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Good money management skill is crucial to the success of entrepreneurs and their business growth. Most business owners start their business with great ideas and energy; however, they unconsciously develop wrong financial practices along the line.
See below some of those bad practices and their corresponding right habits expected:
1. Running The Same Bank Account for Both Personal and Business Purposes.
Combining business and personal income as well as expenses is the number one bad money habit, and it’s alarming that so many business owners make this mistake. This practice makes it almost impossible to monitor your business income and expenses. Performance measurement becomes extremely difficult.
Right Practice: Register your business and open a corporate account solely for business transactions. To open both a business and a personal account, visit https://www.advansnigeria.com.
2. Late payments of Loans
Late payment of loans affects the reputation of your business and lowers your credit score. A credit score is the same as your credit worthiness. No bank or investor will invest in your business without evaluating the risk posed by lending money to your business and the probability of paying it back.
Right Habit: Ensure you keep records and make repayments when due. In case of any change in date as to your repayment, clarify with your lender or client officers of the bank.
3. Failure to Keep Detailed Financial Records
One effective way business owners can track their income against expenses is by keeping detailed financial records. Some entrepreneurs try to keep track of income and expenditures in their heads, which can never be accurate. It can lead to wrong business decisions that can eventually ruin the business.
It’s good also to note that it will be difficult to attract investors if you cannot back up your business decisions with financial records.
Right Habit: Start keeping records so you can plan more effectively for your business. You can approach an expert in financial records keeping if you lack the skill.
4. Weak Control of Expenditures and Wants
Successful business owners have strong control over their expenditures and wants.
You need to be able to distinguish your needs from your desires. The key to financial success is spending less than you earn.
Right Habit: Say No to impulse purchase
5. Not delegating tasks
Every entrepreneur should know how to delegate. You can hire someone to work on tasks you are not skilled enough to handle so you can spend time on other essential tasks, e.g. financial record keeping.
When a problem or task arises, you spend both time and money on it, and the more you spend on one, the less you spend on the other.
Right Habit: Consider the time against the money spent on a task. Will it be better to pay someone or do it yourself?
Sound financial practices help entrepreneurs achieve their goals and manage their businesses effectively. Pick up the right habits to become better with your business finances