When businesses fail, a common refrain is “what happened?”. Now, there are different reasons a business might fail, quite common is that the business is simply not making enough money to stay afloat. This might not seem so evident on the surface, if the business isn’t also keeping its accounts properly, it might be too late when you realise that funds are being frittered away.
These 9 tips should help you avoid this.
1. Budget and stick to it
Make a budget of all your expenses and keep track of what you spend with the budget. Especially for major projects, it’s vital to plan ahead. This way, you can always be prepared.
2. Keep records of everything
This will help you should track of expenses and incoming funds. This way even tiny expenses would not be overlooked.Include all expenses not matter how little, because whether little or not, they are part of your incoming funds or expenses.
3. Use purchase orders and invoices
These documents serve as records of transactions, but they’re also tools to make sure you get paid. Sending out invoices promptly helps you receive payment faster, which is important for your cashflow.
4. Review your tax reports
As a business owner, there are certain taxes you are expected to pay, and it is expected that you pay them as at when due. Always involve your tax payment as part of your expenses to avoid nonpayment penalties from piling up. This is a form of debt that you can avoid.
5. Keep track of what is owed you
Doing business in Nigeria will mean you might have to give products or services on credit. However, always keep track of what is owed you. Open a debtor account book to keep track of this money, and send them reminders once in awhile to remind them to pay up.
6. Have a backup of your records
Have a backup of all your accounting records preferably in electronic and paper. In the event of any disaster, you can still have up to date records. Therefore, as you embrace using technology for your keeping records of your accounts do not completely abandon paper.
7. Outsource to professionals when needed
Outsource to a professional accountant to review your accounts and make sure everything is in order. When the time comes, employ an in-house accountant. This not only takes some of the workload off you but also ensures your accounts are efficiently managed
8. Monitor to check for unwanted expenses
Review your accounts to find expenses that are not contributing anything positive to your business.
Which is why it is important you make a budget and stick to it. This will help you keep track of where your money is going.
9. Separate from personal accounts
Do not fall into the trap of not separating your business transactions from personal transactions. It is important that you have a separate bank account for your business account. This way you don’t end up and another one for personal use. Also, you need to separate your personal expenses from business expenditures.
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