Here are top 3 Business Money-Handling Mistakes you should avoid:
- You do not have an accounting system in place. There are options for the frugal business owner. You don't have to hire a bookkeeper if you think your cash flow wouldn't allow it. There are accounting tools which are helpful for startups.
- If you don't have an accounting system to keep track of what has been happening in your business financially, chances are, you also do not have a projected cash flow. And if you do not have these 2 things, it is likely that you do not have or are not following your business plan. That's a big mistake right there. The reason you have a plan in the first place is to act as a guide for you. Imagine a blind man who doesn't have a walking stick nor a person to help him cross the street. You are the blind man, your business plan is your walking stick and the street full of passing cars is the business industry. What do you think would happen if you try to cross the street without your stick? That's right, BAM! You're out of business.
- You do not keep track of your accounts receivable and your accounts payable so your payments to suppliers could be delayed partly because one: you weren't able to collect on time since you don't know who and what to collect and two: you used the money to spend on trivial things you thought were vital for you business but really isn't. This is poor money management. Deferring payments may help with your cash flow for a little while but doing it often would spell disaster.
As you can see, the mistakes I have pointed out are inter-related. You need to have a feasible financing strategy to help sustain your business. To be successful, you have to think of long-term ideas to develop and grow your business.