What you need to know:
Business banking accounts should be separate from personal accounts to avoid unwittingly intermingling finances.
While mixing business and personal money might sound like the easiest thing to do for new businesses, it should not happen.
Business banking accounts should be separate from personal accounts to avoid unwittingly intermingling finances. Keeping the accounts separate will save you from reporting of inaccurate information, which can lead to an audit by the Uganda Revenue Authority.
Set a clear boundary between your business and personal finances if you want your business to grow.
Having a clear cut account for the finance streams might protect both personal and business finance streams to develop sustainable strategies for a possible successful future.
Financial advisors note that there is a need to assess your professional and personal funds separately to avoid cash flow and tax issues. Below are some of the ways that could help balance your business expenses and your family expenses.
Mr John Walugembe, executive director of Federation of Small and Medium-sized Enterprises - Uganda (FSME), says as a solopreneur, invest time and energy in learning how to manage your bank accounts.
This, he says, may not come off easily but it will save you some time and money. Eventually, it will help you draw a line between spending on personal expenses or reinvesting the money back into the business.
“If you are a small business owner looking to separate your assets from your other projects to improve cash flow, there might be unsaid rules such as drawing a balance between the business and personal finances,” Walugembe says.
Prioritise financial goals
He notes that prioritising and understanding your financial goals is one of the vital steps you will need to embark on to ensure financial stability as a small business owner.
This means being mindful of both long and short-term goals that require cutting back on debt, controlling cash flow, and investing in growth opportunities.
“With an equitable ability of your objectives, you can foster a budgetary arrangement that aligns with your overall business technique which will in turn help you with achieving your ultimate objective,” Walugembe explains.
Focusing on what matters to your business’ success and making the most of your financial resources are two other benefits of setting goals high. You can prepare for a prosperous economic future and overcome challenges by evaluating your financial situation and establishing clear priorities.
Ms Barbara Katende, a personal finance coach, lecturer and author of ‘Money Cure’ says it is possible for an entrepreneur to manage their expenses.
“If you are mindful, it is easier to see the difference in expense, for instance, the price of salt which was at Shs3,500 just a month ago and currently. If you are into construction, this is no different when it comes to the current cost of living,” Katende says.
She notes that one has to understand that the prices and cost of living is high. This means you ought to understand what you have got to do and adjust accordingly.
Katende notes that this calls for the change of attitude.
“It all starts with awareness. The first bit about awareness is understanding that our experiences vary. Every single time money is coming out to my pocket, it’s actually going into someone else’s,” she says.
The Corona pandemic hit so hard amid endless social obligations. This means you do not need everything. That way, you can cater for all social events according to your calendar.
The calendar might indicate that for the next two months, there might be meetings right from graduation to baptism, parties among others.
In addition, do not be influenced by impulse buying especially when shopping at the mall.
This is the reason why supermarkets have too much on display; that way, you can purchase more items.
“It makes you spend money on people who do not care about you or things that do not matter because of trying to impress them. To avoid getting into trouble with such things, you need to have a budget,” she adds.
You don’t need an MBA to understand your personal finances. Managing your finances simply requires either an addition or subtraction.
“I try to reflect on expenses in my personal life and the expenses in my business. This helps you understand where you can save without compromising,” she notes.
She notes that raising a family is quite a venture. One certain thing is that there are lots of bills to pay whether child care, education, housing, rent or utilities.
You can get your finances under control through tracking your disbursements and identifying areas where you can cut back and save that money. You may also be surprised to find that you have some extra money each month that you can put towards your goals or investments.
Prioritise your expenses
David Sempala, the chief executive officer of Royalway Media, says it is vital to prioritise between utilities, mortgage payments, groceries, and unexpected repairs because there will always seem to be more bills than the money.
Prioritising expenses ensures that family needs are met without infringing on the budget or tampering with the business’ finances. This can involve evaluating monthly expenses and seeing what could be reduced or eliminated.
If you dine out frequently, you might cut this back by making it once a week.
Besides, you can set aside money each month to cover unexpected costs once you have trimmed your regular expenses. This, he says, minimises chances of getting money from the business’s cash flow.
Sempala encourages entrepreneurs to maximize any money-saving opportunities that come your way.
For example, he says if you need a cash boost to reach new customers or expand operations, as an entrepreneur, you can get a loan that offers flexible repayment terms and competitive interest rates that help you as an entrepreneur to expand your business to the next level.
In addition, by taking advantage of all the money-saving opportunities available, you can ease some of the financial burdens and focus on what’s really important: your family.