I have a mentee who owns his own business which makes pretty good money. However, he blows his money as quickly as he earns it. In one of our conversations, I encouraged him to start keeping records of his income and expenses. I recommended the app I used and so he started. This was somewhere in December 2020. In mid-January he wrote to me: ‘I wish I knew where the money went. I think saaa. Between December and January over 10k spent. I didn’t do anything extraordinary too’ Does this statement resonate with you? Well, grab a chair as I share 4 money mistakes startups should avoid.
And by the way, these are 4 of my own top mistakes. Some of them cost me paaa. Thank God He’s redeemed me through some wise counselling and well, some bitter experiences too.
Having disorganised financial records
So here is the thing, I did write down almost every expense from our events and other activities. The only problem was, they were in different places and I never collated them. Therefore I could never tell for sure how much I had spent on a particular activity. My records were all over the place.
At some point, I started using MS Excel to keep my expenses and income. However, this sheet was on my laptop and so I realized many records were not kept. This too was ineffective and would cost me dearly when I started paying my taxes.
Not considering all costs before pricing
Oh boy! Where do I start on this one! I used to price things off the top of my head. For instance, one time I was organizing a Dinner With The Girls. As soon as the hotel agreed to give me the space and food for 70ghs, I immediately priced the ticket at 100ghs. My thinking was, I would make 30ghs per person. Haha this is quite embarrassing so let me laugh it off!
I didn’t consider video production, entertainment fee, volunteers, marketing and so many other things. In the end, I spent way more than I made and as usual used my personal money to sort the rest of the bills out. It would take me several of such experiences to finally learn. Actually, have I even learnt my lesson? Well, time will tell.
Not making a budget for the month
I used to just spend as I went. No planning, no budget. When my money got finished, that was it. This caused me to always underestimate how much money I actually needed each month. This also made it easy for me to make the next mistake…
Giving without any plan
First of all, I used to give to charity out of my revenue and not my profit. I would give thinking ‘oh this person really needs help’. However, the money was not even mine in the first place. It belonged to my business and I had a responsibility to steward it appropriately. Sad thing was, when I gave without planning and the business went broke, I would not be happy with God.
Secondly, I had no system for giving. Any person with a sad story got me. And oh, I was duped twice by someone I thought I knew who ‘needed help’. I would find out later that she had played the same trick on others.
I have certainly made other mistakes but won’t bore you with all for now. If you are reading this and are especially a startup then please think about these 4. Are you:
- Having disorganised financial records?
- Not considering all costs before pricing?
- Not making a budget for the month?
- Giving without any plan?
The first step is awareness that something is wrong. God willing next week, I will continue this conversation with some of the tactics that are currently working for me. I hope you will be back to read. Meanwhile, please share your own money mistakes and let me learn too. I bet you have a few.
PS: The replay of my Instagram Marketing For Beginners Online Workshop is available for. Please read more and sign up here http://bit.ly/InstagramMarketingForBeginnersWorkshop
Photo Credit: Vera Obeng Photography