Cash flow is the lifeblood of a business. Hence it is essential for a business owner to always keep track of his finance.

1. Insufficient Resources/Capital

As an entrepreneur it is natural to start a business with small investment called capital. It is OK to be conservative. However it is dangerous to rely on this small capital, as it is most likely to get exhausted and shut down your business. To ensure smooth running of your business you must educate yourself on how you to keep a steady flow of cash coming in. You can get help from your bankers, accountants and business consultants.

2. Maintaining proper financial records.

However small your business may be, you must make it a priority to always record and monitor all financial incomings and outgoings on a regular basis. Failure to do so can affect your business growth. In other words, ensure that your Bookkeeping is up to date. You must review your financial report and have a clear picture of your business's financial position.

3. Proper interpretation of financial records

Now that you have ensured proper recording of financial transactions, your next step is to monitor debtors and creditors. You must ensure there is adequate funding in your business.

4. Poor cost controls.

In an effort to increasing the revenue, some times, business owners fail to monitor the cost associated with manufacturing their product or delivering their services. To avoid this you must have a system in place to track the cost per product/service/employee in place.

5. Lack of internal control over finances:

However small your business may be, it is recommended that your financial transactions are verified /monitored by you and your bookkeeper/accountant. Do not delegate everything to the service provider. However take responsibility for your business financial transactions. This way you will be able to protect your business from any fraud.

Copyright 2008 by Lalitha Brahma
Permission is granted to reprint this article in its entirety provided nothing is changed (including links) and the author's information box is included.

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Author's Bio: 

Lalitha Brahma helps Consultants and Small business owners improve their bottom line by inspiring and moving them to action. Is your Regular paycheck stopping you from exploring the ENTREPRENEUR in you? If you answered "Yes", go ahead and sign up for FREE Newsletter to learn the secret of breaking the Regular paycheck barrier at