While it can be exciting, owning and running a business can also be a nerve wreck. This is especially true when it comes to handling finances. Many businesses in Kenya suffer due to poor management of money.
Here are some of the common ways in which poor business decisions make business to come crumbling down.
- Lack of income to support expenses
Due to poor management of business accounts, you may find yourself without any money to cater for expenditures that keep the business running. Without money for inputs and other significant expenses, the business will die.
READ: ACCOUNTING BASICS YOU MUST KNOW
- Over-investment
Knowing how much money your business has, how sales are doing and the stock levels helps you determine what is available for investment. However, with poor financial planning and record keeping, it is likely for you to put in more money for investment than what should be.
- Little resources to grow the business
A business that has no proper management of finances will always be making wrong decisions; straining the already limited resources. As a business person, you should focus on assets that increase productivity and improve efficiency.
- Increasing debts
When finances get mismanaged in business, loans are the savior for the enterprise. However, taking loans and not planning on how to repay them will cause the business to die since the interests accrue and in the end, the bank has to take the business assets if they are unable to repay.
READ: HOW KENYAN SMEs CAN CREATE AN INCLUSIVE ECONOMY
Managing money is always a concern for every business whether big or small. If you ensure proper management of your business finances you are sure to survive the economy and your industry. It is, therefore, important for you to have some skills about financial management for you to have a successful journey as an entrepreneur.