entrepreneurship mistakes

4 financial mistakes every entrepreneur makes

Managing finances is important for an entrepreneur and if your money skills aren’t strong, you might encounter problems in the later phases.

Managing finances is important for an entrepreneur and if your money skills aren’t strong, you might encounter problems in the later phases. However, managing money doesn’t come naturally to everyone and most entrepreneurs end up making some crucial mistakes.

Here are common financial mistakes made by entrepreneurs:

Faulty business plan

The biggest mistake you can make after starting a business is not having a business plan. It is essential for a business to have a plan to be sure about what the goals and missions are. If the goals aren’t set properly, the whole situation can result in a chaos.

Business plans also consist of a financial plan in detail without proper breakdown of fixed and variable costs. It also states how much money is required in each quarter by the business. If the financial section isn’t made properly in the business plan, it can lead to huge crises.

Related Post: 7 Ways you can finance your new startup

Poor risk management

What distinguishes entrepreneurs from managers is the risk factor. Entrepreneurs have to undertake risks which do not have to be considered by a manager. Not managing risks properly can lead to the destruction of the company.

So, an entrepreneur needs to make sure they foresee the risks that one is likely to encounter in the future and take necessary steps to avoid the risks. Insure all your machinery, land and key employees so that if there is a bad situation, there isn’t much damage. Also, a separate amount of money needs to be set aside for risk management.

Investing in trends

In your entrepreneurial career, you will always be confused as to where to invest. However, the worst kind of investment an entrepreneur can make is by investing in trend. A trend is something which is popular currently but will die in the future and be replaced by something else. Developments in the future are sure to displace today’s developments. Thus, investing in more secure deals is a safer option than investing in futile trends.

For instance, Warren Buffet invests in roads, insurance and electricity.

Not pumping back enough in to the business

If your business is currently making profits, it is all the more reason to pump money back into the business and expand it. Some entrepreneurs let the money lie idle or invest it in banks. This won’t help your grow your business and money will just lie there.

The money can be spent on useful things like improving customer service or marketing for the company or research for a new variant or product.

Related Post: How to raise money for your startup?

5 Signs that entrepreneurship is not your cup of tea

Here are 5 signs that entrepreneurship is not your cup of tea.

Do you want to become an entrepreneur? Entrepreneurship is like that drug which is wanted by everyone but only few have what it really takes to get it. If you’re thinking of becoming an entrepreneur, STOP!

Before you dive into water, you must check the temperature. Before you actually become an entrepreneur, you must know if it is right for you. While you would have read many articles that try to inspire you, this article will present the real picture in front of you. Here are 5 signs that entrepreneurship is not your cup of tea.

1. You look upon others for ideas

If that brilliant startup idea has come from what your friend is doing, there are high chances that the idea will fail when it would be implemented by you. Unless you have a way to make that idea better or in other words to make it unique, you must decide to stay away from it.

2. You don’t like to help people

Entrepreneurship isn’t about starting a business, it is about solving a problem. And you would want to solve a problem only if you like to help people. If you’re a person who just wants a business to buy a big penthouse like Bruce Wayne in Batman or anything expensive, entrepreneurship isn’t for you. Most likely, you’re going to fail. So, don’t try until you develop the feeling of wanting to help others.

3. You aren’t passionate

Maybe you have the most brilliant idea in the world which you know would work but if that idea doesn’t make you excited, restless and nervous, you’re not going to make a fortune with that idea. You must be passionate about what you plan to do. If you’re not, you would never be successful.

4. You are proud of yourself

Starting up a business takes more than an idea. Right attitude is super important. An entrepreneur needs to play different roles and needs to make sure that he/she plays each role perfectly. If you’re too proud to sweep the floor to make space for your first meeting, entrepreneurship isn’t your cup of tea.

5. You can’t handle a team

A business idea would never work unless the people working on it are under a good leadership. A good leader and obviously a good manager is what you need to bring out from yourself to make your idea work. If you think you lack with leadership and management skills, go work on some job and get the experience. Don’t think of entrepreneurship unless you have those skills.

Entrepreneurship is sort of buzzword these days. Everyone wants to be entrepreneur but seldom know what entrepreneurship really means and what it takes to be an entrepreneur. So, do you have what it takes to be an entrepreneur?

You may also like:

12 Ways To Avoid Startup Mistakes

The 15 Characteristics of Effective Entrepreneurs

8 Things Entrepreneurial People Do Differently

This article was originally published in Startup Champ

Image Credit: startupconnect.co.in