More often than not, small businesses succeed or fail, not because of lack of topnotch expertise in the making of the product nor the service was not satisfactory rendered, but largely for financial illiteracy, poor financial management and other economic factors.
In fact, it is worse in Africa where people hardly plan for anything, they leave everything to God!!! But that will no longer be you, after going through this piece.
So, what is it about business, and the management of it finance? Business is the practice of making one’s living or making money by producing or buying and selling products such as goods and services. It is also “any activity or enterprise entered into for profit.
Business therefore is an Occupation, Profession, Trade, or is a commercial activity which involves providing goods or services in exchange for profits. Important to point out here that profits in business is important, but cannot be measure absolutely in monetary terms. It can be in form of a benefit which is acknowledged by a business entity involved in a business activity.
Behind every business is a driven idea, concept and motivating factor(s), this set the pace for the business model, plan, vision, and mission.
Uber, for example, started on the concept of aggregating taxi drivers and providing their services on demand under one brand.
Every other business strategy was developed based on this concept. Business objective of every organization can revolve round customer satisfaction among others important objectives.
It is therefore, safe to classify business under: Manufacturing, that is a business venture where the producers who develop the product and sell it either directly to the customer or the middlemen to conduct sales. Examples of manufacturing businesses are steel factories, plastic factories, etc.
There is also the service providing business, with a focus on selling intangible goods to the consumers. Unlike tangible goods, services cannot be stored or separated from the provider. Service firms offer professional services, expertise, commission-based promotions, etc. Examples include salons, schools, consultancy, and the communication industry.
In terms of ownership, Sole Proprietorship, Partnership, Corporation, Limited Liability, Company Cooperative suffice each with its particular specificity.
Now that you have a good grasp of the ABC of Business, coming closely and cardinal to the birthing of a business idea is the funding.
Simply put the money, either to drive the business, to keep it going or to perpetually sustain it. “Someone has said the Finance management is the business itself” and I will like to add that (Finance) management is the beginning and end of every business venture.
It is therefore a component Key that must be learn for every business owner. You have not learnt anything, if you have not learnt the Finance aspect of Business.
At Techeconomy, we care about you, by now you should know that, so we present to you guides that will help you manage your finance as a business owner.
Did you know the 82% of businesses fail due to money mismanagement? And the funny part is that most business owners fail at money management because of lack of awareness. But who do you want to blame for your ignorance?
No one. As the leader of your business, you are the person in charge who makes the final decision about your business.
You need to ensure that you have a solid financial understanding of your business to make decisions that will impact your bottom line positively.
So taking a frontal role in our guide to effective Business finance, is a Regular Review of the Organization’s Finances. That is Schedule regular reviews of your financial statements to assess your business’s overall financial health. Business is like human being, its financial status cannot and must not be left on check.
As entrepreneur, you must also make it a priority to prepare for Taxes
That could mean staying organized for tax season. Keep accurate records, understand tax obligations, and consider consulting a tax professional as may be appropriate.
Of course, using financial software and accounting software to simplify tasks like bookkeeping, invoicing, and financial reporting will go a long way.
Please pay yourself too
If you’re running a small or midsize business (SMB), it can be tempting to put everything into your day-to-day operations. After all, that extra capital can often go a long way in helping your business grow.
Alexander Lowry, a professor and director of the Master of Science in Financial Analysis Program at Gordon College, said small business owners shouldn’t overlook their own role in the company and should compensate themselves accordingly.
You want to ensure that your business and personal finances are in good shape.
“Many SMB owners, especially at the outset, neglect to pay themselves,” he said. “They [believe] it’s more important to get the business up and running and pay everyone else. But, if the business doesn’t work out, you won’t have ever paid yourself. Remember, you’re part of the business, and you need to compensate yourself as much as you pay others.”
Invest in growth
You need to inculcate this, if you have not been doing it before now. It’s important to set aside money and look into growth opportunities, which can allow your business to thrive and move in a healthy financial direction.
Edgar Collado, chief operating officer at Tobias Financial Advisors, said business owners should always keep an eye on the future.
“A small business that wants to continue to grow, innovate and attract the best employees [should] demonstrate that they are willing to invest in the future,” “Customers will appreciate the increased level of service. Employees will appreciate that you are investing in the company and in their careers. And ultimately, you will create more value for your business than if you were just spending all your profits on personal matters.”
You must also, Monitor the Cash Flow
Regularly review your cash flow to ensure you have enough to cover expenses. Identify any potential issues early.
Invest Wisely
Consider your options for investing profits to generate additional income or save for future needs. Plan for the Future: Develop a long-term financial plan that includes goals, savings, and strategies for growth. This will help a great deal in good billing strategy.
Oh!!, this is becoming a long read, but wait, I must tell you this. Focus on expenditures, return on investment (ROI), and lastly set up a good financial habit.
You don’t grow big to manage well, you manage well to grow big. So go and win!!!!
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