FINANCE AT YOUR FINGERTIPS by Moses Ayiku, Jr. MBA OP/ED
As we continue to provide information about starting a business, please note that our ultimate objective is to successfully set up a business that will grow with time. It never ceases to amaze me how a business can start on a very small scale and grow like a plant over time. If a business does not grow with time, then there is something wrong and that must be identified and addressed sooner than later.
Over the years, I have worked with clients and seen how a good idea, well implemented can lead to the existence and growth of a thriving business. It is an amazing thing! Interacting with such entrepreneurs, one would marvel at their success. Sheer determination and a fundamentally good business idea are the backbone of such success.
A typical question that one can ask is, what are the key success factors in setting up a new business? In other words, what can one do to ensure that the business one sets up grows to be a solid and profitable one?
Keep your eyes on the money always. Some who didn’t do this have been known to fail. There have been a number of cases where a person who starts a new business with a fundamentally good business concept, ends up closing their doors and declaring bankruptcy. The main reason for this is because they did not keep their eyes on the money side of the business.
Please ensure that you always have a grip on your finances at any time to avoid this calamity. One may have to decide on an accounting software to keep track of the finances. There are a number of accounting software out there and many of them have various pricing plan options that one can pick from. It is important to not only buy the software, but to actually use it!
The accounting software available on the market usually have simple menus and with time one can become an expert on the software. That is how one can obtain the most from the software; having superior knowledge on how to use the software. It may be beneficial to undergo training on the software so that one is conversant with their operation. That is how one can gain the most out of them.
In keeping your eyes on the money, ensure that you have daily, weekly or monthly budgets to guide your operations. Budgets must be realistic and as accurate as possible. Develop cash flow projections that can let you know whether your business can stay in operation or not. When it comes to finances of the business, the concept of prudence should be utilized as much as possible. If you really don’t need to spend on an item, don’t.
A major reason why some businesses fail, is the lack of funds. Being well resourced is a necessary requirement for any business. As we hinted earlier, raising funds for a business in most cases is not a walk in the park. It requires a lot of quality information to be produced, a business plan and good credit amongst other things. All these invariably take time, something that is of course limited.
When you start your business, please follow your business plan. It should have clear cut steps and stages that one can follow. For example, the business plan typically will have an implementation schedule. This schedule provides details of key activities that one must undertake to set up the business properly. The schedule will indicate that on a month-by-month basis certain steps have to be taken.
The business plan could also have different phases for establishing the business. For example, a business can have a phase one where they deal only with retail customers. Phase two would allow the business to now deal with corporate customers. The typical reason for such an approach is that initially a business may not be able to put all the structures in place as well as the finances to immediately start serving corporate clients. Such clients usually require bulk orders with certain specifications.
In such a situation, it is better to start simple, work on developing the business as one serves the retail customers, improve and enhance operations, before eventually opening the door to corporate clients. The struggle to service corporate clients is important because such clients mean larger revenues and larger profits if well done. Corporate clients with their sizable orders, could be the reason a business enjoys significant growth and larger profits with time.
When a business is able to control its finances properly and maintain sound financial practices, this can go a long way in ensuring profitability. At the end of the day, that is why the business was set up! Amongst other reasons, businesses are set up to make a profit! Keep your eyes on the numbers, always. With time you will be surprised at how adept you will become in handling your finances. There are abundant training programs and resources available that can assist you to acquire skills that can help with establishing a sound business.
In the next part we will continue with information about starting a new business. Please feel free to share with me your questions and experiences on starting a new business. I will do my best to respond, and, in some cases, I will write on some of these questions.
Your questions and comments can be sent to localtalknews@gmail.com.
