An entrepreneur is a person who develops a business idea until it becomes a business opportunity. For this, it is necessary for it to solve a problem (added value), it must have a market, it must generate profits and it must have the capacity to be protected.
An entrepreneur is full time. You must dedicate yourself with passion and enthusiasm to developing your business project. For this, not only is it enough to know the market to which it is directed, it is vital to learn other areas of business knowledge such as marketing, operations, strategy development, human management and above all finance. You as an entrepreneur can be very good in your area, however, this will not guarantee success, because if you do not know how to efficiently manage the business resources, the project will go under.
Finance is an essential competence for an entrepreneur. That same enthusiasm and passion that he feels for what he does, he must also feel for the world of finance. Here are the most common financial mistakes committed by entrepreneurs:
1. Relying solely on loans to start the business: In other installments, we raised the need that the seed capital for the establishment of the business comes from other alternative sources, such as friends, family, savings, partners, angel investors, investors of risk or funds from government entities. Starting the business with a very heavy financial burden could jeopardize the sustainability of the project.
2. Do not keep an organized accounting: A smart decision is to implement an organized accounting system. In this way, the entrepreneur can monitor the financial health of his business, and not be surprised that it is not profitable and should close. On the internet there are accounting systems at a very good price that an entrepreneur can download and apply to their small business.
3. Depend solely on friends and related to generate sales: It is understood and accepted that the first customers of the business will be our friends and related, but this is not profitable over time. A new business must have the ability to generate its own clientele to be sustainable and create a constant cash flow. On the other hand, if you are a friend of an entrepreneur and go to your business, pay cash, do not demand credit, it is the best way to help you grow.
4. Relying excessively on accounts receivable: If you buy cash, and you happen to give credit to your customers, and this becomes a constant, your business will be asphyxiated by default. I know dozens of businesses that had to close their doors drowned by uncollectible debts. For this, within its business plan, the entrepreneur must establish a serious credit policy, which encourages the flow of their cash flow.
5. Do not watch the cash: Cash is the blood that flows through the company, and if this flow stops, the business will die. For this the entrepreneur must have very clear cash management policies, and never delegate this management to other people. From the financial point of view, the administration of cash is one of the vital responsibilities of the entrepreneur.
6. Leaving the business in the hands of the employees: A specific error is the fact of staying away from the operations of the business, and leaving it at the mercy of the employees. A venture requires that you are at all times in your business, because who better than you to watch over him? Any mistake, indiscipline or even worse, some embezzlement by an employee can be fatal to your business.
7. Do not learn from finance: Every entrepreneur must invest time and money in training. The achieve good business management, with talent is not enough. You must be trained in administrative and financial terms if you want your business to flourish and be profitable. There are cases of very good business ideas that fail because of poor financial management.
8. Divert business funds for personal matters: This is perhaps one, unfortunately, the most common mistakes. A business that is constantly orienting resources for personal matters, and in fact, unproductive, will be doomed to failure. There are entrepreneurs who do not have the patience to let their business mature, and since they start to have some profits, instead of accumulating them, they begin to acquire unproductive assets, such as SUVs, luxury apartments, expensive watches, etc. your business grows and develops, get a salary and live up to where the sheet covers it. Entrepreneurship is a long-term project.
Author Bio: Martina David is graduated from the college of Las Vegas and after that she started working with a company who help people Amazon suspended account reinstated. In a mean time she manage her own blog because Jenny loves travel around the world.