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Business Owner

How to Avoid Five Financial Mistakes Entrepreneurs Make

Business startups are all about the bottom line — profitability is the standard by which success is measured. For many first-time entrepreneurs, “profitability” is an elusive concept. At its base, it makes perfect sense — bring in more cash than you spend, and the business will be profitable. At its core, however, there are numerous factors that keep a viable idea from ever actually turning a profit. One of the most common problems in business startups boils down to poor financial management. The fundamental mistakes that entrepreneurs make can be easily rectified with just a little effort and attention to accounting processes.
The most common financial mistakes made when starting, and how to avoid them, are:
Lack of fundamental accounting knowledge
Entrepreneurship requires a strong basis in basic business essentials, and standard accounting skills in particular. Simply purchasing an off-the-shelf accounting system is not enough — the tool is only as useful as its user. From correctly categorizing expenses to ensuring debits and credits are balanced, knowing how accounting systems work, and why they work, is not only a good idea, it is an absolute necessity.
Failure to develop accounting procedures
Every financial transaction in a business should follow a consistent, written, formalized procedure from decision-making to recording. That is, every income and expense should follow the same path from approval to data entry into the accounting software. Without standard procedures, transactions get lost, decision-making becomes inconsistent, and the numbers never seem to quite work out. Everyone involved with the company’s accounting system need to be handling transactions in the same manner, and those procedures need to reflect an understanding of financial controls.
Inaccurate data entry
Along with developing standard accounting procedures, it is essential to include steps that verify the accuracy of the data entered into the system. This may seem obvious, but every struggling business we have encountered had serious data entry errors in the books. A small error — an extra digit, transposing numbers (2521 instead of 5221) — can wreak absolute havoc in a fairly short amount of time. Establishing at least one double-check procedure can eliminate the majority of these mistakes.
Failure to review and analyze
One of the great features of every available piece of accounting software is a set of easy-to-create financial statements. Unfortunately, many entrepreneurs are number-phobic and do not take the time to learn how to use these crucial tools for financial management. A simple, consistent review of the numbers and running a few basic financial ratios can be extremely revealing, both in terms of potential problems and identifying exploitable opportunities. Business owners do not have the luxury of being “not-a-numbers-person” — business is all about the numbers, thus it is essential to use the available tools to keep control over your venture.
Failure to budget
It is nearly impossible to launch a successful startup without a well-researched budget, and even more difficult to survive without planning out the business’s financial future. No budget generally indicates no planning, and tends to result in throwing good money after bad, especially during lean times in the venture. Setting a budget allows a business to maintain focus on a well-developed strategy while ensuring the cash flow is sufficient to keep the business alive and growing.
It is a common but inadvisable error for first-time entrepreneurs to underestimate the importance of solid financial management. Simply ballparking expenses and taking a see-what-happens attitude with the cash flow are quick paths to failure. Doing your homework and mastering the fundamentals of accounting are not just a good idea, they are the only way to build a viable business idea into a thriving company.…

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Business News

A Forex Trader’s Biggest Mistakes And How To Avoid Them

There is interest in FOREX trading; however, some may hesitate! It could be intimidating or appear difficult to most people. Caution is wise when it comes to spending money! Learn about the Forex market prior to investing. It is important to keep up with information about forex. Here are a few tips that will help you do that.

The more you practice, the better you become. If you use a demo account, you can have an idea of what to expect without taking the financial risk. There are many online tutorials you can also take advantage of. Make sure you know what you are doing before you run with the big dogs.

Some people think that the stop losses they set are visible to others in the market. They fear that the price will be manipulated somehow to dip just below the stop loss before moving back up gain. It is not possible to see them and is generally inadvisable to trade without one.

Do not open in the same way every time, change depending on what the market is doing. Many traders jeopardize their profits by opening up with the same position consistently. Learn to adjust your trading accordingly for any chance of success.

There is no need to buy an automated software when practicing Forex using a demo account. You can go to the central forex site and get an account.

Select a trading account with preferences that suit your trading level and amount of knowledge. Do accept your limitations, and be realistic. You will not see any success right away. It is widely accepted that lower leverages can become beneficial for certain account types. As a beginner, start out with a practice account to minimize your risk. Starting trading with small amounts of money until you learn effective strategies.

Study the market and make your own conclusions. Being self-sufficient is critical to success in the currency markets.

Actually, you should not do this. If you have a strategy, you will find it easier to resist impulses.

One piece of advice offered by professionals in the foreign exchange trade is to maintain a detailed journal of your activities. Journaling helps you document and emotionally process your high peaks as well as your dark valleys. This can give you a clear indication of how you’re progressing in the forex market and enable you to analyze your strategies for use in future trades, thereby optimizing your profitability.

Exchange market signals are useful tools for buying and selling. Your Forex software can alert you when your target trade is available. Always choose your entrance and exits beforehand so that you don’t make emotional decisions.

Forex trading requires you to make what are sometimes rather tough choices. This can make many people hesitant to take the plunge. Whether you are ready to get your feet wet, or have already been wading in the forex pond, the tips you have seen here can help. Remember to stay on top of current market conditions. Make solid decisions based on your knowledge, the charts and your strategy. Be sure to make wise investments.…