4 Money Mistakes that Most Entrepreneurs Make
Bad financial management is one of the major reasons start up fails.
But these can be avoided with the right information, discipline and commitment.
Here I outlined 4 major money mistakes entrepreneurs make and that could crumble their businesses.
1. Not paying yourself a Salary. If you are an entrepreneur and you don’t pay yourself a particular amount of money every month, it means you are spending from your business money.
Most business owners feels because they own the business, they have right to spend whatever they like from their business profits
Infact, this is ridiculously one of the reasons people rush into starting their own businesses.
If you don’t want your business to pack up because of mismanagement of fund then you should start paying yourself salary.
Most times, I will have upto 5million naira in my business account but less than 5k in my personal account but I will never spend from the business account, instead, I’ll wait till my next salary is paid.
You might be wondering how to determine how much to pay yourself from your business
It depends on how much you Need, the size of your business and your over all business goals.
2. Not Having insurance. A lot of smallbusiness ownersstill do not see the need to insure their businesses, They feel after all its just a small business. The fact that it is a small business is the most reason it should be insured.
Running your business without an insurance is a risky thing to do. Your business is an investment and just like every other investment, it is exposed to several risks.
Reach out to an insurance company today and find out what it would cost to insure your business. Trust me, it won’t cost as much as you think 😀
3. Not investing outside of your business. Ok so the income have started rolling in, how are you spending it?
I know the temptation that comes from having more than what you used to have. The temptation to upgrade your wardrobe to rep your current position as a CEO, the temptation to start trying out those assorted food you see on IG and all the rest of them 😁
All that can wait while you invest in capacity building, invest in learning skills that could serve as an alternative if your business fails, Acquire as many appreciating assets as possible, build an emergency fund.
So that if something happens and your income stops coming, you will be glad at the wise decisions you made.
4. Getting an office space: We all like the feeling that comes from sitting on that massive CEO desk and swivel chair 😀
My concern is, hope that isn’t the only thing you have right now?
You see, a lot of entrepreneurs pay too much attention to branding than in acquiring appreciating assets that should come in handy when they are faced with financial challenges in the business.
Branding is good but don’t go imitating your competitors who have been in business years before you, made more money before you in getting office spaces that would add little or not value to your business.
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