Money Handling Mistakes – Episode 185 Belk On Business podcast

5M ago 25:57

Content provided by Josh Belk. All podcast content including episodes, graphics, and podcast descriptions are uploaded and provided directly by Josh Belk or their podcast platform partner. If you believe someone is using your copyrighted work without your permission, you can follow the process outlined here https://player.fm/legal.

Money Handling Mistakes – Belk on Business – Episode 185

There are many mistakes a business owner can and does make, some which could be fatal to the business either directly through mismanagement of the finances or indirectly through failure to follow proper internal controls or following basics of asset protection.

1) Co-mingling of business and personal finances – this goes beyond paying personal bills with the business checkbook but can pierce the corporate veil.

- Asset protection issues – creates a risk exposure

- Internal control issues – creates a risk with banks and regulators

- Loss of self confidence and confidence others have in you

- Decreased business value – don’t know true business performance whether it is paying personal bills and trying to expense them in the business or pulling cash out of the business beyond payroll and properly determined and documented distributions

2) Mismanagement of debt – debt stress tests the business and will magnify any other financial mismanagement mistakes

- Need profit to cover payments

- Best startups not take on any debt if at all possible

- For all businesses - only take debt on assets with greater book value (not FMV) than corresponding loans

3) Mismanagement of Spend

- Outspending cash inflow

- Not following a properly designed budget or not having a budget at all. Budgets should be designed around goals

- Buying what you don’t need or failure to plan - Rent vs buy (overspending on real and personal assets or properly analyzing if it is needed at all), tax planning or management (payroll, sales, income), planning and saving for growth or seasonal or market fluctuations

- Establish retained earnings for emergencies and opportunities

- Review payables, receivables, both bank and credit card statements (subscriptions or other unneeded spend can be identified – fraud minimized)

- Don’t purchase large nonperforming assets just to reduce tax exposure

Subscribe on these platforms:

Apple Podcast: https://apple.co/2Zp6hgj

Spotify: https://lnkd.in/gcWDnFZ

Stitcher: https://bit.ly/34aRgO2

YouTube: https://youtu.be/nh41AdbMgxo

193 episodes