Starting a business is one thing, sustaining it requires strict adherence to the basic rules of record keeping and maintaining a business account separate from the personal one. As simple as this might sound, it has become the major reason for the collapse of most small and medium size businesses especially in Africa. From a realistic point of view, direct spending from the business might be difficult to eradicate but it can be controlled with a view of sustaining the business.
While the necessity to spend from the business might be compelling, if it is not regulated, it will destroy the entire business. In a traditional African family, most small or medium size businesses are run by women. With sympathetic mindset, sense of responsibility and the need to support their husbands, often times, they are forced to spend from the business. Minor expenses such as transportation fare for the kids, buying of snacks or lunch for the kids after school, buying of stationeries for the kids, taking care of household needs and others, are directly taken care of from the investment capital.
For a family that is struggling financially or a family where the father has become irresponsible in taking care of the financial needs of the children, the woman automatically steps in to fill the gap. This might be as a sign of good faith in supporting the husband in times of need or adjusting to the only option available in order to stop the kids from becoming beggars. Either way, she must spend from her business and in most cases, it affects the investment capital and eventually destroy the business. What then is the way forward?
To start with, there must be a proper record keeping where income and expenses are properly documented. This will provide a clear guidance on how much was invested in the business, how much was taken and for what purpose. Having a proper record keeping will save you the stress of trying to remember how much was spent from the business, when and for what purpose. Because records do not lie, it will equally provide you with a signal that if you continue with such uncoordinated and unregulated spending, the business is at the risk of collapse.
In addition, you can place yourself on a monthly salary. This is done by converting yourself to a salesperson who is employed to manage the business. How much salary you earn depends on the size of the business and the sales returns. Overpaying yourself is as good as direct uncoordinated spending from the business. Therefore, set a realistic salary influenced by objective assessment of the business size and performance. And once that is done, you must be financially discipline and faithful by ensuring all your spending from the business are covered by your salary. To keep your business afloat and support your family, you must be financially prudent and discipline. Remember, family needs will always be there, but once the business is destroyed via reckless unregulated spending, the possibility of bringing it back is slim or totally impossible.
Abdulkareem Azeez
FIS President & Director of Studies