Running your life and business

Being a business owner can involve a lot of sacrifices. It also means managing overhead costs and cash flow, and preserving relationships with suppliers by ensuring payments are made on time.

And on top of all this you have to manage your personal finances.

There are several things you can do to ensure you don't neglect your own financial affairs and end up in financial trouble:

Separate your business finances from your personal affairs

If you don't, you could find yourself using money from the business to cover personal expenses when you start the business.

It's also important to keep impeccable business records for the South African Revenue Service and other business reporting requirements. If you pay yourself a salary, you'll have to show SARS your personal income tax records and business tax records.

Keeping proper records of the money that flows into and out of your business will help you keep an eye on the cash flow.

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Get rid of debt

It's advisable to eliminate as much of your personal debt as possible when in business. It's hard enough ensuring that money is doing its most efficient work when you first get into business. Having creditors dog you for unpaid clothing accounts or loans adds unnecessary pressure to your obligations.

Don't neglect your savings

Any business owner is familiar with the fact that unexpected costs crop up. Cars break down, office equipment stops working — the list is endless. It's important to have money set aside for these unpredictable events.

And, of course, the usual personal emergencies won't simply go away now that you have a business.

Do your best to save consistently. It may not always be possible, especially if your income is erratic, but save whatever you can. Have the foresight to set up an emergency fund: it will help you get through those tough months when income is barely trickling in.

Keep it lean

Some business owners are prone to splurging when they get a windfall. Although this shouldn't need to be emphasised, it's important not to go overboard when you strike it lucky, but rather to reinvest in your business.

Also, avoid unnecessary entertainment costs. Don't do lunch when a simple coffee meeting in the office will suffice. Keep a record of every single cost and know how it affects your cash flow.

Budget for business and yourself

Budgeting is important in business management — but it's as important when it comes to your own finances. Just as you do with the business's books, when it comes to your own finances you need to keep track of what is going in and out, what obligations you have, and that you pay creditors on time.

Take care of financial planning

You can't afford to neglect life and disability cover and your retirement savings. It's also advisable to get medical aid. If you can't afford a fancy plan, at least find cover that will take care of hospital stays.

Speak to a financial planner — there are ways to secure your future while you find your feet as a business owner.

You can follow Tsamela on Twitter @DineoTsamela