Every financial failure started with one mistake.
Such mistakes happen because of an ignored error and such business errors stem from people refusing to follow business protocol and common sense.
Research shows that 82 percent of businesses fail due to poor financial strategy and management. Most startups begin on a good note with a reasonable sum of money but end up not being relevant in the market due to financial negligence. Business is all about sales and profits. If you don’t look into it extensively, you’ll soon be vulnerable to rivals who are more prepared.
Here are six money mistakes millennial entrepreneurs make and ways to avoid them.
1. Poor Financial Auditing and Recording
Your financial record should be the blueprint for your corporate strategy: past, present, and future. What you don’t document, you can’t track. What you can’t track may not grow effectively. Most startups get off to a rousing start amid the euphoria and excitement, thereby neglecting the need to document your progress. Delegate finances to auditors and accountants, especially when you’re preoccupied or lack such skills.
2. Avodi the 'I Need No Help' Mentality
Since you’re just starting, there is a high chance you don’t know a lot about the intrinsic parts of business. I believe millennial entrepreneurs can learn from other experts in the same industry. There’s no shame in gaining knowledge in your chosen industry. Seek financial mentors who will guide you and direct your decisions.
3. Negligence and Cyber Threats
It’s normal to concentrate on sales, ads, production, supplies and purchases etc. and neglect the little loopholes like waste that slowly drain the business finance. As more businesses are going online, there also are unpleasant cases of cyberattacks on business databases, consumers’ personal credentials and payment information. Hackers are utilizing password-guessing attacks against online businesses. You must educate your staff and secure your online business from attacks that can cripple your finances.
4. Cheap Sales
The success of every startup depends on cash flow. Most startups sell their goods and services for less than the production cost. They claim to do this to gain a segment of the market to which they plan to sell a more costly product. This is a very dicey step to take because it can lead to the failure of the company, especially when you don't have more money to offset the bills. Customers who buy from you because of cheaper prices will leave you when they see someone who sells at a cheaper rate. If you do a detailed market survey and create your product and services to be beautiful with a lot of benefits, your intended customers will buy from you and remain loyal. Learn to add incentives to your products and services. Add the cost of the incentive to the actual price of your goods and services. Use a good sales plan or marketing strategy and sell your products and services.
5. Getting Loans Not Presently Needed
The issue of loans for startup entrepreneurs mainly arises when it turns bad. Whether it is loan from business loan institutions, credit card companies, auto title loan companies, mortgage bank etc., getting a loan should have a definite purpose. A loan is obtained when clear pointers shows that getting it will increase the sales and retain more customers.
A mentor of mine even emphasized: “If getting the loan won’t add to the growth trajectory of your startup, your business doesn’t need that loan yet.”
6. Not Having Super-Clear Financial Goals
Success is measured by goals achieved. Goals are the foundation on which successful businesses are built. Your financial goals help you to decide how to best reinvest your profits.
Take time to handle financial analysis while crafting your business plan.
Richard Agu is a researcher, entrepreneur and freelancer, passionate about entrepreneurship and self-development. Currently, Richard writes for Entrepreneur.com, Goodmenproject.com, among others. Follow him on Linkedin.com by clicking here now.
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