One of my college teachers told us an interesting story that I remember to date. A certain professor, he said, had serious insomnia that he claimed he often went for several weeks without sleeping a wink.
His colleagues disputed this so they decided to prove for themselves if the claims were true. A doctor volunteered to conduct the examination and establish the nature of the anomaly.
It was agreed that during one of his serious bouts, the professor would spend a few nights with the doctor so that the doctor could conduct the study and possibly publish the findings in a journal. The professor agreed and they set a day to start the experiment.
Contrary to what many expected, that night it was the doctor who never slept. The professor was snoring throughout the night but in the morning he swore he never slept.
This story came to my mind recently when I was attending to a client, Mike, who told me that most of the time he feels like an athlete who should be competing in the field but is constantly on a treadmill – sweating, panting and burning calories but not moving an inch.
After six years in business he cannot see much progress financially and in the quality of life. He has been working hard but never enjoyed a single month of debt-free life. He is constantly balancing his accounts to pay loans, suppliers and bills, leaving nothing for himself. Sometimes he is forced to borrow to pay debts. Even the few assets he has bought, he said, are all held by banks as collateral for loans and overdrafts.
As we discussed his business model and operations, I realised the enterprise is highly profitable and Mike makes more money than most of his peers. The problem is how he manages it and his spending habits.
I realised he had no clue how much money his business was making and how he was spending it. He and his wife worked in the business with no fixed salary and operated business accounts where they withdrew money according to family and personal needs. None of them operated a personal bank account.
Most business owners are like Mike, more often than not intertwining business and personal life. After all, they say, you are the business and the business is you. However, muddling up the two does more harm than good.
Business experts advise we separate business from personal life both emotionally and materially. It is important to quantify and value every input and output to your business and charge appropriately.
Even if you are just starting out and resources are scarce it is essential to separate the two, especially as far as money is concerned. Most business owners slip into the habit of overspending business money then blaming the business for failing to meet their expectations.
Treat your business, big or small, like an independent and viable entity. Put business expenses separate from your personal spending, even though initially it may feel like they are one and the same thing if you are a sole proprietor.
Draw a regular salary commensurate with the profitability of your business and your input and set your lifestyle based on this income. This will not only streamline your cash flow but will also set you free emotionally from business woes that come from time to time depending on season and market dynamics.