If there is one thing we know at Coopealianza, it is that running a successful business requires planning, preparation, strategy and leadership. And managing money responsibly – inflows, outflows, fixed expenses, variable expenses, cash flow, savings for contingencies, among other aspects – is one of the biggest challenges.
For this reason, today we want to share with you, who also have your own business, a series of expert recommendations on business finances.
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Monitor your financial information
No one should be more clear about your financial situation than you. What are your income and what are your expenses? What transactions have been made and why? How much capital do you have to cover expenses in an emergency?
It is true that business moves slowly at first and that sustainability requires consistency, persistence and hard work, but you will not be able to achieve it if you do not have a clear and real scenario. Don't entrust that responsibility of seeing “the whole forest” to someone else. Hire a good Accountant and rely on a professional with Administration knowledge if you wish, but do not stop monitoring your financial information personally.
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Set a salary for yourself
While this is your business, your time and effort are also worth money.
It is important that you set your own salary and stick to it. You must receive a fixed remuneration and the most stable possible, that will give you peace of mind, quality of life and a better perspective of things.
One of the biggest mistakes of an entrepreneur is not defining his salary or including it in the list of expenses of his company. And that salary should at least cover his basic expenses.
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Separate your personal finances from business
Keep your accounts clear and independent.
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Try to have more than one source of income
In this way, you will not be completely dependent on the success of your business to be able to cover your needs and lifestyle. Ideally, especially as you break even, you should have more than one source of monthly income, including passive income that will give you greater financial freedom.
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Have an emergency fund
We know that when a business is starting, saving is difficult. However, one of the best recommendations will always be to have an emergency fund to which you could pay an amount from time to time to expand your financial "mattress".
Ideally, this fund would contain what is necessary to cover your expenses for at least 6 months or, as its name implies, to face an emergency such as a serious health problem.
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Set a budget and stick to it
As we mentioned at the beginning, you must monitor your financial information and know it in depth. And one of the easiest ways to manage money wisely is by having a budget and sticking to it.
Sometimes we make the template in Excel and create the budget, but then we don't apply it in real life. And the document by itself is useless.
This recommendation to have a budget applies to both your business and your personal life.
Finally, remember that at Coopealianza we have Development Banking funds, Revolving Credit Lines, direct credits for purchases of fixed and productive assets, and Invoice Discounts. ¡Grow your business, we help you!