Pinoy Business Coach

This is going to be a little tough on the bones. When they say that building a business is 90% Emotions and 10% Technicalities, they were not kidding. Being in a business is a very emotional thing because of the MONEY involved. There are various ways that the money in a business can make or break the business and the business person:


1st- Without the skill of reading or making financial statements, one would not know the difference between SALES, GROSS PROFIT, NET PROFIT and so forth. I know a lot of people who take money to spend for their personal lives from SALES (if you think that is a good idea then I would suggest you get educated with financial statements.)

2nd- Mixing personal money and business money, almost all of budding entreps are guilty of this at the beginning but somehow we kind of evolve into 2 separate entities. Mixing personal money and business money will drive you nuts and chances are, you wife will scowl at you all the time. (guaranteed!)

3rd- Not knowing the ratios of a business and knowing the demographics of expenses in a business will leave you in the dark and lead to bad decisions. Ratios that need to be found out include but are not limited to: Income to Expense Ratios, Profit Margins, Return of Investment, Net Margins etc..

4th- Just because sales is good, business is good. This can become a very naive statement to make. Others would justify splurging and spending on liabilities just because they are selling very well, although there might be some truth to that, it is only a small piece of the grand financial statement. The bottom line is what counts and how consistent a business can give such a bottom line.

Truth be told, a business will often reflect the ability of the owner to manage his or her own finances. Small victories lead to much larger victories. Private victories lead to public victories. Yes, you have it right, one needs to manage his own personal finances before he can manage the finances of a business.

One of our readers, Jay Castillo has a very good article about this in his blog. Click here to read.

When I started out as a sole proprietor, I practiced paying myself first. Since I was single and had little liabilities, i managed to save 50-60% of my income to invest in my business and also to further my technical skills. All that hard work really paid off. If you have not started this habit, you can acquire information about managing personal finances from a lot of sources.

Be awesome!