Why it’s important that your personal finances are under control

Businesses fail every day, and for a variety of reasons. But many of those reasons can be traced back to (a) the owner and (b) the owner’s personal financial situation.

In order for you to be successful with your business, you need to be successful personally, and that also means financially.

When you work with Wealth Enhancers for your business, we will also inquire about your personal finances. You might think it’s intrusive, but we know that your personal and business lives are too intertwined for problems to exist in one and not the other.

Emotional baggage

First of all, you cannot carry personal financial troubles into your business endeavour on an emotional basis. You may find yourself distracted by your personal situation, even to the point that you cannot concentrate or make proper decisions. You might spend your time thinking about how to get the money that you need, rather than thinking about the ways to improve your company.

If your personal situation is desperate, you may become reckless, taking risks that you would not ordinarily take, not assessing the potential for reward properly. Studies have shown that people who are worried about their finances tend to make decisions that not only don’t help, but actually hurt their situations.

Financial distress

And secondly, obviously, you need to keep your personal financial situation completely separate from your business in terms of actual money. If you start “borrowing” money from your business because you need it to pay personal bills, you are headed down a very slippery slope towards disaster.

Get right and stay right

You can help your business by establishing the right money habits in your personal life as well as in your business life.

1. Honestly assess where you are and where you want to go

You must be able to face your reality, even if it’s unpleasant. If you have debt that makes you uncomfortable, define it and make a plan to eliminate it. In other words, you must know your numbers.

2. Clarify and track your goals          

Make sure they are specific, actionable and measurable. Set a series of smaller goals that will aggregate to reach the larger goal. This makes large, seemingly unattainable goals come into focus.

3. Find motivation      

It can be hard to sustain a long-term goal, even if you have interim milestones to hit. Keeping your eye on the prize is not always enough. You might need to add small rewards, or find other ways to keep your enthusiasm high.

4. Deal with obstacles

It would be great if your path was smooth, but it’s unlikely. Know that there will be rough patches and that maybe you will even take a few steps backward. This does not mean that you are a failure or that your plan is not solid, only that you hit a bump. Pick yourself up and continue on.

Ultimately your company’s success will depend on a number of other factors, but you can take steps to make sure that your personal financial situation is not going to impact your business.