My Town Tutors is a great resource for parents & teachers. Find qualified tutors in your area today!

August Guest Blogs / Top Guest Blogs / August Jokes

If you want to work independently or as a freelancer, you will inevitably have to deal with your financing concept. However, this point is often only incidentally or not at all taken into account when setting up a business. That this is a big mistake is shown not least by the fact that many self-employed and freelancers fail due to an early financial failure.

The previously thoroughly thought-out business idea and the acquired skills lose their value in one fell swoop if they are not supported by solid financial management, which is largely responsible for the success of your own company. It is, therefore, worthwhile to deal very intensively with this topic, as it is about the existence or failure of your own company.

Have a clear goal

Before you take the step into self-employment, you should first get a thorough overview of your financial resources. If these are not sufficient for your project, loans to start your own business must be considered. However, it is important not to lose sight of reality and to realistically assess the expected income.

It has regularly proven its worth to set the revenue forecast below the revenue opportunities determined by market analysis. This basic consideration should form the basis for every financing concept.

On this basis, further financially relevant concerns of the company are established. A financing concept mustn’t be a one-off affair. Rather, it is a companion that has to be adapted to the respective economic situation.

If more income is generated than forecast in the financing concept, the values ​​must be adjusted by the factor of the surplus. The same of course also applies to the opposite case.

Separate liquidity and financing

Another serious mistake made by the self-employed and freelancers for reasons of ignorance is that there is no strict separation of liquidity and financing in the financing concept.

The financing of individual purchases or consumer goods often exceeds the financial leeway to such an extent that the company has no “free” money at its disposal. Thus, the company is deprived of any opportunity to grow, as orders cannot be processed due to a lack of available money and consequently there is no calculated income. Therefore, in every financing concept, the separation of liquidity and financing must be observed.

To be successful with your company, you need a financing concept in any case. Of course, not everyone is so well versed in this that the concept also brings the desired advantages. Anyone who has problems with the creation and maintenance of a detailed financing concept will find the help they need from their tax advisor to be able to deal more specifically with the company itself.

Conclusion

A solid financing game is required for anyone who wants to control where their money goes. This is especially true if you are self-employed or a freelancer, if you can’t control cash flow as early as possible you will experience bigger problems down the road. And we have not mentioned anything about tax yet! If you are incapable of doing it yourself then you can hire an accountant but  make sure he/she knows how to become an enrolled agent.