- LBTY - 7.00 0   | 0%
- BAT - 460.00 -1   | 0%
- BOC - 68.00 0   | 0%
- CGEN - 25.00 0   | 0%
- WTK - 146.00 0   | 0%
- GLD - 1,890.00 0   | 0%
- LIMT - 340.00 0   | 0%
- BKG - 26.00 0   | 0%
- KPLC - 1.00 0   | 0%
- ORCH - 10.00 0   | 0%
- SLAM - 10.00 0   | 0%
- SMER - 4.00 0   | 0%
- SCOM - 42.00 + 1   | 0%
- KCB - 42.00 0   | 0%
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- CTUM - 16.00 0   | 0%
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- NMG - 23.00 0   | 0%
- BAMB - 37.00 + 2   | 0%
- EABL - 190.00 0   | 0%
- ABSA - 10.00 0   | 0%
- JUB - 306.00 + 1   | 0%
- COOP - 12.00 0   | 0%
- DTK - 59.00 0   | 0%
- NCBA - 26.00 0   | 0%
- CIC - 2.00 0   | 0%
- UNGA - 29.00 0   | 0%
- SCBK - 130.00 0   | 0%
- SBIC - 81.00 0   | 0%
- NSE - 9.00 0   | 0%
- HFCK - 4.00 0   | 0%
- CABL - 1.00 0   | 0%
- LKL - 4.00 0   | 0%
- SCAN - 6.00 0   | 0%
- EVRD - 1.00 0   | 0%
- TPSE - 14.00 0   | 0%
- NBV - 7.00 + 1   | 0%
- XPRS - 4.00 0   | 0%
- UCHM - 0.00 0   | 0%
- CARB - 11.00 0   | 0%
- OCH - 2.00 0   | 0%
- EGAD - 10.00 -1   | 0%
- KAPC - 82.00 + 1   | 0%
- TOTL - 24.00 0   | 0%
- FTGH - 1.00 0   | 0%
- UMME - 6.00 0   | 0%
- SGL - 16.00 0   | 0%
- SASN - 17.00 0   | 0%
- TCL - 1.00 -1   | 0%
- PORT - 8.00 0   | 0%
- IMH - 22.00 + 1   | 0%
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- FAHR - 6.00 0   | 0%
- KNRE - 2.00 0   | 0%
- HAFR - 0.00 0   | 0%
- MSC - 0.00 0   | 0%
- KQ - 3.00 -1   | 0%
Five money mistakes that early-stage entrepreneurs make
By Grace Kianira | November 14th 2018
There’s little that’s glamorous about starting a business. And when it comes to money, things get even murkier.
There are many theories about cash and how entrepreneurs should spend it. You need to balance everything between investing and building a war chest that will help you survive future upheavals.
It is difficult knowing what to prioritise, but even big multinationals struggle with money, and this is despite their having numerous moneymen on call.
They’re still not immune to closure of business units or staff layoffs.
But as an entrepreneur who’s just starting out, you are more at risk of landing into money problems than someone who’s a bit more established than you are.
This, therefore, requires that you take more precaution with your business and how you spend money, which makes it important to know the pitfalls you should avoid.
Here are some of the money mistakes that have felled promising businesses.
1. Spending too much money in the beginning
In the formative stages of a business, you want to spend more time creating systems and structures.
In many cases, this doesn’t require a capital input; rather, it requires devoting your time to brainstorming on the product or service you’re planning to launch, and the marketing and branding techniques that you’ll apply to reach your customers.
Leverage on low-cost or free platforms, as opposed to going out and spending millions of shillings on marketing and branding gimmicks.
Also, make use of freelancers as much as you can – get referrals from fellow entrepreneurs or use the rating system provided on most online job sites.
Hold on to as much money as you can when you start out – don’t try to do everything and anything within your first year.
2. A lack of accounting records
The fastest way to lose your business is by disregarding the accounts. Too many entrepreneurs imagine that because the business is just starting out, they can keep track of their spending and income using basic records.
Don’t buy into the lie that your memory is sufficient – or that any odd piece of paper you jot numbers down on will suffice.
Every single shilling that goes through your business needs to be properly recorded. At a bare minimum, use one book to record your transactions.
But it would be even better if you invested in enterprise software or apps that can track your expenditure and income, and generate monthly reports.
Also, consider hiring an accountant on a freelance basis. However young your business is, you have tax obligations that you need to comply with. Don’t overlook them assuming you’re too small to matter.
And don’t jeopardise your future growth by not tracking your numbers when it’s relatively easy to do so.
3. Raising capital too early
Seeking funding for your business is okay, however, you should exercise caution as you do this. Getting investors too early on in the business might give you too much pressure to make a return on their investment.
You could find yourself making mistakes, such as taking on big clients too early in an attempt to make your investors happy.
While the business is still young, focus on getting co-founders or business partners who can plug in into your business without stringent financial conditions.
This will give you peace and give you more time to concentrate on building the necessary structures for the business.
4. Living beyond your means
Every entrepreneur dreams of their business raking in the kinds of profit that make the blood, sweat and tears worth it.
However, this isn’t going to happen if you spend all your earnings on expensive cars, renting posh office space to project an image of success or taking big holidays.
The wise entrepreneur manages their profits by setting aside a substantial amount for reinvestment in the goose laying the golden eggs.
This isn’t to say that you should live like a pauper. By all means, treat yourself and enjoy your success – just don’t go overboard with it. And don’t fall into the trap of trying to impress others by buying things your business doesn’t need.
Come up with a formula that splits the profits between your business and yourself.
5. Mixing personal and business cash
This is something that especially bedevils entrepreneurs who start their businesses as sole proprietors. It can be difficult to separate the money the business generates from your personal cash.
However, as challenging as the process of separation may be, it’s important that you draw a line between what you spend from your personal finances and what you leave to your business.
One of the best ways to do this is by setting up an account for your business, and drawing down from that. If you pump money into this account from your own account, note it down.
And then set up a personal account and pay yourself from your business – however little it may be, get into the habit of drawing a salary. Use this account to settle any personal needs, such as shopping, eating out or holidaying.
This way, you get a clear idea of business growth and it’ll save you a great deal of stress when your books of accounts are being audited or you’re filing returns.
What are some of the other money pitfalls? Share your ideas and experiences with us.
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