Did you know that 82% of businesses fail due to poor money management ? If you want your brand to survive the test of time, you have to learn about finances for entrepreneurs . In this post we tell you everything you need to know to get started.
Friday morning arrives, that time of the week that you set aside to review your company's numbers. It's not your favorite activity, but you know that it's necessary and that your company's profitability depends on it.
You open the Excel file where you record all the transactions, fill in the data, check the columns and, once again, the numbers don't add up. You check the formulas (maybe there's an error there) but everything seems to be correct.
There you realize that it is time to focus on the health of the business, that you cannot postpone it any longer and that, to do so, you have to learn about finances for entrepreneurs .
Don't worry! In this article, we'll tell you the main concepts you need to know, 8 tips for good financial management , and, finally, we'll share with you the best finance courses , both in-person and online.
Shall we begin?
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Basic finance for entrepreneurs: key concepts
Let's start at the beginning: what are finances? In a business, finances refer to the management and control of the business's economic resources .
This includes planning, acquiring phone leads and allocating funds to ensure that the business can operate healthily, grow and achieve its long-term goals. Managing a business's finances is therefore essential to its survival.
Here we share with you the most important concepts related to this financial management .
Budget
The cornerstone of every business, a budget is a financial plan that details all estimated revenues (sales, investments, financing, etc.) and all projected expenses (production costs, marketing, salaries, rent, taxes , etc.) of a business over a specific period (usually a year).
It is a fundamental tool for controlling finances and making informed decisions.
Fixed costs
These are costs that a brand has to pay no matter what happens. They generally remain stable over time and are not related to the business's production or sales level. Some examples are rent, employee salaries, and insurance.
Variable costs
Variable costs are expenses that change directly with the level of production . That is, the higher the level of production, the higher the costs. Examples include the purchase of materials or sales commissions.