5 Basic rules of entrepreneurship

 5 Basic rules of entrepreneurship

As an entrepreneur, you’re given a platform to shine and contribute equally to a growing economy. And with that comes a load of responsibility. Especially financially as you’re managing not only your business finances but also not allowing them to cross over into your personal finances.  

Here are 5 Basic rules of entrepreneurship that should assist you in not mixing personal finances with business finances.   

Rule1: Don’t mix personal finances with business finances.   

There’s a danger in running your business finances through your personal account. Say you want to start a small business crafting wooden furniture and you can buy most of the equipment on your credit card. 

In one way, it’s the quickest and easiest way to get going. But if you default on credit card payments or fall into debt, your personal assets can be seized over and above your business assets. 

Rule2: Ensure you’re not set up for legal liability. 

Keeping clear records and distinctions of which expenses are businesses and which are personal helps. In not leading you to tax complications come tax season. If there’s no differentiation you can incur fines that can close your business. 

Rule 3: Lend credibility to your business.  

By having a separate account in the event you require finance from a bank. Your clear financial documentation will aid the bank in assessing whether to grant you a loan. 

Rule 4: Always think about your business funders. 

In order to qualify for grants or loans, the lending facility needs to assess whether you’ll be able to repay the loan. Your credit record is their way of checking. Even if you’re starting a brand new business, if you have a tarnished personal credit record or are blacklisted for bad/non-payment, your ability to borrow will be negatively affected. 

Rule 5: A little personal with business never hurt anyone. 

Sometimes waiting for financial investment is often one of the first reasons that entrepreneurial ventures fail, so it’s usually better for business owners to invest their own capital first.  

If you’ve a frugal mentality and are able to stay within a budget, the biggest benefit to this is that business owners can prove that they’re able to turn a profit with their own money to investors and funders. This makes the next stage of the venture’s growth that much easier.

Categories: Financial tips