Q&A Session on Managing small business
Hello Doc, I keep injecting my salary money into my ka business but it eats it. I sometimes take some money out for transport or utilities at home when things get tight but I put in more than I get out. I can’t see where the money is going. How can I know which one is my money and which one is for the business? Joan Jjuko
Dear Joan,
Its important that the business is seen as different entity from yourself. You need to give it a name and let it have its own pockets preferably a bank account. Its very easy for company money to be “mixed up with that for vegetables at home” (Okubulira mu z’enva). Once you see the business as a hard neighbor, it will help you deal with it as such.
At the start, look at your investment as a loan/ shareholding done to the business. The reason you are investing is not to know you have a business but essentially to plant the seeds with the hope of seeing fruits that should be more than the seeds you planted. Imagine your investment was seed, if you ate it, would you harvest fruits?
Once the business starts running, you need to identify a point say six months where you know that the period for planting is done. You stop planting and allow the business to grow with your support but not financial.
Give yourself a salary for being Managing Director (MD) of the business. Ensure its not too much to collapse the business but enough to run your errands so that you won’t need to take business money out daily.
If you take out money, write it as loan and indicate when you will pay.
Note: Your business is a hard neighbor so pay it back on time. Demand this money and pay it back as soon as you get it. Ensure its in extreme situations that you have to borrow from the business.
When you pay your own money, record it and once the business is able to, take it out. Ensure the business pays its bills. Avoid impulse expenditure , draw up a budget and have weekly or daily expenditure which is planned for. This should be withdrawn from the bank and not taken from the days income. Avoid at all costs spending from the source. This will allow you some discipline.
At the end of the quarter, balance the books and decide how much of the profits will be re-invested in and how will be taken out. Trust me, you will succeed in separating the money.
