Financial Management: 5 common mistakes that can affect your business

Financial Management 5 common mistakes that can affect your business

 

Financial management, the 5 most common mistakes:

 

Surely you, like other entrepreneurs, think about succeeding in the new venture. But to achieve stability and growth in business, it is essential to have a good financial management plan.

 

The most effective financial management plan is one that includes metrics, objectives and a guide on what to do and what not to do so as not to compromise your company.

 

But not all beginning managers know which aspects, specifically, should not be adopted in business management.

 

Therefore, we have selected in this article 5 common mistakes for you to avoid when managing the finances of your small, medium or large business!

 

Financial management, the 5 most common mistakes:

 

Forgetting to project cash flow

 

You can track daily what goes into and out of your company's cashier. But even with this “real-time” monitoring, it is important to always make a projection of cash flow inflows and outflows.

 

This is part of good planning that takes into account the possibility of future investments and forecasting unexpected expenses.

 

In addition, cash flow projection is essential to help your venture in times of crisis.

 

If you know how much money is going in and how much is going out in a given period of time, you will be able to more efficiently plan and control expenses and investments.

 

Not separating professional and personal accounts in financial management

 

A very common mistake that occurs mainly in small enterprises. Every beginning of the business journey is marked by the mixture of personal accounts and company accounts.

 

Which, in fact, can contribute to inefficient management at several points. The ideal is to create a pro-labour for the manager and leave a part of the money for the payment of the company's bills.

 

And don't forget to also set aside an amount to invest in your business, whether to buy materials, equipment or investments in marketing.

 

Not controlling cash flow

 

If you own a physical or online store, having strict stock control is a very important point!

 

But watch out! Carrying out stock control doesn't just mean making a list of products to buy. Truly efficient inventory control encompasses:

 

Evaluate which products need replacement and how often;

Evaluate which products are most sought after by consumers

Analyze which products are in low demand and tend to get stuck in stock.

 

You can use an Excel spread sheet for these conferences. Or, if possible, implement your own management system for stock control in your store.

 

Not using a standard tool to manage finances

When it comes to financial management, there is no way not to talk about the importance of having standardized tools.

 

Whether they are spreadsheets, notebooks or more robust software, these tools allow a homogeneous control of corporate finances.

 

As a result, you get a more effective overview of the business and identify problems more easily as well.

 

Failure to prepare the financial plan of the business

 

The financial plan not only serves as a complete guide for your business, but also serves another purpose. In short, it allows you to compare projected results with what has actually been achieved.

 

But if you don't have the time to prepare your company's financial plan, count on the experience of John Labunski!

 

Our consultant, the specialist John, can give you all the essential guidelines for you to manage your company with more peace of mind.