10 Essential Financial Habits for Successful Entrepreneurship in India

1. Budgeting

Creating a budget is a crucial financial habit for entrepreneurs in India. By tracking income and expenses, entrepreneurs can gain a better understanding of their financial situation and make informed decisions about spending and saving. For example, if an entrepreneur knows that their monthly expenses exceed their monthly income, they can adjust their spending habits or consider increasing their income through additional revenue streams.

2. Saving

Regularly saving a portion of their income can help entrepreneurs in India build a financial cushion for unexpected expenses or emergencies. According to a survey by the Reserve Bank of India, only 28% of Indian households have sufficient savings to cover their expenses for three months. Hence, saving is a critical habit for entrepreneurs in India. Entrepreneurs can consider setting aside 10-15% of their income in a dedicated savings account.

3. Investing

Investing in a diverse range of assets can help entrepreneurs in India grow their wealth and prepare for their future. Popular investment options in India include fixed deposits, mutual funds, and stocks. Entrepreneurs can consider seeking professional advice from a financial advisor to determine the best investment strategy for their individual financial goals.

4. Monitoring Cash Flow

Regularly monitoring cash flow can help entrepreneurs in India avoid overspending and ensure their business is running smoothly. Entrepreneurs can use cash flow management tools, such as budgeting software or spreadsheets, to keep track of their income and expenses and make informed decisions about their finances.

5. Planning for Retirement

Entrepreneurs in India should start planning for retirement early on, even if their business is still in its early stages. This may involve saving for retirement and considering investment options like a Public Provident Fund (PPF) or National Pension System (NPS). According to the Pension Fund Regulatory and Development Authority (PFRDA), only 12% of India’s population is covered under any pension scheme, making retirement planning a critical habit for entrepreneurs in India.

6. Protecting Assets

Entrepreneurs in India should take steps to protect their personal and business assets, including insuring their business and property and considering liability insurance. Entrepreneurs can consider purchasing insurance policies from leading insurance providers in India, such as the Life Insurance Corporation of India (LIC), HDFC Life, and ICICI Prudential.

7. Monitoring Credit

Entrepreneurs in India should regularly check their personal and business credit reports to ensure their credit score remains healthy. A good credit score can help entrepreneurs in India secure loans and credit at more favourable terms. Entrepreneurs can obtain their credit reports from credit bureaus such as CIBIL, Experian, and Equifax.

8. Minimising Debt

Entrepreneurs in India should aim to minimise debt, particularly high-interest debt, to ensure they are not overburdened with interest payments. According to a report by the Reserve Bank of India, household debt in India has increased significantly in recent years, making debt management a critical habit for entrepreneurs in India.

9. Staying Informed

Entrepreneurs in India should stay informed about financial news and market trends, including changes to tax laws and regulations. Entrepreneurs can subscribe to financial news sources, such as the Economic Times, Business Today, and Mint, to stay informed about relevant financial topics.

10. Seeking Professional Advice

Entrepreneurs in India may find it helpful to seek professional financial advice from a financial advisor or accountant. This can help ensure their finances are well-managed and their business is on track for long-term success. In India, entrepreneurs can find financial advisors through the SEBIs list of RIAs.