Author: Gerard Ferreira
Regardless of how you’ve started actively thinking about having a side hustle or devoting more time to alternate income streams, making the transition from ‘employee’ to ‘entrepreneur’ is at once exciting and daunting, stressful and rewarding. To ensure you have fewer negative feelings, financial management is crucial.
You’re doing this for financial freedom so, rather than walking there with 2 steps forward and 1 step back, you want to ensure that you get there as quickly and effectively as possible.
The type of financial management you require will differ from person to person but here are a few guidelines that can help.
Ensure you have a financial buffer.
The common advice is to have 6 to 12 months of income saved, but let’s face it: times hard, prices gone up and yuh does buy food out more than yuh should. So I suggest 12 to 15 months.
That said, I can hear you saying “HA! I doh even have have 3 months’ of savings proper!” So how do you get to that point? There are a few things you can try:
If you’re like me, you read less these days (#shameface), but books like Ramit Sethi’s I Will Teach You To Be Rich speak to what you’re interested in and cover a lot of what I’m talking about here (plus with a step by step program, no less).
Determine a startup fund.
What will your business need to begin? Maybe it’s as simple as buying inventory or as complex as renovating a space. Be realistic about EVERYTHING that will be required to make a sale and calculate that cost.
Then multiply that figure by 1.5 for your reality, because it’ll end up costing more than you think. Guaranteed.
Some useful links to help with this aspect:
You can also search ‘Business startup cost calculator’ to find one that might be easier to use or more comprehensive.
What you spend on, what you save, what you have coming in – track all of it. Keep your receipts in a container so you can easily reference them. The act of tracking itself cuts spending but it also allows you to monitor your expenses in a time when card swiping and online payments remove you from the reality of your bank account.
Don’t comingle funds
This is a fancy way of saying ‘don’t mix your personal funds with your business funds’. This is one of those things that ‘everyone’ does but is literally illegal to do. It’s also one of the quickest ways to get into financial trouble. Avoid the bacchanal. Keep your personal and business spending and funds as separate as two opposing political parties rallying during election season.
These two links help further explain why and how to keep from making a financial melee:
Business Content + Caribbean Spice. Mix up Nice!