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Around the world, people are facing being laid-off, taking salary cuts, or simply realising that life’s short and it’s time to reach for that long-postponed dream. But you need money to do that…
The personal finance website JustMoney crew have some tips to share with self-starters and entrepreneurs looking to make that jump towards their dreams.
We’re in the middle of a global pandemic…
So it’s essential to do your homework and get your personal finances sorted before ordering those new business cards. “Small businesses are fragile under normal conditions, with about 70% failing within the first two years of operation, mainly because of cash flow issues,” says Sarah Nicholson, Commercial Manager of JustMoney.
Here are Sarah’s seven tips to kick-start your start-up or dream project:
1/ Limit your expenses
The lockdown has proved that you can work without a fancy office and business lunches. Generate a solid business plan, keep your expenses low and focus on generating revenue.
2/ Maintain productivity
“Aim for a dedicated workspace, however small, and balance work sessions with short breaks,” says Sarah. This will keep you focused… and you’ll avoid burnout.
3/ Get help with funding
Government grants and other forms of funding are available for promising enterprises. Scout around for the option that suits you best, and find out how to improve your chances of qualifying.
4/ Know your credit score
Avoid debt wherever possible, but know your credit score should you need to apply for a loan (e.g. for an essential manufacturing item). Your credit providers will check your “credit score” – a profile of your recent credit history which reflects how well you manage your debt repayments – to approve or turn down your application.
A good credit score means you can borrow money at a better interest rate, and potentially save thousands of rands in repayments. Check your credit score free here.
5/ Set up savings
“As an entrepreneur, you’re responsible for dealing with cash crunches in your work and personal life. Customers don’t always pay on time. Aim to have at least three months’ worth of living expenses covered so that if there are hiccups in your cash flow, you can survive,” says Sarah.
6/ Take care of tax
The expenses you incur to generate your income can be deducted from tax, but you need to prove this by keeping records of all income and expenditure. “You also need to maintain a travel logbook to justify your vehicle mileage. If you’re employed, find out how you’re taxed on your side hustle,” she says.
7/ Invest for your retirement
Lastly, you are responsible for your retirement, so after you’ve set up your savings account, look at investing your money in the long term.