When you’re an employee of a company, you get paid regularly, and you do with that money what you wish. The two really aren’t intertwined at all after that. When you own a small business on the other hand, everything you do is intimately woven together with your operation. Your company is like a living, breathing organism that has money coming in and going out, and needs to make more than it spends to stay afloat. Knowing how your personal habits affect your small business can mean the difference between staying in business and going under.
Your profit is your means for growth
When you profit from your business, you now have new capital in your hands that can be used to make your business grow. When your business grows, you gain new earning potential. If you find yourself spending all of your profit on personal things and not saving any money, you’ll soon realize that your business is either beginning to stand still or that it is shrinking.
In essence, bad spending habits in your personal life roll over to your company. Save and invest.
No savings means uncertainty
You never know what is going to happen in life or in business. When an unexpected emergency happens or an unplanned expense pops up, you want to make sure that you have money in the bank to ride it out. The same goes for your business. You never know when equipment will break, you need to upgrade, see a great opportunity or when business might slow down. If you aren’t in the habit of saving money, that is something that is going to affect your operation. If you are a small business owner looking to keep your doors open, you need to have something to fall back on.
Credit is key
Realistically, your business can’t grow and operate from a huge savings account. Most businesses run smoothly and efficiently from day-to-day with the help of credit. Whether you plan on building your business using small business loans like the ones offered by Lendified or you want to use credit cards or other means for paying for things, your credit is intimately linked to your business. If you have a habit of paying late, over-stretching yourself, and relying on credit to pay bills, this doesn’t bode well for your company. This wastes money, hurts your credit score, and doesn’t give your business a solid foundation to build on.
Your personal finances are directly tied in with your company in more ways than you might think, and knowing how personal finance habits can affect your small business is the key to remaining profitable. Just as in your personal life, there are benefits to being smart with your money - every business relies on cash flow and investment.
If you are looking to grow your Canadian small business, Lendified offers small business loans in Canada with instant approval.