Entrepreneurs often neglect cash flow. If you want to handle your business’s finances well, you need to understand your cash flow. You may not be able to pay your payments or invest in your business without a clear cash flow picture.
Say you run a small retail store and don’t track your cash flow. You may not know that you’re losing money every month since inventory costs more than sales. Without knowing your cash flow, you may order more inventory and get deeper into debt instead of cutting down and focusing on sales.
Another typical financial mistake is mixing personal and business finances. As an entrepreneur, it’s tempting to use your personal bank account and credit cards for business costs. This can soon become an entanglement 🙂 , making it hard to track business spending and revenue. It also makes it harder to assess your company’s finances and make decisions.
For instance, you use your personal credit card to pay business expenses for your small consulting business. You may not realise that those charges are accruing interest, which can gradually eat into your profits. If you don’t separate your private and business costs, your tax deductions may be inaccurate, which could increase your tax liability.
Finally, entrepreneurs fail to budget. Especially when starting out, you need a spending and investing plan. Without a budget or financial strategy, you may overspend and underspend, which can throw your business off balance.
You start a small marketing agency without a budget or financial plan. Overspending on office rent and equipment may reduce your marketing and advertising budget. You may struggle to bring in new clients and build your business.
Dave Ramsey, a renowned financial expert once said:
“A budget is telling your money where to go instead of wondering where it went.”
Just like a budget helps you take control of your finances and allocate resources strategically, managing your business’s finances helps you make informed decisions and steer your business towards success.
It’s important to stay on top of your finances and plan ahead, and you’ll be well on your way to building a thriving business.
My Biggest Blunders Speaker: Dr Jabulile Msimango-Galawe, Senior Lecturer, Author, and Entrepreneur
Dr Jabulile Msimango-Galawe, fondly known as Dr J, is the founder and managing director of DrJ Business Support (Pty) Ltd, and the program director of the MM – Business and Executive Coaching at the Wits Business School.
She is an entrepreneur, statistician, business coach, mentor, facilitator, public speaker, researcher, and senior lecturer. She has been in the business space for almost 20 years, and in mentoring and coaching for almost 5 years.
She is a practicing business and executive coach registered with COMENSA [Coaches and Mentors of South Africa] and serving as a board member with GSAEC [Graduate School Alliance for Education in Coaching].
Catch Dr J at My Biggest Blunders | Pretoria taking place on Wednesday, 26 April 2023 in Pretoria from 10:00 until 15:30.
This is a free admission event but registration is required due to limited space. We expect this event to be fully booked like our last one.
To register, please go to this link: My Biggest Blunders Registration.
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