A business without enough money is like a human being without blood or a jet plane without fuel. It is an essential resource your business needs in order to achieve its fullest potential.
You can have the best ideas, a bunch of talented people, a great product and a potential market. However, without proper money management, none of your goals can materialize.
I have seen entrepreneurs doing great work, attracting lots of customers and delivering great value. However, because there was nobody paying close attention to the numbers, the business soon found itself having to close down.
All this could have been avoided if only the business owner understood and paid more attention to managing the cash flow of the company.
So, if money is such an important matter in a business, why do so many entrepreneurs neglect to spend enough time on it? There are three main reasons:
1) Ignorant About Money Unfortunately, very few people are trained in money management. Unless you studied finance or accounting in college, it is unlikely that you would have learned about smart money management strategies from your parents or from school, college or university.
2) Fear of Money With ignorance comes a fear of dealing with money. Many business owners I talk to have a fear of constantly tracking their sales revenue, costs and other financial numbers.
They get stressed up when they have to look at and deal with numbers. They get nervous when they see the bills that come in and more stressed when the sales revenue is not as rosy as projected. “I was never good at Math,” is the common excuse they usually give.
Finally, many business owners I know tend to place their finance and accounting matters as the last priority. They are always focused on making the product, providing the service, dealing with customers, selling their company or managing their people. “I have no time to do the books.” “I’ll do it later!”
As a result, their accounts are never up to date. They will only know their May sales, cost and profit figures in September! It is like a basketball team playing a match without being able to see the scoreboard until two weeks after the game!