Thread by @mentorshipzim

Thread 3 - I want to speak about financial management principles in a small business, family business, or hustle as we popularly call them.
I was part of a family business for 6 years then I have been various running small businesses with my hubby for the past 5 years.

This is what I will discuss:
1. The business & YOU
2. The big picture of the business.
3. Structure and systems 
4. Sales and financial management.
5. The value of business support structures

1. The business is a separate entity to you. Give it a name, a separate bank account (even if it's in your personal name), separate it from your daily personal expenditure. This will help you when you want to formalize it. A huge mistake that small business owners make is...

...they personalize their business. So what happens is that the business fails to grow beyond them. Even if you are a sole trader, approach the business as a separate entity to you. It pays you a salary, it pays/accounts for its own bills etc. Why is this important?

You will make strategic decisions if the business has a life of its own. Your emotions wont determine how you make decisions eg removing a line of business not giving you profit (even if its your passion) and you will be able to set structures that will make it last beyond you

2. What is the big picture of your business? Yes, we live in a country where many of us run businesses because we are trying to just make a living. However, if you are building the business for the long haul, you need a clear big picture of what you want the business to achieve

Having a clear picture of what you want to achieve through your business could help you even in selecting a business idea. I am of the opinion that not all businesses are driven by passion or gifting in the area. Some are just based on plugging a gap in market needs.

I remember when my hubby and I were looking at what business we could start to supplement our incomes. We did not build a business based on what we liked. That was not the consideration. We wanted a business that could give us an income while running independently of us.

We picked the transport industry & went for taxis. You don't need a passion for chasing drivers or fixing cars & mapping routes. You need strategy and a big picture in mind. Even a business based on passion still needs clear goals that will steer it towards financial viability

3. Do you have a system in place? I worked for a small marketing business in the UK. The owner created a system for capturing each order details and ongoing client conversations & preferences. Nothing was done without a paper trail or a note.

As an admin, I ran the engine room of the system. If I was not at work, people could pick up from where I left off and continue running orders without having to call me to ask for guidance. In your business, if you are unable to work, can someone pick up your orders and continue?

Ref point 1. Put systems in place so that the business can run as a separate entity to you. Usually, self-employment can be limiting because, without you, everything stops. However, you can leverage internet tools to create funnels/automatic messages to keep your business running

Example: lets say you are into baking. How you record client orders can help you to capture when their special days are & even their favorite flavors. So you can then tailor-make special offers or adverts just for them. My friend @EileenTadi does this in her jewelry business

This leads me to 4. Sales generation & financial management systems are linked. If you are systematically generating sales, you need a system to capture the money you are making. It's counterproductive to make lots of money and yet you have no system to account for & track the $

An effective financial management system includes a budget (are the sales you are making enough to cover the costs of the business?); an expenditure tracker & a sales schedule. This is not very difficult to set up. Even an excel sheet or a counter book can be used here

Two years ago I met a lady who was making $1400 to $2000 every month in revenue. However, she was not sure where the money was going. She was even thinking of borrowing to expand her business because she thought she needed more money.

So we did a budget based on her most recent month & realized that out of a revenue of $1500, she had used just $600 to cover the costs of the business. The rest of the money had gone towards other personal costs because she used business money for family needs. So she didn't need

to borrow to expand. She had enough in her business. In two months, she had saved enough for her expansion. That's the power of simple financial systems. It determines whether the profit you make will lead to more growth or will just end in your pocket & a short-lived business.

Finally, 5. There is value in consulting mentors & other business people. When you are a sole trader, information is vital. If you work alone with no support structures, your exposure to other profitable markets can be hindered. Invest in networks. People are information carriers

End of thread 3.

I will be wrapping up in a few hours - giving a thread on the highly controversial black tax.

Any questions on this? I do offer a short WhatsApp course on this so DM for more.