An entrepreneur is the one who assumes and runs risks, in order to lead his business to success, is one who has good planning, administration and control of his finances and maintains a productive workday.
In finance there are some basic concepts that every entrepreneur should handle, then these are some things you should know if you are an entrepreneur.
Basic concepts of finance
The knowledge of the basic concepts of finance is indispensable for the entrepreneur, since this will help to have a good management of your business regardless of whether it is large or small. These are some basic concepts that you should know if you are an entrepreneur
Capital
It is money, credit and other forms of financing that generate wealth for people and their business. The capital of a company is the money available to pay for daily operations and to finance its future growth.
Asset
Assets are the economic resources that a company has and that will generate money in the future, that is, it is all that adds and generates income. As an entrepreneur, assets will be very helpful since they increase the value of your business, and contribute to their operation.
Passive
The liabilities are the opposite of the assets, since these are the debts that a company has. Liabilities are settled over time through the transfer of economic benefits, including money, goods or services. It is very important that liabilities are paid on time, otherwise, there may be losses.
Bills
The expenses are those that allow business administration and sales, they could also be defined as the exit or graduation of money. The expenses are those payments that are made to services or people, these are defined according to the commercial activity of a business or company.
Cash flow
The cash flow, also known as cash flow or cash flow, is defined as the movement of money outside and within a business or company, the cash flow status keeps aware of the sources and the use of a company's cash for a certain time.
Utilities
Profits are those gains that you will obtain, they can also be defined as the benefits obtained from the operations of a business or company. These are generated once the investment has been recovered, it is recommended that when your business is profitable and you have obtained your profits, after having paid your debts, you make an investment.
Expenses control
Every entrepreneur must have knowledge about the expenses of their finances, it is indispensable for your business or company to bring a good accounting. Cost control is defined as a method or strategy that is carried out to reduce expenses through administration and analysis of financial data. It allows better projections and detect where costs can be minimized to identify excessive expenses areas.
Make smart investments
Investments are of the utmost importance for entrepreneurs, and is one of the key factors for the growth of a business or company, therefore, you must know how to invest wisely, since investments can provide you with a means to innovate, develop and grow.
Separate your personal expenses and the expenses of your business
It is important to take measures to separate the expenses of your business and your personal expenses, for this it is advisable to open a commercial bank account, this is an important step to maintain the expenses of your business separated from yours.
You must prepare a budget
The budget is the tool that will help you make a good monitoring of when and how money is earned or spent. Creating it is indispensable to supervise and better understand if the business is having enough income to pay your expenses.