Hey entrepreneurs: Don't make these 3 finance mistakes
Entrepreneurs are the BEST. We take an idea from scratch, put all of our brain power and hard work into it, and build that idea into a business for which people pay real money for our services and products. When you think about what goes into building a business, it's pretty awesome that we can make this happen.
However - you knew there was going to be a however, right? - there are some pitfalls that entrepreneurs often encounter that will truly make or break their success, and they're related to the numbers.
I get it. We're not all math people. But neglecting the numbers can land you in a scary place, so today we're talking about a few mistakes you can avoid.
1. You fail to plan.
When you start your venture, it's easy to just dive in headfirst and spend a little here and there, get your first sale, and go full steam ahead without thinking about what expenses lie ahead and what your revenue pipeline looks like. This could be a quick way to get into trouble if you don't know what's around the corner. Your plan doesn't need to be super complicated.
Start with the expenses. Think about what you need to be successful, what investments you need to make in your business (computer, training?), what supplies you'll need to create your products, any professional services (legal, accounting, etc) - then lay those out into a monthly spreadsheet so you know the timing of each expense.
Then tackle the revenue. What is the bottom line you need to cover expenses? Now think bigger: How much do you want to make? Plot out your revenue goal by month so you have clear targets to work towards.
I know it sounds like a lot, but this planning exercise will help you focus and give you clear insight into the financial health of your company or organization.
2. You get behind on tracking your numbers.
We, as entrepreneurs, are busy people. We're constantly thinking about our businesses, serving our clients, putting out products, doing activities to help the businesses grow, so it can be very easy to let a few months go by without entering expenses into our accounting system, organizing receipts, or looking at a P&L. This is the danger zone! We have absolutely no knowledge of how our businesses are doing without staying up to date on our numbers.
So make sure that you set aside just one morning a month to make sure all revenue and expenses are entered into the books, your bank account is reconciled, and you take a look at your P&L. Maybe even forecast out the coming months so you can see where your business is headed. The most important thing is to stay on top of it - otherwise, you'll likely be spending more money and calling in the experts come tax time or end of year. This strategic insight is going to help you make better decisions for your business and give you the insider info you need to grow!
3. You refuse to ask for help.
I know firsthand how hard it is to ask for help. I mean, you're an entrepreneur for goodness sake! You built this business from nothing, so why shouldn't you be able to do it all?! I ran into this in my own business. I am very stubborn and was determined to build my own website and create my own graphics from scratch. Hours and days later, I was frustrated with the end result, tired of Googling how to do every little thing, and annoyed I had wasted so much time with nothing to show for it. I was humbled into making that call to the graphic designer I had in my back pocket.
Same thing goes for the finances. If you're not a finance expert, you probably won't give the numbers they priority they need because it's not a fun task for you, and you'll likely spin your wheels for much longer than it would take an expert to get your financial house in order and analyze the numbers for you. Focus on your strengths and leave the numbers to the crazy math lovers.