Businesses spring up daily around us and if you already don’t have yours, you will start contemplating establishing one because it sure looks like the only way to guarantee financial stability. On the other hand, we can’t help but still ask questions like; Why are some businesses crashing within a short period? Why are some businesses not growing? Among so many other questions.
Risk-taking is one of the cores of any business but the difference between the successful and the unsuccessful businesses is the calculated risk.
Successful entrepreneurs in the world always give account of how they pushed boundaries to achieve what they have but their stories are never without how they had a well thought out plan on what risk to take.
However, managing money while growing a business can be a very tough and difficult task while mismanaging money from your business can also cause it to crash.
One thing to always put in mind or make a priority is to keep your business financially healthy. Actually, there are some money mistakes that can be fixed while some can cause total damage. In this article, we won’t be differentiating which is less harmful or riskier. The aim is to ensure that money mistakes are totally avoided to enable the business thrive.
Here are some biggest money mistakes to be avoided to keep you in business for as long as possible;
- Not separating personal account from business account: Mixing personal and business funds is one money mistake that should be totally avoided. Many make the excuse of just starting the business without a separate account. The error will begin from not being able to decipher money made and money spent. If you want your business to succeed then you have to separate your accounts and peradventure you need some money from your business, then you have to do proper transaction and documentation.
- Not having a solid plan: Make plans for everything when in business. Remember the saying “when you fail to plan, you plan to fail”? Well it is so true in this case because without solid plans, you will struggle with decision-making in your business. There are business plan tools online you can use free of charge to avoid making money mistakes in your business.
- Not saving: Your business needs a backup and that is what savings serve as. If you are not setting aside some funds in case of emergencies, you might be as good as sitting on a gun powder. Not saving can be one of the biggest money mistakes but it’s avoidable if you inculcate the habit now and name it emergency fund, then your business will surely survive in rough times.
- Not setting a budget: Budgeting is everything when it comes to managing finances. If you are not doing this, you might soon lose track of your income and expenses, which is not in any way good for the business. The only way to avoid overspending that can lead to business crumbling is by creating a realistic budget. Let the budget be based on facts, priority and thorough research.
- Diversifying without proper research: Once a business starts booming, the next thing the owner starts thinking about is branching out into something new and different. At this point, you should know that diversifying without proper research is very harmful and it can cost you all if not careful. So, ensure to carry out proper research and be sure it is a step to take at that point.
- Pricing too low: That you just set up a business and you want to dominate the market is not enough reason to price your products/goods/services low. If your prices are not making enough profit, then the business will start failing gradually. It is best to calculate your desired profit margin using the industry benchmark and your business financial projections.
- Not investing in marketing: Don’t say your business is too small or just starting and marketing is luxury. This kind of mindset has made many businesses avoid marketing, leading to no brand awareness, no buzz and no lead generation Businesses are most likely not going to grow without the presence of marketing. So, put at the back of your mind that marketing is not an expense but an investment.
In summary, if you are just starting a business or nurturing an existing one, it is very important to manage your finances appropriately. One money mistake can cost the business a great loss that is irreversible. So, ensure you avoid the aforementioned money mistakes to keep your business far away from financial crisis.
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