Business financing mistakes can be perilous not only to the growth of a business but perhaps even your actual business survival. Oftentimes, these mistakes can be avoided by having in place some very basic accounting and financial management systems.
If you were to start committing any of the following 3 business financing mistakes too often, you would greatly reduce your chances of long-term business success.
A good business track-record is largely judged on financial success and financial success in business is assessed largely through the examination of business accounts. Good business accounts demonstrate to banks, financiers, colleagues etc., that you are a bankable business person and will lead them to put their faith and money into you and your business ventures.
Business Financing Mistake # 1 – No Monthly Bookkeeping.
Regardless of the size of your business, inaccurate record keeping creates all sorts of issues relating to cash flow, planning, and business decision making. In a word, your business is doomed if you are not doing monthly bookkeeping. Bookkeeping services are dirt cheap compared to most other costs a business will incur. Bookkeeping should be done on a monthly basis along with Management Accounts so that your financial records are always up to date and you can view the financial status of the business. By itself, this one mistake tends to lead to all the others in one way or another and should be avoided at all costs. (Read more)
Business Financing Mistakes # 2 – No Projected Cash Flow & Budget
Having no meaningful bookkeeping creates a lack of knowledge on where you are. And having no projected cash flow and budget creates a lack of knowledge about where you’re going. Without keeping score, a business tends to stray further and further away from its targets and, invites a crisis that eventually forces the business to change it monthly spending and cash-management habits. A projected cash flow first and foremost needs to be realistic. You should project both a best-case and worst-case scenario based on projected sales and business expenditures. (Read more)
Business Financing Mistakes # 3 – Inadequate Credit Control
There’s nothing worse than making sales, doing the work, sending your customer an invoice and then not getting paid on time…or worse still not getting paid at all! It’s a well-established fact that the longer a debt isn’t collected the less chance it will be collected. Typical credit terms in most established business are 30 days. However, due to a culture amongst some customers of paying late and small business not operating strict credit control, a business can often not get paid on time and fast run out of cash. So how do you avoid this? Well, there are numerous steps you can take but the following 3 steps will help ensure you always get paid…and paid on time.
1. Appoint someone in the business to be in charge of credit control.
2. Reinforce your payment terms and conditions on your contracts, on your website, on your invoices etc.
3. Send your invoices on time and include a statement of the account with each invoice.
In a world of tightening credit from banks, strict business finance practices are required even more. You can’t expect your bank to extend your overdraft or facilitate a term loan if you are guilty of any of the 3 above financing mistakes. (Read more)
There’s so much more to business finance and money management than I have covered here that I could write a whole book on it! But for the moment if you are starting out or taking over the running of a business and are experiencing working capital or cash-flow difficulties than I would first start investigating these 3 key areas and see that they are being managed diligently. If you do this, than many of your cash-flow difficulties will begin to disappear and your business finances will improve quickly (assuming your business proposition is sound in the first place and sales are strong). Find out more about business, personal finance and wealth creation strategies by signing up NOW atwww.MillioniareMindsetSecrets.com
