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Common Financial Mistakes Small Businesses Make

Business

Starting a business is no easy feat, and for many, the financial side of things can be the most confusing and overwhelming part of it all. Setting your business up for success means ensuring that you have your finances in order so that you can maximize your profits. All too often, though, small business owners make various financial mistakes that hinder their profitability and hinder their ultimate success. Here are 6 common financial mistakes small businesses make and how to avoid them.


1

Paying Too Much Tax

Every business has legal obligations to pay taxes, but many end up unknowingly overpaying, simply because they aren’t structured properly and because business owners try to save money by not hiring a qualified tax accountant to help them. What they don’t realize is that they may actually save money by spending a little extra to find a competent and qualified expert to handle their taxes and ways to (legally) maximize their savings opportunities. As a business owner, you can make this process easier by staying organized and keeping all receipts and financial documents in order.

2

Taking on Too Much Debt

Almost every business owner will find themselves having to take on some form of debt in order to start and run their business. However, it is crucial to be cautious of how much debt you take on and the stipulations that come along with it. Taking on heavy, high-interest debt can easily cripple a new business. If your business needs to take out a loan, be sure to make sure you don’t take on more debt than absolutely necessary and make a repayment plan in advance. Also consider finding alternatives to loans such as small business grant programs.

3

Not Paying Attention to Your Business’ Credit Score

Did you know your business has a credit score, too? Many people are unaware that businesses have their own separate credit score and that it is equally as important as their personal credit score. Building a great business credit history is essential to securing loans and even to working with certain suppliers. Just like your personal credit score, you can check your business’ credit score at all three major credit bureaus (Experian, TransUnion, Equifax). Note that, unlike consumer credit reports, which can be accessed for free once a year under federal law, business credit reports and scores are not required to be offered for free, but this shouldn’t dissuade you from making monitoring your score a top priority.

4

Making Impulsive “Glitzy” Purchases

Particularly during the start-up phase, it’s easy to get carried away by the excitement of things and make purchases that are excessive and unnecessary. If you find yourself getting swept away with accessorizing your office, ordering loads of branded merchandise and promotional materials, or business cards on extra fancy double-thick card stock, it’s time to take a step back and reassess your spending priorities.

Remember that every dollar you spend affects your bottom line, so before ordering custom furniture or an expensive coffee machine, assess whether these purchases will actually affect the success of your business in a measurable way or if you can find a more affordable alternative.

5

Cutting Costs Rather Than Increasing Revenue

When things get tight, it is most business owners’ instinct to find ways to cut costs. Often the first thing to be cut is a business’ marketing efforts, which can just lead to an even further loss of revenue. Instead, consider taking an alternative approach and figuring out why you aren’t generating enough revenue and how you can change this. Is your business not getting enough exposure? Are customers coming through your doors but leaving without making purchases? Are your products/services priced too low? Once you identify why you are not generating revenue, you can make adjustments without making drastic cost-cutting efforts.

6

Not Having an Emergency Fund

Even successful, established businesses are not immune to slow periods, so it is essential that you prepare your business to avoid any cash flow problems. If you have no savings available, you could find your business quickly swallowed up. To avoid any issues paying employees, vendors, rent, etc. be sure to keep 2-3 months of operating costs on hand so that you can survive slow periods and stay one step ahead of the game.

A business owner has to do everything they can to beat the odds and ensure the success of their business. Avoiding these common mistakes will help put you ahead of the competition and, ideally, lead to quicker profitability and growth. Always keep your bottom line in mind and pay careful attention to your finances so you can avoid stress and focus on the growth of your business.

7min read
Culture

The Middle East And North Africa Are Brimming With Untapped Female Potential

Women of the Middle East have made significant strides in the past decade in a number of sectors, but huge gaps remain within the labor market, especially in leadership roles.


A huge number of institutions have researched and quantified trends of and obstacles to the full utilization of females in the marketplace. Gabriela Ramos, is the Chief-of-Staff to The Organization for Economic Co-operation and Development (OECD), an alliance of thirty-six governments seeking to improve economic growth and world trade. The OECD reports that increasing participation in the women's labor force could easily result in a $12 trillion jump in the global GDP by the year 2025.

To realize the possibilities, attention needs to be directed toward the most significantly underutilized resource: the women of MENA—the Middle East and North African countries. Educating the men of MENA on the importance of women working and holding leadership roles will improve the economies of those nations and lead to both national and global rewards, such as dissolving cultural stereotypes.

The OECD reports that increasing participation in the women's labor force could easily result in a $12 trillion jump in the global GDP by the year 2025.

In order to put this issue in perspective, the MENA region has the second highest unemployment rate in the world. According to the World Bank, more women than men go to universities, but for many in this region the journey ends with a degree. After graduating, women tend to stay at home due to social and cultural pressures. In 2017, the OECD estimated that unemployment among women is costing some $575 billion annually.

Forbes and Arabian Business have each published lists of the 100 most powerful Arab businesswomen, yet most female entrepreneurs in the Middle East run family businesses. When it comes to managerial positions, the MENA region ranks last with only 13 percent women among the total number of CEOs according to the Swiss-based International Labor Organization (ILO.org publication "Women Business Management – Gaining Momentum in the Middle East and Africa.")

The lopsided tendency that keeps women in family business—remaining tethered to the home even if they are prepared and capable of moving "into the world"—is noted in a report prepared by OECD. The survey provides factual support for the intuitive concern of cultural and political imbalance impeding the progression of women into the workplace who are otherwise fully capable. The nations of Algeria, Tunisia, Morocco, Libya, Jordan and Egypt all prohibit gender discrimination and legislate equal pay for men and women, but the progressive-sounding checklist of their rights fails to impact on "hiring, wages or women's labor force participation." In fact, the report continues, "Women in the six countries receive inferior wages for equal work… and in the private sector women rarely hold management positions or sit on the boards of companies."

This is more than a feminist mantra; MENA's males must learn that they, too, will benefit from accelerating the entry of women into the workforce on all levels. Some projections of value lost because women are unable to work; or conversely the amount of potential revenue are significant.

Elissa Freiha, founder of Womena, the leading empowerment platform in the Middle East, emphasizes the financial benefit of having women in high positions when communicating with men's groups. From a business perspective it has been proven through the market Index provider MSCI.com that companies with more women on their boards deliver 36% better equity than those lacking board diversity.

She challenges companies with the knowledge that, "From a business level, you can have a potential of 63% by incorporating the female perspective on the executive team and the boards of companies."

Freiha agrees that educating MENA's men will turn the tide. "It is difficult to argue culturally that a woman can disconnect herself from the household and community." Her own father, a United Arab Emirates native of Lebanese descent, preferred she get a job in the government, but after one month she quit and went on to create Womena. The fact that this win-lose situation was supported by an open-minded father, further propelled Freiha to start her own business.

"From a business level, you can have a potential of 63% by incorporating the female perspective on the executive team and the boards of companies." - Elissa Frei

While not all men share the open-mindedness of Freiha's dad, a striking number of MENA's women have convincingly demonstrated that the talent pool is skilled, capable and all-around impressive. One such woman is the prominent Sheikha Lubna bint Khalid bin Sultan Al-Qasimi, who is currently serving as a cabinet minister in the United Arab Emirates and previously headed a successful IT strategy company.

Al-Qasimi exemplifies the potential for MENA women in leadership, but how can one example become a cultural norm? Marcello Bonatto, who runs Re: Coded, a program that teaches young people in Turkey, Iraq and Yemen to become technology leaders, believes that multigenerational education is the key. He believes in the importance of educating the parent along with their offspring, "particularly when it comes to women." Bonatto notes the number of conflict-affected youth who have succeeded through his program—a boot camp training in technology.

The United Nations Women alongside Promundo—a Brazil-based NGO that promotes gender-equality and non-violence—sponsored a study titled, "International Men and Gender Equality Survey of the Middle East and North Africa in 2017."

This study surveyed ten thousand men and women between the ages of 18 and 59 across both rural and urban areas in Egypt, Lebanon, Morocco and the Palestinian Authority. It reports that, "Men expected to control their wives' personal freedoms from what they wear to when the couple has sex." Additionally, a mere one-tenth to one-third of men reported having recently carried out a more conventionally "female task" in their home.

Although the MENA region is steeped in historical tribal culture, the current conflict of gender roles is at a crucial turning point. Masculine power structures still play a huge role in these countries, and despite this obstacle, women are on the rise. But without the support of their nations' men this will continue to be an uphill battle. And if change won't come from the culture, maybe it can come from money. By educating MENA's men about these issues, the estimated $27 trillion that women could bring to their economies might not be a dream. Women have been empowering themselves for years, but it's time for MENA's men to empower its women.