FINANCE. Adhere to the agreed spending spree

Kabeli Lichaba

It is always important to emerging business people to stick to agreed targets and principles-just in the same way you stick to your guns when conducting business in your favour. It is also equally important to stay true to the business plan-it is the guiding light to your business. When analysts predict that many start-ups fail within the first three years they are not simply prophets of doom, they speak from research done over many years.  

I am sure that one of the reasons that some of these businesses fail it is because of an acute mismanagement of money accrued and money owed to second parties. It is an undeniable fact  that many young people want to shine and flaunt their newly acquired status as ‘successful’ entrepreneurs, so the first thing they will do after much hard work and earning their first profits would be to make a statement to the world that ‘We have arrived’.  This statement is always invariably accompanied by a reckless spending of company money.

It is always a temptation to spend almost all the first profits in their entirety, the owner declaring, “I am thanking myself for the hard work since the conception of this venture”. Absolutely, there is no query that they may take some form of respite from their hard work and reflect while they celebrate. But, the old grey hairs shake their heads in disbelief when they read this. For them the first money into the business means trouble-and the beginning of hard work. Money, wherever it is, is a big temptation to immediately stray from agreed use, and the beginning of reckless spending just because “I deserve it, it is mine”.

So take heed when they warn that businesses fail in the first hurdle, they are right. In order to stay afloat through the first turbulent years, stay true to the business plan- and review it every six months so as to match it to the demands of the hectic business world. It requires tons of discipline to do so, but it can be done. People like Richard Branson operated from dingy basements for long periods just to hold on to that precious pound until the next pound appeared on the horizon. There are other successful business people who did like-wise. Read their biographies and learn.

The business plan should not only be used to control the company finances, it should be used in every day operations. You will be surprised how easily you will be acquainted with consulting it as soon as the situation calls for it, instead of only using it when you visit the loans bank manger. This will rub off into your personal spending behaviour as well. You will feel good every time you look at the bank balances.

So do not rush off to parade your gains in the first five years of your business. If you don’t, observers will respect you and admire your maturity so early in your flight to top business horizons.