Where is My Money Going?

So you’ve decided you want to be your own boss. Operations are running well enough but for one worrying detail—you can’t seem to keep tabs on the money the business should be making. It goes without saying that the only way your business can survive is if you are consistently making a profit. So where is your money going?

In the early days of a startup, the amount of cash moving in and out needs to be managed extremely well. It’s been documented that almost 85% of businesses fail due to not paying attention to cash flow. Unfortunately, many starting entrepreneurs aren’t financially savvy and this is what makes cash flow management the push that sends new businesses hurtling downwards.

Unpleasant though coming to this realisation may be, it doesn’t necessarily spell doom for you once you quickly handle it. The trick is paying(and I can’t stress this enough) close attention to what’s going on with your finances. Be sure to identify where all income comes from and how it’s all spent. And this wouldn’t necessarily have to be as tedious as you may imagine either. Successful businesses swear by systems— some as simple as keeping an Excel document — that help them keep an eye on everything. You must log every expense and every pesewa of money that comes in. It’s not enough to just do it, though.

It must also be done as quickly as possible because otherwise, your books may show that you have more money than you actually do, and that may lure you into a false sense of security, leading you to spend more when you most probably don’t have that much money to spend in the first place.

If cash flow is managed poorly, you leave yourself open to issues such as not knowing profit margins, unnoticed theft or not having the records investors may need in the event that you are able to scale your business up to the point to get investors. Your constant awareness of where your money is going and what it’s doing is the first step towards getting control of your finances.

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