Personal budget

Personal budget v Business budget: check the difference

Is it just me or has personal finance become all the rage in Kenya? You’re being taught to invest, to make money on the side and even how to save. Wow. I guess it means Kenyans’ problems have shifted from lowly things like price of unga. A tool relevant in all this is the budget. For you, in entrepreneurship, this means both a business and personal budget.

Entrepreneurs were always taught to keep their business and personal money accounts separate – way before it was cool. Unfortunately, small business owners have a tendency of imposing their persona on their businesses. This is okay if you’re hardworking and nice. If you were nice, you would follow us on Twitter:

A problem with treating your business as if it’s an extension of you is that finances end up mixed up. Yes, you may have separate accounts. But the way you sort out money issues become similar. Just because you shop in bulk doesn’t mean it’s the right choice for your business right now. And if your relationship with your supplier allows you to go a long time without paying, it doesn’t mean you should try it with friends.

At the base of this issue, as with all financial concerns, is budgeting. So, why don’t we learn key differences between a personal budget and a business budget:


Our friends at Rookie Manager say that saving is forgoing consumption not spending less. Do you agree? Anyway, savings are a huge part of personal budgets. You are always advised to stash cash away whenever possible. If you are an amateur at saving, and can’t put away a lump of your earnings, you can regulate yourself with concepts like #52WeekChallenge.

In business, usually, the one time where savings are a big concern is when you’re starting out or have a new product. You would need savings to sustain what you’re doing before revenue makes things self-sustaining. Otherwise, businesses “save” by acquiring assets. You cannot play it that safe in business. It would be better to focus on generating returns rather than keeping money idle, if that’s even possible in the first place.


Your personal costs are more or less fixed. I know you check off your basic needs first. No, your nails and stuff are not on the list. Basics are rent, food and internet (we will allow that). It’s only when these are met that you get to do pretty much what you please with the money you’ve earned. We would suggest you stash it in your savings *wink*

Business does not have costs settled so well. What is most important is ever changing. If the machine breaks then it’s that. If the supplier wants to start a Twitter Thread on you then it’s that. A business budget, unlike the personal budget, is about constantly deciding what are the priority costs.

Being broke

How do you deal with a shortfall in your personal finance? It should be simple. Cut back on your spending. It’s not just Friday cocktail. You would have to eat greens for a whole week and stuff – pretend to like salad. But many can’t keep with their personal budget because they fall for the temptation to keep up appearances.

In an ideal world, small business owners would just need to fill a short term loan foam to deal with shortfalls. But we live in Kenya. The only other way to deal with being broke in business is to clear your stock. Don’t sell the other kinds of assets, stock are assets too. You may have to see them at a loss just to sort the short term problem.