Monday, 5 October 2015
FINANCIAL ERRORS OF ENTREPRENEURS
"As entrepreneurs, we tend to be really bad at hanging onto cash. As soon as there is some money in the bank, we are constantly reinvesting in our companies. While this has great ROI potential, it leaves us vulnerable to shifts in the marketplace. Keeping cash is like having insurance against life ... you just don't know what's going to happen in your business or personal life that may require you to have cash on hand, but you will be very thankful you had it when that time comes."
"Every you money spend as a company/entrepreneur has to have a potentially positive ROI. Don't chase after vanity or 'branding,' unless you can quantify it somehow. It doesn't have to always have a positive ROI, that's why you test, but it has to have the potential."
"Don't skimp on costs necessary to grow your business, even if you're not making a lot of money yet. The same frugality you apply to your personal life doesn't apply in business. Spend money on products and services that simplify your business life, make you more efficient or grow your ultimate bottom line. Think long term and guard yourself against unnecessary burnout due to doing too much yourself."
"Disorganization is toxic. Missed deadlines, out-of-control expenses and the constant 'where-did-I-put-that' scrambling all act as friction on your forward momentum and growth. Put into practice a system of organization that enables you to keep the nuts and bolts in place, so you can work your high-value magic efficiently."
"Thinking it's OK to expense everything because it's a tax write-off, especially if it's not essential to your company."
"I see this one a lot: pouring money into your business when you should be pivoting or shutting down. You should have traction (paying customers) within a few months after starting the business. If you're using another definition of 'traction' then you're just fooling yourself, wasting your time, and delaying the inevitable."
While you are busy workings in your business, trying to create the next big thing, don’t forget to work on your business as well and keep an eye on the financial shape of your company.
Eating a two-pound of full chicken will mess you up for a couple days. Drinking a wine of #200,000 will mess you up for a couple weeks. But making one of the above financial blunders? That could mess you up for life.