When we start a business, we often think we have it all worked out on how we will handle the money coming in. Most times we’ve dreamed about how free we will be when it comes to taking in millions of dollars of revenue. Sadly, too many of us don’t do the proper planning with our business funds. We could use some help in the management department when it comes to our money. Too many of us believe we have the right answer when we don’t. We can use a little help, but that assistance needs to be correct. Here are seven misconceptions related to business finance management.
- I don’t need a financial planner
Some business owners are a bit touchy when it comes to sharing their financial wealth within their company. No one wants the competition to know how good they are actually doing. That said, too many owners forgo getting a financial planner. The thought process is that they’ve got it under control when it comes to their money. Here, it is farther from the truth and not hiring a financial planner can make things worse for a business. Every company should have a financial planner on board so they can help them create realistic budgets that make sense.
- Budgets are a waste of time
It can be ridiculous to hear any business owner say that budgets are a waste of time. For one, this is the first principle of business one will learn. It’s those budgets that stop departments from overspending. When any company gets into the habit of just buying stuff whenever they feel like it, this can create a lot of problems. Business owners must live and die by the budgets they create to keep the company on track. Their investors will be happy to see the financial organization and you’ll receive a lot of praise with knowing where the money is going. Never ignore the opportunity to create a budget for every expense that you have in your company. A budget can stop your company from going bankrupt. Any business operating without some kind of departmental budgets is running on a disaster course.
- Accountant and Bookkeepers do the same job
You should never think that your accountant is the same as your bookkeeper. The accountant is used to find solutions to your money management and give you advice often on your taxes. They are the official sign off for filing business taxes or guiding you through buying that next business. Bookkeepers log all financial information into reports. They are the ones staff members will let know there’s a problem with their paycheck. Bookkeepers collect all of the revenue coming into the business to organize it inside the software.
- My business is too small to hire a financial planner
There are many financial planners who specialize in small business. They understand the crunch you’re in when it comes to money. They are there to help the owner realize they can move money around in the right way. A financial planner can help manage expenses one thought they had under control and never did. Use them to allow your business to build from small to big just by handling your profits better.
- I can use business funds for personal use
Using your business funds to inflate your personal lifestyle is one of the biggest misconceptions when people get into the business. This is also a huge red flag that the person starting the business doesn’t know what they are doing. You should never use business funds for personal use no matter what the situation is. You have to make it a point to separate your business money from all personal funds. This will give you leverage when needing money for personal bills.
- My business is too small for investors
No business is ever too small to attract investors. In fact, this is how some companies have grown from the basement into huge corporations. They took the time to realize their tiny business is worthy of big investors pumping in money to make them grow.
- Emergency funds are useless
Every business should save for a rainy day even if they have never experienced a crunch on funds. It makes sense to put away some cash and never touch it as tragedy can strike at any time. The business that isn’t prepared will miss out greatly when they need funds to repair a part of their company that keeps it together. Many of us have walked into a business where the sidewalks are cracking or the interior is a turnoff. These areas can be ignored to the point where they are a hazard to the customers. Emergency funds can help restore your company to a brand new look when something goes wrong.