Updated: Sep 3, 2020
One of the hardest things about having a small business is implementing financial literacy. Most of us, especially in the black community were never taught how finances should be modeled. Let alone to enter your first business venture and be tested on this reality. Opening a small business is a great way to get more money, but it can be challenging. The main lessons I learned about business finance are:
1. Your 9-5 is not going to fund your business
2. Your business’s profit is not your money
3. You need to pay yourself first
4. You need to pay other people, even if you have no employees
5. Profits aren’t always in the positive
6. Your business needs its own bank account
7. Keep up with all your spending details
8. And get you a financial advisor
You’re probably scratching your head at a few of these lessons or thinking “Don, you ain’t say nothing new”. Honestly, if I was reading this a year ago, I would’ve felt discouraged. But I’m here to tell you to have no fear and let me elaborate!
When I started my business, I had just transitioned between one job into another. I was excited about the increase in salary. With the extra cash in my pocket, I assumed it was a perfect time to start a business. But just as most of us have been taught; I always paid my bill, got food, and saved. With that I assumed my finances were great because I didn’t worry, I was paid! But starting something from nothing will definitely have you rethinking your trips to pizza hut. I thought I had no money for business because $400 was more than what I was planning to spend for a domain after I spent a stack on rent.
And I wondered, am I too broke for business.
The first lesson I learned was my 9-5 isn’t going to fund my business. The reality is if you’re going to wait till your paycheck comes to restock your inventory, you're fucked. Period!!!! I spent a few months setting aside $100 from my paycheck into a separate account.
Again, your business needs its own bank account!!! That doesn’t mean create a business account at a local bank. You just need to separate your money. Make sure you pay yourself, pay your business, and pay your bills. Honestly, I had planned to wait until my first year in business to create a BA. Only because I wanted to avoid bank fees. I just created a checking that required $500 to remain free and that’s it.
This helped since the first few months of business I was spending money like it was nobody’s business. I purchased a domain, paid contracts, got supplies, paid for a business email, etc. Having a separate account helped me manage my money and where it was going.
This brings me to one of the most disregarded pieces of advice in professional business and finance, GET A FINANCIAL ADVISOR!!! We all like getting and spending money but when it comes to purchasing assets or planning our money for the future, it gets difficult. With a small business, your expenses look different and are different across fields. A small business for clothing spends money differently than a blogging business. So, to get a little advice from a paid professional gives your money a professional overlook and perspective. Trust me you ain’t too broke!!!