As a professional, you certainly know how to separate your career from your personal life. Your professionalism is what will raise you the corporate ladder, after all. Your bosses will also applaud you for it. But if you become the boss, with your own business and employees to manage, can you still separate your personal life from your career?
Many workers, especially those that couldn’t put up with a nine-to-five job anymore, quit and try their lucks at business. It seems that people see entrepreneurship as a way out of a vicious cycle, with being their own boss and in control of their own time. But if your lifestyle, particularly your spending habits, are out of control, then a business might be a new trap for you.
That isn’t to dissuade a spender like you. However, the truth is, our business spending tends to mirror our personal spending. Therefore, if you relentlessly spend for yourself, then you’d likely incur high operating expenses for your startup as well.
But that doesn’t have to happen. In this article, you’d learn key bits about managing your personal and business spending.
Types of Spenders
Before starting a business, it would be helpful to know what type of spender you are. The following are three common types of spendthrifts:
- Risky risk-takers. These are spenders who act before thinking. In business, they’ll likely take out a huge loan to use for a product launch, without conducting market research first. And they do this just for the risk, which they believe is worth it.
- VIPs. They splurge only on designer items, both for themselves and for their business. Even if the startup can’t afford top-of-the-line computers yet, for example, they’ll probably insist on buying them, nonetheless, just for image’s sake.
- The Impulse. As the name states, impulse spenders give in to their impulses to buy, usually to feel good. Out of all the three types, the urge is probably the most common because everyone carries a bit of it in them, whether we admit it or not. Have you ever gone to the grocery store specifically to buy eggs, but end up going home with other items? This habit of yours can be suffered by your business as well.
Operating Expenses in Business
The operating expenses are where your personal spending will mostly manifest. Said expenses are the costs incurred by a business regularly, such as administrative expenses, costs of goods sold, and research and development, to name a few.
Office supplies, utilities, equipment rental, and travel expenses also fall on operating expenses. As a business owner, your goal should be to reduce these costs so that your cash can cover more required payments, like wages.
Ways to Reduce Operating Expenses
As you apply these practices to your business, use it on your personal spending, too. You’ll be surprised how much you can save by controlling your urges to splurge.
- Use technology. VoIP, digital invoicing, online payments, virtual conferences, and the like will cut down your daily costs significantly.
- Ditch useless software. If you spend too much on upgrading unnecessary apps, ditch them, and stick to the ones that are genuinely beneficial for your operations.
- Put up with refurbished equipment. Old furniture and electronics won’t tarnish your reputation, as long as they’re all in good working order.
- Choose an affordable location. It’s okay to use your garage as your first headquarters. You’ll have a nicer office in no time.
Getting an SME working capital loan will be necessary at times but don’t make acquiring debts a habit. They can only go so far, and your expenses will still depend on you and what you earn from your business.
Your venture’s finances will require your rationality, so make careful considerations before using your money on anything. This way, you can have problem-free management of your profits.
