Balancing the Ledger Between Business and Personal Finances

It is often too tempting for business owners to take a casual approach towards managing their finances. A common misconception is that since the business belongs to the owner, there is no distinction between the financials of the two. This is incorrect and will lead to future problems, particularly during an audit. According to Bloomberg data, eight out of ten businesses fail within the first 18 months. In Malaysia, the Federation of Malay Economic Bodies has put this number at an average of 82 out of 100. This high number of failures often stem from a lack of long-term planning and necessary management skills.

How business owners can be better prepared
"In a report based on start-up postmortems, it was found that of those who failed, 29% did so due to a lack of funding."


With the right planning, funding and flexibility, businesses will have a better chance of succeeding. Here are some financial tips that can help you build the business of your dreams while maintaining a healthy balance for your personal finance.

A) Separate Business Funds from Personal Funds – By staying organized your business will be more credible and there will be no issues in auditing or tax calculation. The separation will also allow your business to clearly demonstrate its obligations while your personal finances are kept safe from any business liabilities. This might not be the easiest of tasks sometimes, so thankfully there are powerful solutions you can make use of such as RHB’s SME e-Retail for retailing owners. This all-in-one business solution has the tools to help you manage cash flow and monitor your business financials while keeping costs down.

B) Leverage – There will almost certainly be times when you will need leverage to expand. Rather than giving up equity to leverage, a business loan is a better option. RHB’s SME Biz Power Loan gives you the opportunity to not only get the funds you need, but also retain full ownership of your business. You can also apply through the RHB SME Financing Online Portal, which means valuable time saved! Alternatively, should you so desire there is also the option to inject funds into your own business. This is done by either reinvesting personal funds or buying more equity. Having strong personal finances will allow you to do this with ease and reduce the chances you’ll have to seek funds from a third party.

C) Mitigate Your Risks – Businesses usually do their utmost prevent having excess unused funds. One way of doing this is to opt for a solution such as RHB BizPower Flexi FD. This can help both limit your credit exposure as well as ensure that you have access to funds anytime you need it. Similarly, on a personal note, putting extra funds into a Fixed Deposit account will help you reap the benefits of increased interest income as well as help insure that you’ve got something aside in case of emergencies.

"Having a strong personal finance portfolio can auger well for your business."

D) Diversify – As the saying goes, it’s not a good idea to keep all your eggs in one basket. By diversifying your business, you will benefit from an extra layer of protection should factors affect any industry. Similarly, look towards a diversification in personal funds so that you can lower your risk profile. One option would be to look towards Unit Trust Funds. RHB’s Wealth Management team can help you invest in various award-winning funds. Unit Trust Funds have been known to generate up to 25% in returns (over a one-year period).

Move ahead with an eye towards the future

Having a strong personal finance portfolio can auger well for your business. The reverse will also be true, but both are conditional upon managing your money wisely. It may be true that it takes a lot of discipline to keep the lines between personal and business wealth separate. However, as you can see, there are similarities in the way both can be governed. With RHB as your preferred partner, rest assured that we will take care of your financial needs as you build the business of your dreams. Speak with your RHB Relationship Manager today and discover how RHB’s strong offerings in both personal and business financial solutions can support your needs.

1Past performance of funds are not an indication of future performance and return percentages may go down as well as up

Join RHB Premier Today

Switch to RHB Premier today

Please fill in the fields below so we can get in touch with you.