Five Money Habits that will cripple your biz

Beware of these financial planning mistakes!

For any business small or big, money matter is serious. If not dealt properly and timely, it might pose serious threat to the business in future. There has been numerous examples of SMEs and startups which ran into financial mess due to their inability to juggle between bookkeeping activities beside sales and operations.

It could also happen that, in spite of the business doing well with impressive sales figures, the financials look bleak and that’s when one should introspect into the money habits and financial upkeeps. It’s always better to have a check on your money habits, before it cripples your business. Let’s have a look at the key mistakes in the business that could stumble your growth:

Not having a budget

Probably one of the serious flaws, which a business has to pay for in the later stage. As a business entity, one should know how much you could afford to spend even before you start doing so. Preparing a budget is easy and can be prepared based on various sub-heads like sales forecast, fixed costs and variable costs. Creating a spending guideline additionally can help to stick to the prepared budget.

Not tracking the cash flow

This is vital in understanding the inflow and outflow of funds that’s there in the system. Hence, tracking all expenditure and timely collection of receivable funds can avoid cash crunch in future. All expenses should be tracked by their receipts and a timeline should be devised to get the outstanding. The longer it takes for collection from the time of invoicing, the more are the chances of creating financial blunders.

Not maximizing tax deductions and write-offs

One should be aware of various tax rebates that a business can avail. Not taking advantage of such provisions, will lead to paying huge chunk of funds out of the system. Many SMEs and startups are not enlightened about how the various deductions work and how it can be tackled through proper tax planning.

Not hiring an accounting professional

An expert should be on-board to guide the company’s books of account. Even if it isn’t feasible to have a full time CA, it is advisable to have an accounting professional or CA on contract basis. They will help you out with proper guidance and end of every financial help will help in filing requisite papers to government officials, in order to avoid any future financial mess.

Not keeping yourself on a ‘Salary’

This is a very common practice in smaller firms, where the owner or founder don’t keep themselves under salary obligations and often mix up personal expenses with that of company’s expense, which later affects the business’ books of account. Instead, treating yourself as a company employee and drawing fixed salary will help to curb the financial irregularities.

Besides all these provisions, business owners should also consult with insurance providers. Their experts who work with SMEs can guide you with proper policies. Once you get rid of these common money habits, your ride on the lane of profits will be smooth and flawless.

What financial habits have helped you tide through crisis hours in your business? Do share your views.

 

 

 

 

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