When it comes to being an entrepreneur, one element of the process that commands your full attention is and will always be financial management.
On the one hand, this may seem obvious. To start and maintain a successful business, you need to watch over the money being spent and generated. But did you know that many businesses that end up premature closing do so due to cashflow problems? Did you realize that this is one of the core ingredients that will allow you to not just scale, but to do so at a sustainable rate that you can maintain over time.
Successful entrepreneur Alexander Dillon firmly believes that proper financial management is one of the foundational building blocks to success, regardless of the industry you’re operating in. This is true for various reasons, all of which are worth a closer look.
Why Proper Financial Management Matters
One of the biggest benefits that financial management brings with it, in the eyes of Alexander Dillon, is how it forces you to plan ahead.
You can’t properly manage your organization’s finances if you don’t fully understand what that money will eventually be used for. It’s not just about growing for the sake of it – it’s about scaling in a natural way that allows you to capitalize on business opportunities rather than watch them pass you by.
That is to say, you need to begin this process by first setting out tangible, realistic goals for yourself. Where is your organization now versus where do you want it to be in five years? Then, you develop a financial strategy to connect those two ideas. This helps make sure that every financial move you make is purpose-driven.
Another major benefit of financial management is that it forces you to think about the risks you might face on the journey to accomplishing your goals. Again, you can’t have proper money management without context. What is your business environment like? What resources are necessary to achieve your goals? What happens if things don’t play out precisely as you assume they will?
These are the types of questions that sometimes new entrepreneurs don’t answer until it’s too late. But by forcing yourself to think about them now, you can be better prepared for whatever life happens to throw at you later.
Finally, proper financial management almost always leads to more sensible cashflow decisions. Many people don’t realize that inadequate cash flow is one of the primary reasons businesses shut down unexpectedly. When you have a plan in place for your larger, long-term financial strategy, you, therefore, have the foundation you need to make smarter and more informed decisions daily.
This alone can often help you identify situations where you should be spending money, thanks to the return you’ll likely get, versus those situations where you should hang back and wait for a better opportunity to arise.
Despite his young age, Alexander Dillon has already accomplished a great deal by following best practices like those outlined above. He’s started not one but two successful investment firms in Blackbridge Capital and GenCap Management. He’s dedicated his time to supporting growing businesses with both capital and leadership. He regularly invests in small startup companies that he believes in. The list goes on and on.
All of this is to say that when Alexander Dillon says that something like proper financial management is critical, he’s speaking from experience. He sincerely hopes those who listen to him will find themselves in similar positions.