As much as becoming an entrepreneur by itself deserves a positive nod, but it is about remaining a successful entrepreneur that makes a difference.
one of the major challenges that young entrepreneurs face is on how to deal with their money issues, here five (5) common money mistakes that majority of young entrepreneurs make;
Overinvesting in the business
While you may think that you are investing to start and grow your business well, you may actually be over-investing and running out of cash. Instead of spending your money wisely to ensure that your product reaches the market and you start earning your first cheque, you are busy spending on office luxuries, expensive furniture, office vehicle, expensive equipment, and so forth, while you have not even signed your first customer.
Avoiding paying yourself
While you may be fascinated by “owner’s mentality”, that you own a business and deserve all the money coming in, you may not think of paying yourself, as a result you start drawing money from your business account paying for your personal bills, mixing the two accounts is a good start of such a bad ending of your business finances. Pay yourself a salary and separate yourself from business money
You know it all
While you may be an expert in your area of business field, you may as well be ignorant in the field of others. Y
es, you know your business better than anyone, but if you are not an accountant, then you need to hire an accountant to take care of your finances, at least outsource or hire a part-time accountant, avoiding such a reality may cost you more when payables exceed receivables, and when the taxman knocks on your door.
Failing to put a financial back-up plan
Yes, your research and cash flow projections indicate great prospects in earning more money for your business and this you think justifies your spending today, but did you ask yourself what happens when things don’t go as planned, do you have a financial back-up plan? Do you have a creditor’s policy that will guide you in bad times? Have your insured your business assets and undertaking?
Not measuring, and not complying
Do you assess your business financial performance periodically? Do you write reports that give you a true picture of your business and cash flow trend? Are you complying with the plans you had 6 months? or you have forgotten about everything and now spending your first big cheque to buy your dream expensive asset?
Think about your money wisely and plan its spending wisely, most young entrepreneurs do not grow their business and some fail completely because of some of these mistakes that we make every day. Plan, measure, and comply, follow the rules of the game.
Salum Awadh is a CEO for SSC Capital. A corporate and investment advisory firm, and Founder of Tanzania Venture Capital Network, an initiative that seeks to promote the growth of private equity industry in Tanzania.