It is very important to separate yourself from business. The money that your business make should never be used for personal development, it belongs to the business and it should be used to grow the business.
Many people always ask, so how do I survive as the owner of the business, if not employed elsewhere, the owner will be 100% depending on the business. In that case you have to have a salary if you are full time employed in your company.
If you are not employed in your company then you should depend on dividends. Dividends is what you will get after calculating profit and loss. It’s part of the profit that your business is making.
This should be a proper practice even if your business is still small. If you ignore this aspect, you will destroy your business by yourself. If you are in a business of selling tomatoes, after each time you finish your order and you are preparing re order, do some calculations, what is your profit, in case you need some money for upkeep since that business is your only source of income, at least take from the profit not from the actual capital that is meant for business.
I’m fully employed in my business
We sometimes use business capital with the hope that we will somewhere somehow cover it up but in some instances we will fail to recover and the business will collapse and we go back to square one.
In my business, I am fully employed, I depend on my salary, my salary was pegged on the basis of our income and ability to pay it and remain possible to continue operating.
There was a time I needed some building materials, and I didn’t have money to buy from my own business, when I say I didn’t have money, I am referring to my personal money, not business money. So I went to accounts and requested a credit facility, at first the accountant turned my request down because our stock was limited, I respected that. Later I tried again and I was given the credit facility.
I went through and filled up the application forms like any other customer who would like to apply for credit facility. The application went through the normal channel and it was approved, and I managed to get my credit. After buying the building materials to extend my own house, according to our company policy, that credit was submitted to the HR so that when salaries are prepared, the money will be deducted from my salary.
So each time the money will be deducted from my salary until I finish paying the debt. This is the level of financial discipline that will save your company from collapsing.
Right now I have suspended the construction of my house because I am still paying my debt. I can’t afford to buy certain items cash so I had to get a credit facility for building materials for my house.
By doing this I set precedence even to my employees that this is how it is done.
You will never see me going to the cashier and request for money or even go to the accounts and just take money randomly. I behave like any other employee and depend on my salary. When the company makes good profit, we get dividends as directors. That’s the only time you can see me buying a new car, good furniture etc.
Don’t use business money on your personal things
I never take business money and use it for my personal things. This is the reason why my company is growing.
If you visit my company, you may think it’s a government parastatal, things are in order. Everything is running and all organs of the company are functional. You will never be directed to me for everything, but to relevant departments.
Sometimes I seat in my office and watch how things are operating. The order and the function, I feel proud of myself. Even if I am to travel for a year, I know that if I return, i will definitely find the company running smoothly because of the operation system that we have put in place.
Maintain your financial discipline in order to succeed as an entrepreneur.
My company generates millions of dollars, but I still carry my lunch box to work.
Your growth is determined by how much you are able to save. Take care of cents and dollars will take care of themselves.
By B. Marambire
- How To Spend Money Wisely To Avoid Being Broke
- How You Can Easily Maximize Your Profit
- Why It’s Important To Understand Your Profit Margin In Business
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