Business Corner: THE TWO NEED NOT BECOME ONE; CREATING THE DIVIDE BETWEEN PERSONAL AND BUSINESS FINANCES

Finding money to start a business or grow an existing business poses a challenge to small business owners or would-be entrepreneurs.

Kaboom! The business starts, regardless of its pace or size and continues or grows to what you want it to be. Interestingly, there are personal needs you’ll have that require financial solutions and in such incidences, as the business owner you are quick to take cash from the business purse to put the pending issue to rest. This is usually the case because average small business owners/entrepreneurs see their business as an extension of themselves and as a result of investing so much time and work in building their businesses, have become attached to the point of having non-existent personal life apart from the business. As much as you’re passionate about rendering a service or providing a product to your target audience, remember you’re in business to make money. In all aspects of life, boundaries exist, but creating an overlap of personal and business financial boundaries can be disastrous to a business regardless of its size.

Okay! You may be a sole proprietor and feel you have got your business covered, now here are the interesting two faced facts: 

First, sole proprietors are the most popular forms of small businesses not required by law to maintain official business accounts as required of corporations, partnerships, limited liability companies, etc. Secondly, financial accountability of this business form is difficult for the owner because he is answerable to no one.

Now, what’s the importance of ensuring a financial marriage doesn’t occur? The average small business owner doesn’t hope the business remains at its start-up stage for the entire time of existence; there is always a dream to be much bigger and better. Dreams of this nature are what give rise to business expansions – creation of new product lines, employment of more manpower, acquisition of machines as required, etc. These and more are usually achievable with the influx of finances (loans, grants or investments as the case may be). 

At the end of a year (fiscal or calendar year), it is important for the business owner to reflect on the health of the business and ascertain areas that need erasure and areas of the business that require expansion to thrive. Also, the process leading to cash entry for business expansion usually involves a declaration to appropriate bodies, the financial state of the business for the duration of its existence. 

The inability of a business owner to create and respect the divide between his personal and business finances spells out to financial institutions, prospective investors, prospective partners (in the event of a change in the business form), and employees, the financial irresponsibility of the business owner.

You don’t need to be a professional accountant in addition to your business knowledge to solve this problem before it is created or if it already exists. Today, consultants can construct accounting and financial management records systems for business owners, ensuring accurate and professional accounting systems for their businesses. And yes, their services are affordable.

Are you a small business owner or an entrepreneur? Please share your experience on how well you have tended to the union of your personal and business finances.

Make 2016 your best year yet!

Spread the word… It’s a #Deliberate2016.

Osato Omwanghe

osato.omwanghe@gmail.com

+2348130910375