We’ve intensified our mission to empower entrepreneurs in building financial prosperity and last year we spent a considerable amount of time talking to our members about what they need to grow.
One topic that is always discussed and highlighted as important is access to capital, whether that be equity or debt, entrepreneurs are always looking for a way to access capital.
Whilst we know that access to capital is important we also know what all prosperous entrepreneurs know; business is about making enough impact to make money, it’s about profitability and in order to build a long term multi generational business you need great financial acumen or at least work with a team that does.
You need a key eye for budgeting, strategic investments and understanding opportunities before they even arrive at your doorstep.
Here are 8 Tips to help you Master the Art of Financial Management in Business:
1. A Robust Financial Plan
Creating a solid financial plan is the bedrock of entrepreneurial success, making money is one thing and understanding what to do with that money is another; money is an asset. You’ll definitely need a plan to grow your assets, particularly if you are a career entrepreneur and business owner.
Ensure you are meticulously outlining your business objectives, revenue projections, anticipated expenses and unanticipated costs.
Note that this plan may need to be adjusted in response to changes in the market, emerging opportunities and other unforeseen circumstances.
Do not be so hung up on your plan that you do not know when to pivot and or make minor tweaks to your financial plan.
2. Smart Budgeting: Every kobo Counts
We know that innovation and expansion is crucial but financial discipline should work hand in hand with growth.
As an entrepreneur you should allocate financial resources meticulously and prioritize crucial areas in your business depending on your products, services and key metrics.
Try as much as possible to maintain a lean budget by removing unnecessary expenses.
A lean budget when managed in the correct way encourages efficiency, enterprise sustainability and growth.
3. Cash Flow Management: The Lifeblood of Business
Cash Flow management is incredibly important. Cash flow is the lifeblood of any business.
Master the art of maintaining a healthy cash flow to navigate unexpected challenges and also to capitalize on strategic opportunities.
One very simple way to implement this is by negotiating favorable payment terms with suppliers and partners.
To cut the long story short, make sure you always have access to liquidity, do not run out of cash to run your business.
4. Diversification and Investment Strategies
As an entrepreneur you should understand that diversification and investment can take you from 50 to 100 very quickly.
Saving is good but investing is great, diversifying your assets and allocating resources to low risk, high-return opportunities can not only increase profitability and revenue but can also safeguard against economic downturns and provide a financial buffer for your business.
At Prospa we offer low risk, high-return investment accounts for entrepreneurs.
5. Debt Management: A Balancing Act
Contrary to popular belief, debt is not a dirty word. Debt can be used to drive growth but you must remember that managing debt is a balancing act; a delicate one at that!
As an entrepreneur ensure that you assess the risk and benefits of leveraging debt for your business. Explore options that are favorable for your business. Be particular about the terms, tenure and interest rates.
Make a decision based on your business and bear in mind that bad debt will make it harder for you to obtain a loan and is more likely to increase the interest rates of any loan you are offered.
Keeping to the terms of your business loan often makes it easier to obtain credit in the future.
At Prospa we offer business loans to registered Nigerian Businesses.
6. Tax Planning: Navigating the Regulatory Landscape
Tax in general can be challenging for entrepreneurs. If you have limited understanding of taxation and how to plan tax and or do not have an internal team to do this for you then speak to tax professionals, they can help you optimize tax for the benefit of your business all whilst staying compliant.
Whilst tax planning may not be the most exciting aspect of your business; depending on how you see it, staying on top of tax regulations and favorable practices can impact your bottom line.
7. Risk Mitigation: Planning for the Unpredictable
You should always plan for the unpredictable. Execute your plan for the best and prepare for the worst.
As an entrepreneur it is important to note that risks are inherent in business; economic volatility, industry disruptions, natural disasters, technological failures and the list goes on…
Putting the right measures in place starts by identifying potential risks as early on and then putting a contingency plan in place; contingency funds, business insurance, backup technology, a crisis communication plan etc.
Failure to do this can cost your business a lot of money, in the worst case scenario it can put you out of business.
At Prospa we offer business insurance for a variety of businesses across multiple industries.
8. Long-Term Vision: Building a Sustainable Legacy
Every career entrepreneur knows that the experience is very different from the glamorous photographs and articles they often see and read in the media. Your experience, whilst unique to you will be characterized by changes, growth, good times and challenges, note that you are not alone, there are millions of entrepreneurs all around the globe experiencing exactly the same thing.
Whilst it’s very easy to get distracted by noise, focus on the money. Building a sustainable entrepreneurial and business legacy requires long term financial planning and creating a mindset and culture that values financial responsibility.
Mastering the Art of Financial Management for Business is definitely not a one size fits all approach. You should adopt strategies that work for your business and be willing to adapt when and if need be. As a general rule of thumb when it comes to finance in business; measure twice, cut once.
If you need assistance, our dedicated member support team is here for you. Feel free to reach out to us at help@getprospa.comor give us a call on 018890240