To operate without a budget is like driving without a compass until you end up in wrong direction or stop here and there to buy what is not planned for or pleasing to the eyes
By Nwokolo Charles Ike
Most Entrepreneurs enter into business to produce goods or provide services based on their idea of the business or what they leant from watching others doing in similar business. However, having good idea about a business or having learnt from friends, are not sufficient to guarantee success without deliberate effort to think clearly about the various aspects involved in running business. Many establish business, and sooner or later begin to experience low demand for their goods or services, encounter many competitors in the market or have need for more capital to meet operational needs. To reduce risk of failure and losing money, Start-Ups should go through the different aspects of running their business to build confidence and ensure good runs.
Not having Financial Goal
Jumping into business without financial goal can be confusing. Start Ups should have clearly defined goal to spur them to action and keep them focus towards saving and making right investment for rainy day. They should set achievable goal whether it is getting enough money to live on, comfortable retirement or securing financial future. This will help direct organizational effort towards achievement of objective.
Not having Structure
In addition to the above, before you delve into operation, create a sound structure as the backbone of your business. Establish your mission and objective of starting the business, who you serve or what problem you solve and your strengths. You must pay adequate attention to your business to nurture and build it, grow your customers, develop competitive edge and ensure constant revenue stream.
Not planning and Budgeting
To operate without a budget is like driving without a compass until you end up in wrong direction or stop here and there to buy what is not planned for or pleasing to the eyes. Document, highlight means and ways of gathering and spending revenue. Having a budget gives your Business direction and purpose. With budget, a company can plan the activities to be carried out within a defined period. You need to know how much money is needed each month to cover basic expenses, rent, food, utility, insurance etc. This will guide the business on how much to spend weekly or monthly given the expected revenue to be generated.
Not planning for Taxes.
Know the Laws and Regulations requiring compliance. Understand your business and know the different taxes and how they affect your business and plan for them. Such taxes as Company and Personal Income Tax, VAT, Withholding Tax (WHT) and labour law as it affect your staff must be noted to avoid ugly occurrences.
Not having financial records
Keep records of your business transactions. Track revenue and list your expenses. Learn to separate your business expenses from personal expenses to have a clear picture of business activities. Accurate records is very essential for preparing financial statements which represent true and fair view of financial position, performance and cash flows of an entity. It also provide a basis for Tax compliance and assessment of financial support or Loans.
Not thinking Insurance and Investment in health insurance scheme.
Life assurance for the Chief Executive and having the key assets of the business insured against adversity will be a wise investment. This will mitigate risk in the event of uncertainty.
Not providing emergency fund
It is vital to plan for emergency fund, for say six months to act as buffer while all efforts are made to grow the business, acquire customers and ensure steady income. When you plan, stay focused in building your business, you will be well prepared to handle most challenges that will arise.
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