The need to save sensibly is not just an entrepreneurial requirement. Saving money for the future is a common message passed down from one generation to another. It is a known fact that saving is critical for future financial security. However, it is even more crucial for an entrepreneur.
Why do entrepreneurs need to save better?
Although spending sensibly and saving with discipline is important for everyone, it is even more crucial for an entrepreneur because they are deprived of the certainty of a paycheck every month. Unlike a salaried individual, an entrepreneur deals with far more unpredictability in the venture that they pursue.
Unlike a salaried individual, an entrepreneur deals with far more unpredictability in the venture that they pursue.
For early-stage entrepreneurs, this unpredictability is, in fact, a regular affair. As a start-up deal with the teething troubles of an early stage venture, even their ‘present’ is uncertain. They are still at a stage where they are investing in capability building and creating a reputation for themselves in the market.
An entrepreneur has to be prepared for new market dynamics. The changes can impact their personal life as they may need to alter the various aspects of their life, including the lifestyle choices of not just themselves, but their families as well. When times are rough, it is the financial foresight that an entrepreneur has displayed in the past that may help them in sailing through. With some financial savings from the past, an entrepreneur can keep their head above the water, if needed. Even when the situation is not that dire, a security blanket like this can help them make prudent decisions. As their immediate needs are taken care of, they can exhibit more control over their decisions and choices. This allows them to take a more desired path without being the victim of a situation. A path that is desirable may require more emotional and financial reserves than an easier route, and this is where financial savings come to the rescue.
When times are rough, it is the financial foresight that an entrepreneur has displayed in the past that may help them in sailing through.
An entrepreneur’s understanding of various instruments of saving money such as tax planning and investments, reflects their business acumen as well. It impacts their image in front of stakeholders and investors. Keeping money aside for one’s start-up while bootstrapping alongside, helps an entrepreneur to create an internal reserve for the future. An entrepreneur can also create a culture of saving within the organisation as they discuss it with their team. It helps in developing a mindset of sensible spending and decision-making across the organisation.
Life is unpredictable and uncertain. And that should be reason enough to save. For everyone. Having money in the bank simply gives you options. And sometimes, that can be a life-saver!