Keep 'Em Separated: How to run a business and still afford Netflix
Not all the aspects of starting and owning a business are about ideas and inspiration. You still have to pay the bills, and starting a business comes with new bills to pay.
Here are three things to remember if you want to keep your business and personal finances straight in order:
Even if your business is still at the planning stage, you’ll need a bank account… and one you don’t use for personal expenses like rent and food. Do some research and find a free checking account and debit card. You don’t want to start off spending money in unnecessary ways. Put a little money in your new checking account. When you buy something for your business, even if it’s just a notebook to keep track of your recipe experimentation, pay for it with that debit card. Get in the habit of filtering every purchase you make through that “is this for my business” lens. When you visit a new taqueria in your neighborhood, is that research? Talk to the owners about ingredients and the line cooks about process and turn it into research—delicious research. Now it’s a business expense for sure!
When your business starts to make money, even if it’s just your mom buying a taco, that money goes into the business account. At first, it will seem like more is going out than coming in, but that’s normal, which is why the next part is so important.
2. Make sure you monitor this account. At the end of each month, log how much you spent and how much you made. Go over each expense and gauge how effective it was. Could you have shopped somewhere else and saved a little money on the same product? Did you get a good price on a bag of onions only to discover ⅓ of the onions were mushy? Now you know not to shop at that grocery store.
3. Keep those accounts separate. Seriously. Having separate accounts doesn’t help if you’re constantly pulling from them whenever you feel like you need to. If you feel like you need to take money out of your personal account to help out the business, you are doing more than just moving some money around – you’re investing more money in your business. Keep track of those transfers when you have to make them, but remember that starting to be an entrepreneur doesn’t mean you stop being a person.
If you’re running on three hours of sleep because it’s finals week, pick up a latte on your way to class even though there’s only $10 in your business account. Don’t feel guilty, and don’t use that business account for your latte habit. You may think it’s impressive that you are giving your all to the business (and it is!) but ignoring self-care doesn’t make your business better. It makes it harder for you to succeed.
That thinking works both ways. If you want a new pair of Beats and there is enough in your business account but not your personal account, guess what? No Beats this month.
Distinguishing between personal and business expenses is just one of the tough balancing acts you take on when you own your own business. Skysthelimit.org can help with all aspects of the entrepreneurial process, from nitty-gritty set up to mind-mapping on a whiteboard. Sign up today to gain access to our free Pathway to Business Ownership plan and bring your business to life today!