June 17, 2024

Top 5 Financial Mistakes Business Owners Make

Everything is available today for the competent financial management of a company – courses, consultations, software, and instructions. It’s almost impossible not to understand, but sometimes financiers and owners make elementary mistakes. Solving them you will avoid making a business as random as services here इसे यहां आजमाएं, and everything will get more predictable.

Not Keeping a Payment Calendar

A payment calendar is a company’s short-term plan and a clear system of coordinates. If a business doesn’t have one – it’s unclear where and why it should move.

The calendar displays the company’s receipts and expenses by day or week. It helps manage the flow of funds, anticipate cash gaps, and control accounts receivable.

The payroll calendar is a simple and important tool. But to make it “work”, you need to keep it organized. If planning for several months is difficult now, implement a four-week calendar and do a weekly update.

Not Revising Minor Expense Items

Only the lazy one hasn’t said that during a crisis you should give up everything the company can exist without. That’s right – you have to review costs and see where optimization is possible. But as practice shows, only obvious and large expenses are being cut. For example, marketing. But in the long run it generates income.

Besides large costs, analyze the small and “inconspicuous” – for example, housewares or irrelevant subscriptions. Such small items add up to big costs. Think of American Airlines, which, by removing one olive from a Greek salad, saved $40,000 in one year.

Go through each cost line and analyze what can be cut without loss.

Hiding the Real State of Affairs in the Company

Keeping silent about how things are, not talking about plans and not bringing the team into a common information field is a big mistake. Yes, it can be scary, yes, there is a risk of running into discontent. But if you hide it, then the negativity of the entire team is guaranteed.

If you are open, share the figures, show the real picture and explain the difficulties the company is facing, then most likely, the team will understand the delay or reduction in payments. Moreover, they will do everything they can to help the business get back on track.

Not Analyzing Your Sales Portfolio and Margins

Not counting margins and not analyzing your sales portfolio can be a big problem.

Many companies now have a bulk of products – let’s say 10 thousand items. But of these, according to the classics, about 20% of the products are those that provide the main income. Analyze this 20% and understand whether there is a margin. If not, concentrate on the products that make money now.

When analyzing gross profit margins, make sure that the monthly deviations are no more than 1-2%. If the margin jumps, it means there is something wrong with the cost of production or there are problems in pricing.

You may have to give up products that are operating at zero or minus, because they need to be supported, and that requires resources.

Not Making Reserves 

As soon as income falls, there is nowhere to take funds to pay rent, salaries, and loans. That’s why you should always make a reserve – and this applies both to personal finances and to the company.

If you have not set aside money before, you can start with simple steps:

  • Deposit a fixed amount of your net income each month.
  • Pay yourself a monthly percentage of your profits in the form of dividends – make it your “cushion”.

Even if you start with small amounts, after a year, you will have a good reserve.

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