Separating your personal finance from your Business Finance

I have been working with small businesses for 21 years now. I have been very involved with coaching and mentoring within these organisations for the past ten. And one of the biggest mistakes I see entrepreneurs making, within their founding years, is to mix their finances. And I totally understand why.

You start your venture funding it with your own money. Buy your initial stock, or your first marketing material. You have debit orders coming off in a few days, so when that first deal comes through, you supply your personal bank account details. And the cycle starts. You cannot afford to draw a salary initially, so how are you supposed to live? The only money coming in is for the business and you ARE the business so what harm can there be?

This is why planning is VITAL. You need a vision. This needs to be documented and broken down into all phases of the start-up, and all elements that will come into play. This is exactly where a business plan is needed. Look at what you will be doing, what you will be charging, and what your costs will be. See what your competition is doing and what they are charging. Make sure you are market-related and relevant. And then get the various legal requirements in place. Establish what SARS will require, and then open your bank account.

Remember, your income will all need to be declared at the end of the financial year, whether in your personal or business capacity, and so it is very important that it is split from the outset.

You will never accurately be able to measure your turnover, your profit, or your expenditure if your personal and company finances ae muddled, and you will not be able to use any accounting package if you do not start off with these in the right place.

Give yourself a gift that will stand your business in good stead. You are both worth it.