If you’re a CEO of a company or even a General Manager – you’ll know how much difficult it is to run a business, in this age of competitiveness. You not only have to keep track of all the daily activities of the company, but also its employees, and even new product launches as well. Therefore, with so many responsibilities, it is just hard to keep track of everything in the right way. And this is why most of the times, a certain business or organisation fails to create an impact on the market
But, the main thing that most businesses overlook, is the financial department or bookkeeping. Money is the start and the end of all kinds of problems. So, without much talking, let’s jump on some of the common financial mistakes that kill small businesses.
5 Mistakes From A Financial Standpoint Killing Small Businesses
- Not Taking Note Of Unexpected Or Hidden Expenses : Running a business means having to face unexpected expenses, at any point in time. These expenses can be in the form of anything. For example, the expense can be in the form of company licenses, employee benefits, and various other additional expenses. Therefore, it is always recommended to keep a provision for costs like these, so that they don’t go out of hand later on.
- Overspending On Sales : It should be kept in mind that, more sales doesn’t mean more spending in the marketing department. For effectively spending on sales, the company has to look at the Customer Lifetime Value (CLTV) vs. Customer Acquisition Cost (CAC). If the CTLV is greater than CAC, then only it is worth spending on sales.
- No Management Of Cash Flow : It is very much required for a company to have sufficient revenue and profits, to have sufficient cash available at any given point in time. So, if the expenditures of the company exceed the overall revenue, then the company might incur losses, and thereby go into liquidation. Thus, management of cash flow is very much essential. This is the reason why a bill counter machine is used in most businesses, in order to track the revenue.
- Having Huge Overhead Costs : Overhead costs are those costs that are incurred while doing a certain kind of production. Therefore, excessive rent or unnecessary subscriptions are examples of overhead expenses, that should be kept in check. Having a simple budget will greatly help in visualizing the overall expenditure.
- Having No Financial Plan Or Model : Having a particular financial plan is utmost necessary for running a business or a company. This will help in avoiding any unnecessary costs or expenditure. It will also help in sustaining the company for expected future benefits as well. Without no financial plan, is like having a ship without a radar.