3 Financial Lessons Every Small Business Owner Should Learn

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But, whatever the particular structure and features of your business, it’s undeniable that good financial management is absolutely essential, in all situations, with no exceptions. Writers and graphic designers included.

Here are a few essential financial lessons that every small business owner should learn.

Cash flow is king

What is cash flow, you might ask? Simply put, cash flow is the total movement of money in and out of your business. Cash flow is a holistic and organic way of understanding the relationship you have with money, professionally speaking.

Metrics such as raw income are misleading at best, and completely irrelevant at worst because they don’t account for the fact that “wealth” and “profitability” are more nuanced issues that just earning more money. Perhaps your business brings in 10% more in revenue than it did earlier in the year, but at the cost of a 10% increase in marketing expenses. In this case, you are effectively standing still.

Cash flow is king, and it’s critically important that you recognize this fact and pay meticulous attention to questions like; “how is money being circulated in my business?”, “how much money is coming in, versus how much is going out?”, “what have my cash flow trends been like over the last quarter?”, “what will the projected return on investment be of dedicated more of my budget to a particular area?”

Poor personal financial habits often carry over into business

There’s well-traveled saying out there which goes “the way you do anything is the way you do everything”. The point of this saying is, in large part, that habits have continuity, and that you can’t easily just “switch off” one aspect of your personality or habitual behavior pattern when it’s convenient.

Rather, you’ve got to work on adjusting your character, as a whole, by improving the dimension of your life that you want to, across the board.

This maxim certainly seems to be true in financial matters. Poor personal financial habits often carry over into business. If you want to become a better steward of your money at work, focus on simultaneously improving your skills at sticking to a budget, at home.

Short-term financial success may come from sly and manipulative dealings; long-term financial success comes from integrity

Some people manage to make a tidy amount of money from exploiting and manipulating others, through scam deals, Ponzi schemes, and other assorted unethical practices.

It’s worth keeping in mind, though, that while these unscrupulous practices might be profitable in the short term, they very often collapse completely down the line, and take the reputation of the scammer down in a major way, too.

Long-term financial success almost always comes from having a degree of integrity in business. Focus on sticking to your word, turning out a good product, being reliable, and honest, and your financial future is likely to be a lot brighter than if you cut corners.