7 Must Know Tips to Become A Successful Entrepreneur

Running your own business is tough, but it’s even harder if you don’t have a solid grip on the financial side of things. As a Nigerian entrepreneur myself, I’ve made plenty of money mistakes over the years that I learned from the hard way.

So I decided to put this guide together to share the key lessons that helped me get my finances in order and set my business up for success. Whether you just started or have been in business for a while, I hope these practical tips will give you the financial clarity and control you need.

Let’s Start with the Basics

I remember feeling overwhelmed by all the financial jargon thrown my way when I first started my business. Terms like cash flow, revenue, and profit – it was like trying to learn a foreign language!

But getting these fundamentals down is crucial for any entrepreneur. So here’s a quick overview of what they mean:

• Cash flow: The lifeblood of your business! It’s the money that flows in and out daily and determines if you can cover costs.
• Revenue: The income you earn from sales and services before any expenses come out.  
• Expenses: All those ongoing operational costs like inventory, payroll, equipment, etc.
• Profit: The money left over after you pay all expenses. Hey, you gotta make more than you spend, right?
• Taxes: I know, I know. But we all have to pay them! More on that later.

Don’t Mix Personal & Business Money

Many entrepreneurs, myself included, have the bad habit of dipping into the business money jar to fund personal buys and then taking cash from personal accounts to cover business expenses. It gets messy fast! So do yourself a favor and set up completely separate accounts. Get a business bank account and credit card only used for company transactions. This keeps things organized for taxes and accounting later.

Budgeting is Your Friend

I admit it – I avoided making budgets for years because I thought they would restrict me too much. Boy was I wrong! Having a carefully planned budget in place is like having a map so you don’t waste money and can spot potential cash flow issues ahead of time. Take time to build a realistic budget including all expected costs and sales forecasts. Revisit it every month or quarter to tweak it as needed. It helps you align spending with your actual financial situation.

Mind the Cash Flow Gap  

There were times when cash seemed tight even when my business was profitable on paper. What I learned is that cash flow and profit are different things. Profit looks at the whole financial picture while cash flow focuses on the actual money moving in and out daily. I started invoicing clients quickly, following up on late payments fast, and negotiating deals where I got paid upfront. This helped bridge cash flow gaps so I could cover my operating expenses seamlessly.

Pay Yourself!

As a business owner, it’s easy to just withdraw any extra cash for personal use whenever you want. But this can get out of hand quickly. I started formally paying myself a set salary with automatic bank transfers. This keeps personal and business money separate, and ensures I pay myself fairly without overdoing owner draws that can starve my operating capital. As my profits have grown, my salary has too!

Don’t Hide from Taxes!

I’ll be honest – I was pretty clueless on business taxes when I started my company. I just hoped I was keeping enough of my income to cover them when tax time came! That was wishful thinking though and I got hit with some hefty late fees at first. Now I have a tax prep professional who helps me estimate and set aside money to square up my different tax obligations across the year. I highly suggest you consult an expert too so you stay compliant. It saves so much stress!

Assume Growth & Plan Ahead

My accountant is always cautioning me that rapid business growth often sinks companies if the financing isn’t there to support it. Inventory, new hires, expanded locations – these things all require significant upfront capital. So nowadays I create projected budgets that account for expected growth costs 1-3 years out. This helps me foresee where I may need extra funding for key investments so I can get financing lined up.  

Funding Doesn’t Have to Be Impossible

This brings me to my last tip – know your financing options! Bootstrapping is great but every business eventually needs a capital infusion if they want to scale.

As a Nigerian entrepreneur, we may not have as many traditional lending sources but there are other creative options like merchant cash advances, invoice factoring, grants and competitions, P2P lending like Peer Lendly or even crowdfunding. Get savvy on what capital solutions fit your business model and growth plans. Having funding ready allows you to act quickly on opportunities without scrambling to cover costs.

I hope these lessons from my journey to financial stability can shortcut some of the money struggles too many entrepreneurs face.