It is undeniable that many businesses are forced to go out of business because they cannot manage finances properly, one of which is by spending funds for purposes that are not too important.
For example, you spend significant funds by buying a vehicle to deliver goods, even though you can still rent a vehicle and allocate these funds for more essential purposes.
Therefore, Pintek would like to share tips on managing healthy finances for SME business continuity from a financial expert, Aulia Akbar CFP®, AEPP®.
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SME financial problems
Akbar, who was contacted by the Pintek team by telephone, said that the central financial problem of business actors did not have good financial records.
“Not a few SMEs are still mixing personal finance with business. Even though it is very risky to create problems for his business and personal finances in the future, “said Akbar.
Because the primary purpose of managing finances wisely is to determine whether your finances are healthy or not, both personal and business finances.
By having healthy finances, the business will automatically sprint and the results obtained are, of course, more leverage.
“Business is an investment, and investment is uncertain. On the other hand, investment is also closely related to risk. So investing in that business is indeed a big risk. Therefore, it is important for business actors to have healthy finances,” said the man who started his career in public relations in the media industry.
Furthermore, Akbar also said that the purpose of business is to make a profit. So don't let your money run out to cover losses from the business.
The right way to manage finances
Several things need to be done by SMEs to have healthy finances. It's simple, and the goal is to continue to grow.
1. Make sure personal finances are healthy
According to Akbar, before going into business, you must ensure that your finances are healthy by setting up an emergency fund of twice your annual expenses.
“To start a business, you must have twice the annual funds. The goal is to prevent or overcome economic pressures in the next few years. So personal security must be there first before starting a business,” said Akbar.
Besides daily living costs, you also have to calculate expenses for abnormal nature such as health costs to education costs which continue to increase every year.
2. Separate personal and business accounts
If you already have an emergency fund for yourself, the next step is to separate your personal and business accounts. Because when finances are put together, you can't differentiate between business and personal income.
“The goal is that you can find out where the money has been spent. Again, personal funds are savings for daily needs for the next few years,” said the man who already has a certificate from the Financial Planning Standard Board (FPSB).
Furthermore, Akbar said that if personal funds were used for business, it would undoubtedly boomerang for survival in the future.
“Imagine if there is a family member who is sick and the money you save has been used for business, of course you will find it difficult to find funds for medical expenses and in the end you will take business funds. If that's the case, business continuity will definitely be very risky for failure.”
If you have separated your personal and business accounts, the next step taken by business actors is to monitor all business expenses wisely.
The trick is to divide all expenses and record everything in as much detail as possible. Several expenses must be considered by business people, namely:
Cash in, money that goes into your account.
Cash-out, money that comes out alias your expenses such as employee salaries, operational costs, and others.
There are three kinds of expenses for business people, such as:
Operating activities, namely from operational activities or routine activities.
Cash in the form of purchases from consumers.
Cash-out is to pay suppliers or vendors, employee salaries, pay building rent, and so on.
Investing activities, namely from selling assets or investment activities.
Cash in, sell assets (buildings, land, cars, and others).
Cash-out is buying production machines or other assets.
Financing activities, namely from financing activities (debt loans and others).
Cash in the issuance of shares, debt securities, and other loans.
Cash-out, namely paying dividends, installments, and paying off debt securities.
Tips to keep business finances stable
Akbar, who currently works as a financial educator, provides several tips on managing finances so that the business remains stable, namely cash flow or cash flow that must be paid attention to overcome emergencies that may occur.
“In running a business, you must also be careful with debt. In order for the business to continue running smoothly, you have to look at the health of the debt ratio by dividing the total debt divided by the total assets,” said Akbar.
Akbar also continued that the goal is to find out how big the company's capacity is when applying for funding.