Cape Town - The effective planning and prioritising of a budget is one of the most important elements of a business, and key to the future of a business’ financial well-being, says Kobus Engelbrecht, spokesman for the 2016 Entrepreneur of the Year competition sponsored by Sanlam and Business Partners Limited.
The recently released Global Entrepreneurship Monitor 2015/2016 Global Report states that a lack of profits or finance accounts for more than half of business discontinuances. In South Africa, more than one in four business exits are due to financial difficulties.
Engelbrecht says that during challenging trading conditions, greater attention should be given to budget allocation.
“Although forecasting and developing a budget in a challenging economic climate can be difficult, it is necessary for the survival of a business.”
Engelbrecht offers entrepreneurs the following advice on how to stay on top of their finances:
* Stay in touch: Market information and research are key ingredients to maximise opportunities and minimise losses. Interact regularly with your clients, employees and suppliers and make a concerted effort to stay up to date with new developments.
* Buckle up: By doing a quick inventory check, a business owner can quickly refine excessive costs.
* Be realistic: Cash-flow needs to be closely managed and should not be rigid in theory to make the entrepreneur feel positive about the financial future of the business.
* Back to basics: One of the many reasons it is difficult to keep track of money spent is due to the cashless society that businesses operate in. While a good way to avoid unnecessary overspending is to make use of cash payments, this isn’t always realistic.