Entrepreneurs must have a purpose that motivates them, knowledge about their product or service, customer service and leadership skills, but they also require good financial practices to ensure that their business will be profitable.
However, entrepreneurs hardly ever receive training on the subject, so they must learn it on the fly, after trial and error. Unfortunately, sometimes the cost of that learning can even mean bankruptcy.
For this reason, today we want to share with all our associates who are entrepreneurs and businessmen some recommendations on good practices to adopt for the good of their business.
Good financial practices for people with their own business:
- Create a budget. The budget serves as a roadmap on what we can spend or not. You must record how much money you enter, what fixed and variable expenses we have. It gives us clarity.
- Keep small batches in stock. While it's good to be optimistic, investing too much in stock products that we don't know will sell out soon may not be the best idea. The stock must correspond to the business size.
- Establish an appropriate price for our products or services. It is important to know what our profit margin is and if all operating costs are covered.
- Understand the seasonality of the business. This is advice that nobody gives us when we start, but when you have your own business you learn that income is not fixed all year, but expenses are maintained. There are months where – due to your business model – you will generate more than others. That is the time where we must save for the “lean cow” months. What are the months of the year in which you generate more income, which in which less and why? How do you organize yourself regarding this seasonality?
- Make alliances with other entrepreneurs. The objective of strategic alliances and production chains is to offer more complete products or services and share resources, knowledge or technology. This can generate considerable savings in your fixed or variable costs and bring you closer to potential clients that you would not otherwise be able to contact.
If you are thinking of promoting your own business, remember that at Coopealianza we have business lines of credit revolutive or with Banking for Development funds, for the purchase of fixed and productive assets and under the figure of invoice discount. Contact Us if you require more information.