The current global crisis has brought many things into sharper focus and, it’s fair to say, we’ve all faced new challenges under the Covid-19 cloud.
The importance of health, family and friends may top the list for most but, for many of us, our businesses and family finances have been at the forefront of our minds.
One of the major underlying issues for self-employed business owners in particular is the financial pressures the lockdown has caused for their company and the knock-on effect this has had on their family finances.
It has underlined how perilously close to the edge we often tread when living month to month without a safety net to fall back on. Without the speedy government intervention to support workers and bolster our economy over the past couple of months, I’m sure you’ll agree the picture would have been pretty bleak.
Whilst we’re far from out of the woods yet, and a lot of businesses face a rocky road to recovery, I’m hopeful that we will look back on this time as a moment of realisation and an opportunity for positive change in many ways.
One constructive plan we can put in place as we emerge from the current situation and begin to regroup is to make ourselves more financially resilient.
Easier said than done, you might say. We all know it would be ideal to be debt-free with ample savings in the pot and not have the ongoing stress of making ends meet, but making it happen is a different story.
I admit this is not something we can achieve overnight, but I do believe it is achievable for all of us if we have a strategy in place to do it. The reason I can say that is because I’ve worked to achieve it myself and, while I still have goals to strive for in financial terms, it doesn’t feel like an uphill struggle to meet our commitments any more and it has served us well being in a stable position throughout this period of uncertainty.
The programme that helped me work towards a more robust financial position was Dave Ramsay’s 7 Baby Steps. https://www.daveramsey.com/dave-ramsey-7-baby-steps
The idea is a simple but effective one. Start by building up an excess ‘pot’ of £1,000 in savings. Then methodically eradicate your current debts. After this, you can start to create a fall-back fund and, step-by-step it continues until you can accumulate wealth.
The timescale for moving through these steps will differ for everyone depending on your current position, but to make it happen you need to make a start.
Read his book ‘The total money makeover’. It’s a fantastic starting point to help you rethink your money management.
This strategy underpins the way I work with my accounting clients. Why do we run our own businesses, if not to support our personal financial goals? The two really should work hand-in-hand and this is the mindset shift we often need. We’re not working to build a business, we’re working to build a business that funds our lives and a lifestyle of our choosing.
Part of that is developing contingency plans to enable us to cope with the unexpected – like if our income, for whatever reason, is impacted without warning.
So, as we look to embrace a ‘new normal’ following this global catastrophe, I urge you to also embrace being more financially aware and astute with resilience in mind.
Get Smart can help your business become more profitable, so YOU can fulfill your dream. Take the first step today by telling us what you would love to achieve here.