Don’t make these deadly financial mistakes; they can cost you your company. In this economy, you need to be even more careful.
1. Raising insufficient capital. Even in a tough lending market like today, you still need enough capital to get started and carry you through until revenues come in. Make sure to estimate as accurately as possible what your start-up needs will be so you can find the money you require.
2. Setting your prices too low. The old joke goes: “We lose money on every sale but we make it up in volume.” This is no joke if you think you can overcome small margins by selling more. You may need to raise prices, even in a tough economy, if you are to survive. Check on what your competitors are doing so you aren’t priced out of the marketplace.
3. Failing to monitor cash flow. You’ve heard it before: Cash is king. You may have booked sales but if you don’t get paid in a timely manner you can be short of the funds needed to pay your bills and stay in business. Use tools to monitor cash flow.
4. Mis-ordering inventory. You don’t want to have too much inventory on hand because this costs you money, but you don’t want to run short and fail to meet customer needs; you want to be just right. Establish good inventory systems to help you stay on top of inventory needs. Consider using inventory order management software.
5. Going without expert help. Usually, you need financial guidance, something you can get by turning to experts, such as:
-Experts on employee benefit plans
Cash is the lifeblood of any business whether micro, small and medium enterprises or the big conglomerate. It is in the light of this that the two important key performance indicator for measuring the success of any business is profit and cash flow.
How are you running your business? Please comment below to let us know other financial mistakes.