A company without enough money is like a man without blood or an airplane without fuel. It is an essential source of your company needs to achieve its full potential.
You can have the best ideas, a group 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 many customers and delivering great value. However, because there was no attention to the numbers, the company was already having to close quickly themselves.
This all could have been avoided if only understood the entrepreneur and paid more attention to the management of the cash flow of the company.
So, if money is such an important issue in a company, why so many entrepreneurs neglect to devote enough time to it? There are three main reasons:
1) Ignorant About Money Unfortunately, very few people are trained in money management. Unless you finance or accounting studied at university, it is unlikely that you would have learned about smart money management strategies from your parents or from school, college or university.
2) Fear earn money with ignorance comes a fear of dealing with money. Many business owners I talk to have a fear of constant tracking of their revenue, expenses and other financial figures.
They get stressed when they have to look at and deal with numbers. They get nervous when they saw the bills coming in and more stressed as the revenue is not seen as rosy as projected. “I was never good at math,” is the common excuse they usually give.
Finally, many entrepreneurs I know tend to put their financial and accounting issues as the last priority. “I have no time to do the books.” “I’ll do it later!”
As a result, their accounts are not up to date. They will only know their May sales, costs and profit figures in September! It’s like a basketball team playing a game without being able to see the scoreboard until two weeks after the game!