Money Management For New Business Owners
The Bible tells us," Guard, through the Holy Spirit who lives in us, that good thing entrusted to you,"(2 Timothy 1:14). God is trusting you to run a profitable business that helps to fund His kingdom. God not only gave you the business, but He also gave you the aptitudes, & the mental capacities to be a successful entrepreneur.
Good financial management is one way that we can prove to Christ that we know how to keep or secure the business that He has entrusted us with. If you are faithful over a few, God will make you ruler over much (Matthew 25:23). Good financial habits start at the foundation of your business so if you are faithful in the beginning stages of business, Christ will increase your capacity and business.
God will upgrade you in the spirit to be able to handle bigger businesses for him.
Money Management Tip 1: Checking & Savings
Get both a business checking and a business savings account.
The business checking will enable you to handle all financial transactions including sending and receiving payments. Having the checking account will also enable you to take payments via 3rd party payment gateways such as Paypal and Square. Paypal is one of the most trusted gateways in the world! With a Paypal checkout cart, your customers will feel more comfortable shopping on your website.
Before you get a business checking & a Paypal account, you have to first legalize your business. The bank requires your EIN and state business registration papers. A bank will not give you an account without the proper federal (EIN) and state approvals.
I have worked in banking for over 10 years. I can tell you that attempting to try to run a business out of a personal checking account will lead to the bank closing your account. Bankers monitor bank accounts to report all unauthorized account activity.
Save a percentage of every sell . A savings account is important to business for the following reasons.
1. All businesses have ebbs and flow seasons, especially if your business is seasonal. For example, if you sell Christmas trees, your business savings enables the business to remain operational and sustainable during off-seasons.
2. Savings are a funding source for growth. When you want to scale/expand the business or investment in certain opportunities, it will cost money. You need funds to pay expenses, pay yourself, sow and to scale.
If you want to know the BEST bank to choose for your small business, click here for my YouTube video "How to choose the right bank.” The video covers everything you need to consider before you sign on to join a bank which is a financial partnership.
Money Management Tip 2: Personal & Business Finances
However you manage your finances, you’ll handle your business finances the same way.
If you do not financially plan in your personal life, you will not plan in your business. You cannot just jump into things that require financial obligation without doing the proper goal setting & the planning. The Bible instructs us to count the cost before we engage in any activity (Luke 14:28); this principle, for a business owner, requires planning and budgeting.
Over 30% of businesses fail in their first year due to money issues which include: poor financial planning, lack of money and pricing issues. You have to know how much it costs to run your business monthly and the number of sales that are required to cover all costs.
Money Management Tip 3: Check to Check
If you are living a check to check lifestyle you are going to carry that mismanagement into your business.
Living check to check that means that you are not saving but rather spending up all money the Bible considers this spending habit as foolish (Proverbs 21:20). To avoid managing your business finances foolishness, I suggest having a business savings account. Check to check or sell to sell in your business constricts your business’s expansion.
Be careful not to bind your business to a lot of paid apps. Use free software until the business regularly generates sales. I know this can be difficult because when we first start a business, we want the best of everything.
When I started my first exotic jewelry business called Bella Magnifique. I had $2,000 that I spent on: inventory packaging, bags, stickers, logos, business cards, and other incidentals. I didn't spend a dime on marketing. Guess what business failed within one year. Bella Magnifique by Sadé Banks. I've lived the mistakes I teach against, I'm not just a business building expert by name, but I have lived mistakes out.
Money Management Tip 4: Financial Terms & Statements
Know your financial terms. You must know sales, profit, overhead, marginal profit, marginal cost, key performance indicators to name a few. You must also know how to read basic financial statements such as the balance sheet, income statement and statement of cash flows. If you can read a balance sheet, then you can check the health of your business. Financial statements also reveal if you are spending too much money, if you are losing money or God forbid, if somebody is robbing you. Knowing how to read financial statements is crucial to the survival of your business.
Bonus Tip: Tithe on Sales Gross
Pay your tithes on your gross sales. Paying tithes ensures that you honor the Lord Jesus and that you are committed to prospering His Kingdom advancement throughout the world.
In conclusion, good financial management includes:
Having a business checking and savings account.
2. Learn to manage both personal and business finances.
3. Avoid running your business Sell to Sell without any savings to grow and invest in opportunities.
I am, Sadé Banks, a business building expert who equips Kingdom entrepreneurs to Start, Build and Grow bankable businesses God's way.
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