It is important to ask yourself whether you are doing business as a hobby or as a means to an income alone or whether you have a holistic view towards the idea of doing business. This may sound like a lot of heavy words without any meaning but is a very important question.
If you are keen on running your business as a process and as a means of growing, then you will have to pay extra attention to finances. If you spend each and every cent you earn for your personal expenses without bothering about your business, can you really claim that you are serious about your business?
You may be monetizing certain services or abilities like web designing or content writing. You are taking your skills and talents and converting it into cash. Well, are you investing any sum back into your business? What about a professional web design course? Or even a bigger and better computer? Or how about that graduate degree in English that help in pulling you down when applying for big jobs?
If you feel all these expenses are unnecessary and that you can continue at your current levels to earn your current income for the rest of your life, then you are merely treating your business as the money that you earn. There is nothing wrong with this approach but you must be prepared for complications when circumstances change. A sudden shift in web designing and website development may render you obsolete.
When that happens, the fact that you have not invested in your business and bothered about financial planning can hit you hard. You may be planning for your child’s education, marriage or asset purchase. Well, have you planned for your business?
Do you have a specific amount set aside for your business requirements? Failing to do so is going to leave you in a very difficult position. When you are not even bothering about classifying your income and expenses as business and personal, expecting you to think of your business in such a professional manner is asking a lot.