08/08/2025
17 Common Financial Mistakes That Can Be The Reason Your Food Business Is Not Growing As It Should Be
Dear Gamechanger - Food Processor
Are you tired of grinding out long hours in the kitchen, only to see your business stuck in neutral? Or do you sometimes wonder what you are doing wrong in your business but can't seem to out a finger on what it is exactly.
Well, today we're serving up the 17 Common Financial Mistakes that could be holding your food business back from reaching its full potential! Yeah, you read that right. 17 common mistakes!
These mistakes can be reason why you are stuck at one place in your business! This could be the reason, you are still selling a few products even if your peers are expanding. So let's get right into it
Mistake #1: This sound like a simple mistake but unfortunately most people fall into this trap. Taking on debt to fund your business without a solid plan to pay it back.
Don't let high-interest loans hold you back! More so only ask for loans to expand not to try out new business ideas. And get your loans from reputable Banks to avoid stories that touch the heart. Thank you for taking this advice to heart.
Avoid this mistake by:
Creating a comprehensive business plan that outlines your financial goals and strategies for repayment.
Exploring alternative funding options, such as grants or investors or even consider asking from friends and family where you can re instate them as partners.
Mistake #2: Spending your hard-earned cash on unnecessary equipment or ingredients before saving for the future.
Don't just buy equipments because your neighbor business owner have it or because it's own sale.
Buy only when you really need the equipment, and you can nolonger manage.
Put your savings in the bank before you put that fancy new mixer or oven on the counter!.
Avoid this mistake by:
Prioritizing your spending based on business needs, not wants.
Creating a budget that allocates funds for savings and emergency funds. You really need that!
Mistake #3: Not correctly pricing and costing your products, leading to undercharging and lost profits.
Now this mistake is most common and a lot of small scale business owner are guilt of this - charging a certain price because a neighbor is charging that price.
Make sure you're charging what your products are worth! Cost your products, before setting a price.
Avoid this mistake by:
Conducting market research to determine competitive pricing.
Calculating the true cost of production, including labor, ingredients, and overhead.
Mistake #4: Lending money to friends or family members without a clear plan for repayment.
Yes, don't use business money to cover unnecessary expenses like paying for your nieces wedding. You get.
Don't risk losing relationships and money over a bad loan!
Avoid this mistake by:
Setting clear repayment terms and expectations.
Establishing a formal loan agreement.
Mistake #5: Impulse buying ingredients or equipment without a clear plan for how you'll use them.
Keep your money safe from unnecessary expenses and avoid waste! Thus you need to buy equipments of correct size, not small or big. So it's important you determine your production throughput before buying the equipments.
Moreso, in as much as buying Ingredients in bulk is commendable, don't over do it. The last thing you want is having money tied up in Ingredients which you could use somewhere.
And also be wary of Ingredients expiring an dso it's important to check best before dates before you do that bulky purchases.
Avoid this mistake by:
Creating a shopping list based on business needs. Shopping lists are for for business owners also.
Researching and comparing prices before making a purchase. Very important
Mistake #6: Giving away freebies to family and friends without accounting for the cost.
Those "free" lunches for your kids might be eating into your profits!
Yes, it's just a packet for a child's lunch but it will eat into your profit.
Avoid this mistake by:
Setting clear policies for freebies and samples. Don't be scared of charging your friends and families. If you are not careful these can be the reason for your downfall
Also know your breakeven point before you start doing your charity cases.
Accounting for the cost of freebies in your financial records. Yes, and pay for them. This will help you keep track of how much you make per month.
Mistake #7: Not paying yourself a salary. You're working hard to grow your business, but are you taking care of your own financial needs?
On another note - the business profits are not your salary, they are for business growth.
Avoid this mistake by:
Setting a realistic salary based on business profits.
Prioritizing your own financial well-being.
Mistake #8: Not tracking expenses or income.
How can you make smart financial decisions if you don't know where your money is going?
Very important, and another risk for not tracking expenses and profits is you might be operating at a loss even though you make money every day, leaving you with no money for expansion.
Avoid this mistake by:
Using accounting software to track expenses and income. Or even a simple book to keep track of your expenses an daily sales.
Regularly reviewing financial statements. You need to have thing like a balance sheet, profit and loss statement even if you operate under a tree or in your kitchen, it's important for your growth
Mistake #9: Not keeping financial records. The truth is you are not too small to have financial records....as long as you are transacting money you need to keep records so as to know where your money is going and how are you using it.
Avoid this mistake by:
Have financial records like I have mentioned on mistake number 8.
Record daily sales and expenses.
Calculate your daily break even point.
Take note of losses due to reworks and poor quality.
Take note of credits.
etc - to grow into a big company you need to take financial records seriously - this will also help you when you need a bank loan.
Mistake #10: Making more products than you can sell. Make products that you can sell so you don't run the risk of having to throw away products because noone bought them, this will lead to business loss.
It's better to run out of a product that to be left with unsold stuff.
Also if your product is not perishable, keep your stlck level at minimum so you don't have capital locked up in stock which will affect your cashflow and later on limit your growth.
Make sure you're not over-investing in equipment that will just gather dust!
Avoid this mistake by:
Keep adequate stock level.
For highly perishable products, only produce what you can sell. Don't assume, use your production records to know you average daily demand.
Yeah!
Mistake #11: Adding a new product line without conducting proper market research.
Don't waste your time and money on products that won't sell! Money lost will never be gained.
Avoid this mistake by:
Conducting market research to determine demand and quality needs
Testing new products with a small pilot batch. Do market tests with a small batch
Mistake #12: Not negotiating with suppliers to get the best prices.
You're leaving money on the table if you're not negotiating!
Yes, don't be scared of asking for discounts etc.
Avoid this mistake by:
Researching and comparing prices. Very important, do supplier and vendor shopping before you commit.
Building relationships with suppliers, this will make it easy for you to then ask for discounts or getting some Ingredients on credit.
Liase with other processors in your area, so you can buy raw materials in bulk and get discounted price and this will also help save on transport costs.
Mistake #13: Not having a budget for marketing and advertising.
You need to spend money to make money, but make sure you're spending it wisely!
Don't just jump into theories or use certain strategies because you heard they work, work within your budget.
Sidenote: Marketing is also for small companies that want to grow and be known.
Avoid this mistake by:
Creating a marketing budget.
Tracking the effectiveness of marketing efforts whether it's ads, word of mouth etc.
Eve if it's freebies, make sure you don't offer more than what it cost you to acquire the customer.
You get?
Mistake #14: Not monitoring your cash flow regularly.
Keep an eye on your finances to avoid cash flow problems!
This is the reason why most companies fail and most businesses don't grow.
Avoid this mistake by:
Regularly reviewing financial statements - remember I told you to keep the financial records.
Creating a cash flow forecast. Very important irregardless of the size of your business.
Mistake #15: Not accounting for overhead costs, such as rent, utilities, and insurance. Make sure you're factoring in all the costs of running your business! This mistake is the reason why after you chose to operate your business from another place rather than your kitchen, you start running losses.
Even if you are operating your business from your kitchen using your pots and electricity, count those in when costing your products.
This will help you determine the right price for your product and to know if you are making profits or not
Avoid this mistake by:
Calculating overhead costs.
Factoring all overhead costs into pricing.
Mistake #16: Not reviewing and adjusting your pricing strategy regularly.
Make sure you're keeping up with changing costs and market conditions.
For instance if the price of the raw materials changes, you need to find a way to still make profits either by changing price or reducing size..
Avoid this mistake by:
Regularly reviewing pricing strategy.
Conducting market research to determine competitive pricing.
Mistake #17: Treating business profits as your personal money.
Just because your business is making money doesn't mean you should be using it to fund your personal lifestyle!
Business money is to be invested into the business.
Avoid this mistake by:
Keeping personal and business finances separate. If possible keep your business money and personal money in different accounts, they shouldn't mix.
Creating a budget that allocates profits towards business growth and savings.
So Gamechanger, now that you know some of the mistakes you are making in your business that is resulting in it being stagnant besides the number of years you have been in business - Don't let these financial mistakes hold your food business back!
Change your habits and see you business grow. Sometimes nobody is bewitching you, Or that new company or neighbor is not using juju on you, they just know and have good financial management. So you just need to change certain things - the way you run your business and your business will flourish.
What I am saying is Take control of your finances and start growing your business today!
And by avoiding these common financial mistakes, you'll be well on your way to building a profitable and sustainable food business.
Remember, it's always better to be safe than sorry when it comes to your finances!
Stay financially fit, and keep on cooking up success!
Just a quick one, you are guilt of how many MISTAKES. BE HONEST. Message directly https://wa.me/263718625498
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