One of the reasons behind the failure of most business start ups is poor money management skills among entrepreneurs. To avoid making such mistakes we have prepared six money management tips for you.
#1 Watch your Expenditure
Be careful how you spend money. You can for instance outsource services or hire part time employees instead of employing staff on full time basis. You can also run your business from home during the early months of operations.
Be careful how you spend money. You can for instance outsource services or hire part time employees instead of employing staff on full time basis. You can also run your business from home during the early months of operations.
#2 Draw a Financial Plan
It is important to have a financial plan outlining the expected growth of your business. Include your expected expenditure, investment, sales and profits. This will help you determine whether your business is on the right path.
It is important to have a financial plan outlining the expected growth of your business. Include your expected expenditure, investment, sales and profits. This will help you determine whether your business is on the right path.
#3 Involve a Professional
Seek assistance from professionals like accountants, auditors and financial advisors. They will help you draw a financial plan, offer advice on areas you need to improve on and can raise a red flag in the case that they see any warning signs in your business.
Seek assistance from professionals like accountants, auditors and financial advisors. They will help you draw a financial plan, offer advice on areas you need to improve on and can raise a red flag in the case that they see any warning signs in your business.
#4 Save for the Future
Like life, business has both its highs and lows. One day you could be making huge profits and the next extreme losses. The performance of your business can be affected by very many internal and external forces, such as bad weather, conflict, economic recession or labour laws. It is crucial to put aside money for future.
Like life, business has both its highs and lows. One day you could be making huge profits and the next extreme losses. The performance of your business can be affected by very many internal and external forces, such as bad weather, conflict, economic recession or labour laws. It is crucial to put aside money for future.
Image by Toban Black via Flickr #5 Include your Salary
Most entrepreneurs would happily pay their employees, but do not bother to pay themselves. Draw your salary and that of other co-founders; after all, you can’t work for free forever. In the long run if your business cannot meet your salary expectations then you might have to review the viability of that business.
Most entrepreneurs would happily pay their employees, but do not bother to pay themselves. Draw your salary and that of other co-founders; after all, you can’t work for free forever. In the long run if your business cannot meet your salary expectations then you might have to review the viability of that business.
#6 Be Realistic
Whereas it is okay to dream big, be realistic with your growth projections, revenue targets and price of services and products. For instance, do not assume you will make millions in profits in the first year just because your products are unique. Set both long and short term achievable goals.
Whereas it is okay to dream big, be realistic with your growth projections, revenue targets and price of services and products. For instance, do not assume you will make millions in profits in the first year just because your products are unique. Set both long and short term achievable goals.
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