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Financial Discipline: Your key to success in business

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Why are some businesses more successful than others? Your guess is as good as mine – the answer is financial discipline (amongst others).

We are going to discuss practical ways of financial discipline that will help your business succeed.

Separate yourself from the business: How do I do that you may ask?

  1. Open a bank account for your business in the name of your business.
  2. Pay in all your sales into your business account.
  3. Do not take out of business money to spend on personal items.
  4. Instead put yourself on a salary no matter how small.
  5. When in need of money you can borrow from the business account but make sure you pay back.

Save money from your business: How do I accomplish that?

  1. Open another bank account preferably in the same bank and transfer monthly a specific percentage (or amount) of sales or from your main business account. This is your savings account.
  2. Cash is king in business. Setting the cash aside helps you to avoid the temptation of spending on impulse.
  3. See savings like an expenditure. Just like you must pay salaries and utility bills so must save a specific amount or percentage.

Reinvest your savings back into your business (or other investment channels):  Why?

  1. Investment is your money working for you. Therefore your can expand your business by reinvesting your saving into your business or into other investment channels.
  2. However check out the investment properly before you invest your money.

Always work with a budget: How?

  1. A budget is a financial plan of how you are going to spend your money.
  2. Plan ahead of receiving the money and use it as a guide in spending.
  3. I recommend you have a budget for the year and then break it into months.

Keep basic financial records (At least):  What basic records do I need to keep?

  1. For every sale give the customer an invoice once your release goods to the customer.
  2. Issue a receipt for every cash received.
  3. Bank all your collections and attach your bank deposit slip to your duplicate copy of the receipt.
  4. Collect receipt for every payment you make (expect where not possible).
  5. Have a petty cash float in the business premises to address office expenditure.
  6. Use payment vouchers for all your payments.

Remember if your business is to succeed it is up to you!

 

Written by

Bimbo Osuchukwu, Principal Consultant of Valucon Business Services.
Valucon Business Services is an enterprise growth consulting firm that partner with clients in all sectors to identify their highest-value opportunities, address their most critical challenges, and transform their businesses.

 

 

                                                                                                                              

Valucon Business Services

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Lola Sadiq  |  January 30, 2015
Thank you fof this piece!
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Akpos Usiakpo  |  October 27, 2014
For a better Nigeria, this is spot on
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Adaeze Ume  |  July 06, 2014
Very well articulated. These habits are timeless principles that will take you very far. Thanks for sharing.
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nkem okocha  |  January 08, 2013