Good day inleo family; it's another great day to be committed to making smart financial decisions that will propel you towards a fulfilling financial life and freedom.
And you can't talk about wealth and financial independence without talking about business and entrepreneurship.
One thing I’ve learned about business is that if you don’t understand the money side of business and probably still making progress, you’re just running on luck. A great idea, passion, or talent are all necessary but not enough. Business moves, thrives and survives with money, So if you can’t read your financial numbers, you can’t control where your business is going.
Talking about money and business is a whole lot of discussion for one day, so for today well just focus on the importance of understanding the financial aspect of business.
1. It Helps You Make the Right Decisions
Every move you make in business affects your money, before you hire, expand, invest, or even increase your prices, you need to know what your finances look like. When you understand your finances, you make decisions based on facts, not guesswork. It saves you from mistakes that can not only slow your business growth but also slow down your financial goals.
2. Helps You Know If You’re Truly Making Profit
Money entering your account doesn’t always mean profit.
A lot of people are busy but not profitable. When you understand things like your cost of goods, expenses, and profit margin, you can easily see if the business is actually making money or just rotating cash.
This helps you focus on the parts of the business that bring real profit and cut off the ones that are wasting your resources.
3. Better Control of Cash Flow
Cash flow is the life of the business.
Many businesses crash not because they don’t have customers, but because they run out of cash. Understanding your finances helps you know:
When money enters
When money leaves
When to save
When to reinvest
This keeps your business stable and prevents the normal end of the month pressure experienced by many small and medium scale businesses.
4. You Avoid Bad Debt
Without financial understanding, it’s easy to borrow money the wrong way, the wrong time, for the wrong purpose, or at a wrong interest rate.
But when you prioritise the financial aspect of your business you will know:
When a loan makes sense
What type of debt is good
How to pay it back without stressing the business
This keeps you from entering debt that will choke your future progress.
5. You Price Your Products Correctly
A lot of businesses lose money simply because of wrong pricing.
If the price is too high, customers run.
If it’s too low, the business is busy exchanging goods and services but it is broke on the inside.
Understanding your finances helps you calculate your true cost and set a price that makes sense and gives you real profit.
6. Investors Take You Seriously
Investors don’t only invest because your idea sounds nice. They invest because your numbers make sense. When you understand your finances, you can answer questions about profit, expenses, customer cost, and growth. It shows you are organized and serious.
This alone increases your chances of attracting funding.
7. It Helps You Plan and Grow
Growth requires structure, not just hype and vibes.
When you understand your financials, you can plan:
How much you want to earn
Your budget
Your targets
How fast you can grow
You won’t expand blindly. You expand with a plan.
8. You Become a More Confident Leader
When you understand the money side of your business, you lead better. You set clear goals, track your business progress, and guide your team with clarity and confidence. People trust you more because you know what you’re doing, and because the evidences abound in your finaces
conclusion
No doubt about it, financial understanding is the backbone of every successful business. It helps you make smart decisions, avoid mistakes, stay profitable, and grow with confidence. If you can manage your finaces, you can control your business. If you can’t, the business will control you. It's either of the two.
That’s why every business person or entrepreneur must take the financial side seriously. It’s not about being an expert, rather it’s about knowing enough to run your business with clarity and confidence that you're not taking yourself or your team into financial ruin.
Thank you for checking out my blog, do feel free to drop your comments, upvotes and reblog. Also come back some other time as I will be dropping other important finance lessons.
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