A guide to getting your business in order

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Despite the lockdowns, Bellah got her construction business in order during the 2020 edition of the competition Photo: Leon sadiki
Despite the lockdowns, Bellah got her construction business in order during the 2020 edition of the competition Photo: Leon sadiki

PERSONAL FINANCE


One of the 2020 Absa/City Press Money Makeover candidates was Bellah, an entrepreneur running her own construction company in Pretoria.

Despite two months of no work during lockdown, Bellah was still able to turn her construction business around that year by putting the proper processes in place, and thanks to the lessons she learnt during the Money Makeover Challenge

Bellah got her construction business in order during 2020. Photo: Leon Sadiki
Bellah got her construction business in order during 2020. Photo: Leon Sadiki

Being a successful entrepreneur is not just about having a great business idea, it is also about making sure you understand how your business runs, paying attention to cash flow and having proper accounting systems.

A mistake many entrepreneurs make is that they treat their business funds as their personal money. If you treat yourself as an expense in the business and separate your personal finances from that of your business, you will have a better idea of whether the business is profitable or not.

READ: Money Makeover | Tell your money where to go

Despite generating a significant turnover in 2019, when Bellah joined the Absa/City Press Money Makeover Challenge, she had no idea whether her business was making a profit or not.

While she is never short of new ideas, the problem has always been the financial management of her businesses and her cash flow. Although she received large lump sum payments from projects, Bellah never seemed to have enough money to meet her living expenses.

When she joined the Money Makeover Challenge, her business had a significant overdraft and her personal finances were relying heavily on debt.

Bellah worked with an Absa financial adviser who immediately recommended that she start paying herself a regular salary from her business every month. She also worked with a senior enterprise development specialist at Absa to help her understand her business.

Within six months, Bellah had separated her personal and business finances, and paid herself a monthly salary. She created and stuck to a budget, which included paying off her personal loans.

In those months, she had paid off R175 000 of business and personal debt, and built up a contingency fund of R45 000.

On the business side, Bellah kept an income statement on each project to fully understand her expenses and profits. She employed her own team rather than contracting out to subcontractors. This improved her margins considerably.

When she received lump sum payments from her projects, rather than going on her usual spending spree, she reinvested the money straight into the business – paying off debts and building up capital to fund future projects.

She started a Facebook page for her business and has completed three projects from leads she received from this. Bellah made significant inroads into her debt and started to diversify her client base.

READ: Faces of financial freedom

The Money Makeover Challenge takes six individuals through a money bootcamp over six months, during which they transform their finances.

Our 2022 candidates have been selected and several of them have their own businesses. Like Bellah, they need help separating their business from their personal finances, and must put strategies in place to help those businesses grow.

We will be kicking off the 2022 Money Makeover Challenge on June 19. Follow their journeys and apply their lessons so that you too can use this year to turn your finances around.

. Watch these pages and follow the Money Makeover Facebook page @CPMoneyMakeover


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Maya Fisher-French 

Personal Finance Editor

+27 11 713 9001
personalfinance@citypress.co.za
www.citypress.co.za
69 Kingsway Rd, Auckland Park
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