A few months ago, while speaking at a business conference, I asked a group of twenty people how many did their own numbers. Only two raised their hands. I find that extraordinary. Whether you’re a fresh-faced start-up entrepreneur or an experienced executive, when you start your own business the buck stops with you. As a leader you need to know where you are, and only numbers will tell you.
If you don’t do your own personal accounting, start now. There’s no substitute for tracking your income and expenses personally. It keeps you focused and helps you make wise decisions.
You may pay the bills each month, and maybe you base expenses on your bank balance and have a sketchy idea of your future budget – but if that’s it, you might be in trouble when you start a business. Especially as your business grows – you acquire assets, repay debt, plan vacations, and deal with unexpected events. What if things slow down, and your businesses goes bust or cannot support you anymore? You can’t afford to be blindsided by bad news. Know where you stand, and plan ahead; it’s also far better to share bad news with your bankers early rather than have them come to you.
Every month: review your assets, debt, and personal cash flow. If you do this for yourself, it becomes easier to manage the business end of accounting.
Keep track of all your expenditures for one month. Put them in a spreadsheet and create a forecast for the next month. Create a net asset value page, which shows your assets less costs, plus uplifts less debt.
Do you shove your bills into a shoebox? When they’re out of sight they’re out of mind? If that’s the level of your administrative abilities, you may need to make a spending plan and work out payment plans with any creditors, to ensure you keep control of your finances.
Every time you spend money, make a note of it. At the end of each day, add it all up. Then start taking those numbers and building a spreadsheet, itemised into different types of spending.
Do this every month, and build an annual cash flow chart. This is a powerful tool for business planning, and it allows you to gain wisdom from seeing the effects of past choices. Relish the knowledge you gain by studying the numbers, and make wiser choices because of that knowledge.
Over time, your financial spreadsheet will provide you with history, and you will see figures represented as percentages of the total. You can determine if you’re spending too much money eating out, on clothes, or on groceries, or even if you should be spending more in any of those categories. After a few months, it will give you a picture of who you are as a person or a business owner…ideally a solvent one!
I’m a seasoned start-up entrepreneur and property financier who built built businesses worth over $200 million. Since 1992, I helped start a bank credit department, founded a mortgage company, and built the largest single-branded real estate company across five countries in Central Europe. I also developed a portfolio of shopping centers and hypermarkets in Eastern Europe, constructing over two million square feet of retail space.
Today I am involved in the entrepreneur community, trying to share what I’ve learned and I serve as a mentor for startups.
I have authored a new business startup report called “How To Start A Business”. This shows you how to find, enter and profit immediately from a high demand market with virtually no competition… what I call a Blue-Sky Market!
This is how I could turn £400 into £50,000 in just 8 weeks.
Blue-Sky Markets are all around us. You just have to know where to look and have the courage to do things a little different.
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