Frugality is a virtue needed by every entrepreneur from the word go. Otherwise, they will waste a lot of their time wondering why their businesses are not breaking even despite putting in a lot of hard work.
I have built a business to stability and have seen the same business I built tumble down to zero.
Based on my analysis on what caused the business to fail, all fingers pointed on me not being frugal. I was weak at planning before spending the money earned from my business.
The issue of frugality stretches far beyond business. It boils down to being frugal on a personal level FIRST.
Frugality revolves around how you spend your money or income. So how can one start being frugal on how they spend in business?
It Starts With Being Frugal With Oneself
This is the lesson I learnt after building a business for 7 years and eventually failing while at it. All through the growth stages, I always struggled with capital management despite the business bringing in money.
So why was my company struggling with managing finances?
The problem was rooted on my personal financial management pattern. I knew that frugality was necessary in business but I did not practice it individually.
If you are not frugal when it comes to how you spend your own money, you will struggle with everything related with your finances.
In this case, I struggled with managing and growing my business capital because of poor accountability of the earned income.
Ways In Which You Can Be Frugal With Yourself
- Account for every shilling that you EARN or Borrow. It doesn’t matter if the money you have is earned or borrowed. Make yourself accountable and ensure that every shilling goes into good use. Resist the urge to engage in impulse buying. Also, delayed gratification plays a major role when it comes to resisting the urge to spend anyhow.
- Do your ‘Shopping budget‘ Audit. How often do you shop for household consumption? How much does it cost you? For instance, while I was doing my shopping audit, I found out that I didn’t like doing one main shopping a month but instead I did shop in small bits. This when spread across the month was an expensive affair. When you buy in bulk you get quantity at a lower price. The small savings you get by being frugal in your shopping will amount to big savings in a long run.
- Have a goal for every month. This is what you aim to a achieve every month. We all desire to grow and move to a new level every month. Have a goal that requires you to invest money in. This way, you can redirect the savings you get from being frugal to your investment goal. Do not have many goals, have one goal and and ensure you achieve it.
- Limit giving out loans to friends. Are you that generous person who lends money to people when they are in need? Being generous is not a bad thing. But are those people you are generous to grateful. Do they pay you back what they borrowed on time? If you find yourself stuck in life simply because of being generous to others financially, start being frugal. Stop giving out loans to people and start focusing on yourself. Divert these loans you are used to giving out to viable investments.
- Work on your spiritual life. What do you believe in? Irrespective of where you come from, we all believe in the ‘I AM.’ That’s God. Practice what your believe in. For instance, Christians believe in praying. If this is the case, make sure you always pray. Practicing your faith and incorporating it onto your life and business is critical. It strengthens your mind, body and spirit.
Like the saying ‘charity begins at home‘ frugality for success begins with you. If you are not frugal with yourself, you will not be frugal with finances in business. Embracing frugality first on yourself will make it easy for you implement it on your business. Frugality in business is necessary if it has to grow to profitability.
And that is it from me here. Do you think being frugal is necessary in business? Let me know your thoughts in the comments section below here.
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Until next time bye bye and take care.
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