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Idowu Koyenikan once wrote “When money realizes that it is in good hands, it wants to stay and multiply in those hands.” Finance is the blood of every business, and so finance mistakes are capable of causing irreparable damage to a business. Small business owners may not have the resources to hire a team of finance professionals but you have Dillali and we’ve put together a list of 4 seemingly small finance mistakes that are killing your business.
1. Giving yourself unlimited access to your business funds
Even though you own and run the business, you have to acknowledge that your business is an entity of its own. Giving yourself unlimited access to your business funds is a definite recipe for disaster. You could even be dipping into your business capital without realizing. The best thing to do would be to put yourself on a salary; this way you can earn a stable income and still ensure your business's capital is protected.
2. Not keeping track of your finances
If you don’t keep track of your finances you may not notice costly mistakes until it's too late to rectify them. Not keeping track also means you won’t have the data that tells you if your revenue is growing or if you need to change your business model. Keeping track of your finances helps you identify what services or customer bases make you the most money. It will also help you identify which services cost you the most effort and make you the least money. Data like this comes in very handy when it's time to measure success or correct failures. One of the easiest ways to manage finance tracking for your business is by using the Dillali app. With Dillali you can can easily organize and access finance reports like your income, expenses, customer information and product sales on the go.
3. Ignoring taxes
Another costly mistake business owners often make is ignoring taxes. The dicey part is that ignoring them almost always makes them snowball into much bigger regulatory problems for the business. For example you could accumulate penalties that may take even more money out of your business. To avoid this mistake, create a routine or schedule to review and fulfil important regulatory obligations like taxes. You can set a routine reminder so you don’t forget.
4. Not budgeting
A budget acts as a guide that helps you allocate resources to the areas of your business that need it the most. A budget also lets you know how much resources you can afford to give each area. If you operate without a budget, you may be overspending where you don’t need to and underspending in areas you should be giving more resources. The best way to build a budget is to make a list of the different parts of the business that need resources to thrive. Arrange the items in order of importance and tie them to goals, then give the most resources to the areas that can create the most impact for your business.
5. Not being strategic with your pricing model
Your pricing model is one of the biggest determiners of how much money your business has the capacity to make. If you make it too low in a bid to attract more customers, you may be making way less money than your competitors even if you're giving more value than they do. If you set it too high you might turn potential clients away because they can't afford it. Both of these scenarios ultimately mean your business will be making less money than it should. This is why it is very important to be strategic and intentional with your pricing model.