will help you keep going.
Step 2: Assign Goals to that Vision
Once you develop your vision, then you can identify your goals to support that vision. When you develop your goals, use the SMART (specific, measurable, actionable, relevant, and time-bound) format. SMART goals are great because they help you to focus in on the actions that are the most impactful and provide a measuring stick to track your progress.
Step 3: Create a Roadmap from Your Baseline to Your Goals
Once you develop your goals, this will allow you to develop a roadmap to help you to move from your current status to your goals. In order to accomplish this, you must first identify where you are right now. Once you understand where you are you can develop the steps needed to accomplish your goals. A financial blueprint is critical as this will be your guide to spending.
In your roadmap incorporate the spending and activities that bring you the greatest happiness in addition to the items related to your goals. Enjoying your life when you are in the process is essential because it will help you to avoid feelings of deprivation.
Step 4: Anticipate and React to Potential Pitfalls
Once you decide to transform your finances you will be faced with so much temptation to revert back to your old habits. However, be strong! You can develop that strength by understanding when, where, how, and why you spend money. Understand how your emotions influence your spending patterns. Taking the time to understand your spending triggers will help you to develop a game plan to manage those situations or avoid them completely.
Step 5: Set Up an Accountability System to Stay on Track
The difference between staying on track and falling off usually is determined by the systems that you put in place to hold you accountable to your goals. First, promise yourself to be here and better a year from now. Next, get an accountability buddy who will check in with you to ensure that you are following your financial roadmap. Also, write your goals down and keep them visible so you are frequently reminded about what you are striving for. Last, as you accomplish your goals and hit certain milestones, celebrate to acknowledge your progress.
How will you start to manage your personal finances? Hopefully, this post shows you why your personal finances matter and what you need to do to put yourself in a position of success.
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Aisha Taylor is a single mom of twins, personal financial coach, work from home entrepreneur, and #1 Amazon Best Selling Author of the book “5+5 FNPhenomenal Ways to Save $100 This Week Without Killing Your Lifestyle.” Aisha has been featured in ESSENCE, Jet Magazine, and Black Enterprise. She is also the Founder of FNPhenomenal (Frugal –n- Phenomenal), a movement designed to help single moms transform their finances, enjoy life, and stop living from paycheck-to-paycheck. It’s time for you to be Financially Phenomenal!