These 7 Business Finance Mistakes May Cost You Millions!

Take control of your business money!

Track expenses, monitor sales, make better financial decisions, avoid financial mistakes and make better financial decisions with Bumpa.

Download now and start your journey today!

Did you know that 60% of Nigerian businesses fail within their first three years? Here's the shocking truth: it's rarely about sales. Your business could be making money and still be heading towards failure.

It’s also not about your village people.

The truth is that most business owners overlook some of the most important things about business finance. The result of that is you think your business is making money when it's actually running at a loss. Think about it - your shop could be full of customers, and our services could be in high demand, but if you're not tracking the right numbers, those "profits" might be an illusion.

The good news? These mistakes are completely fixable. In this article, we’ll discuss the seven most expensive financial mistakes destroying Nigerian businesses today, and more importantly, how to fix them.

1. Poor Cash Flow Management

Managing money coming in and going out is like controlling blood flow in your body - when it's not right, everything suffers. Many Nigerian business owners mix personal and business money, making it impossible to know their true financial position, and you should avoid this for your business to be successful.

Fix:

• Use a business management app to track your expenses

• Open a separate business account immediately

• Set up automatic bill payment reminders

• Create a digital invoice tracking system

• Review your cash flow weekly

Using Bumpa, organising your business expenses is simple. Create categories like "Inventory" (stock purchases, shipping costs), "Operations" (rent, utilities, internet), "Marketing" (ads, promotional materials), and "Staff" (salaries, training) in the app. Then just upload or snap photos of receipts or record expenses on the go to help you track every kobo you spend.

Track expenses in seconds and make smarter financial decisions by downloading the Bumpa app today.

Related: 10 Ways to Manage your Finances as a Business Owner

2. Neglecting Emergency Funds

Remember the COVID lockdowns? Businesses without savings struggled badly. Yet many Nigerian SMEs still operate without a financial safety net, living from sale to sale. Operating without savings leaves your business vulnerable to market changes and unexpected expenses.

Fix:

• Start with 10% of monthly profits as savings

• Set up automatic savings transfers

• Aim for 6 months of operating expenses

• Keep emergency funds in a separate account

3. Informal Record Keeping

Using notebooks or mental mathematics to track things is simply not a good idea anymore. It’s an easy way to lose track of everything. Have you ever considered what will happen if you lose that notebook? You could lose track of inventory, won’t be able to prove your profits to your bank, or even mess up your taxes.

Fix:

• Switch to digital record-keeping

• Use your phone to scan all receipts

• Track daily expenses through your app

• Generate monthly financial reports

• Back up all records automatically

The Bumpa app makes it easy to digitise your business - you can record all your sales and orders, track and manage your inventory, get reports on your business performance, and track daily expenses right from one app. This makes it easy to keep digital records of every part of your business.

Get started by downloading the app and setting it up in less than 5 minutes!

Related: How to Keep Daily Records of Sales for Your Business Easily

4. Ignoring Profit Margins

Are you actually making money on each sale?

This is a question you need to think about deeply. Have you seen situations where a business was selling a lot and somehow still couldn’t keep the business afloat? It sounds confusing - sales should convert to profit.

But it doesn’t always work that way. High sales volume doesn’t guarantee profit, and this happens when you ignore your profit margins.

Profit margin is simply the amount of money you keep from each sale after covering all costs. For example, if you sell a shirt for ₦5,000 and it costs you ₦3,000 (including fabric, labor, and overhead), your profit margin is ₦2,000 or 40%. The higher your profit margin, the more money your business actually keeps from each sale.

Fix:

• Calculate true costs for each product/service

• Track the performance of your products

• Set up margin alerts

• Adjust prices based on data

• Review margins monthly

Related: 7 Ways That Business Analytics & Data Can Help Your Business Grow

5. Late Invoice Payments

Late invoice payments can strangle your business growth. When customers take months to pay for goods they've already received, it creates a dangerous cash-flow gap. Think about it - while you're waiting 60 or 90 days for payment, you still need to restock inventory, pay staff, and handle other expenses.

Fix:

• Create a clear payment policy

• Enable automated payment reminders

• Offer early payment incentives

• Accept multiple payment methods

• Use digital invoicing for faster processing

Take advantage of the Payment Request feature on the Bumpa app to also remind your customers about completing their payments. This feature sends them a notification with the payment link, prompting them to pay and making it easy.

Related: How to Create Professional Invoices

6. No Financial Planning

If you want a successful business, you simply can’t run it on vibes. This means your business needs to have a solid financial plan. Many SMEs react to financial issues instead of preventing them, so it’s important to create yours and get ahead of potential problems.

Fix:

• Create monthly and yearly budgets

• Set realistic revenue targets

• Track actual vs. planned spending

• Adjust plans quarterly

7. DIY Financial Management

You're great at your business, but financial management needs expertise. Many Nigerian entrepreneurs try handling everything alone, missing opportunities and making costly mistakes.

Fix:

• Invest in

  business management software

• Learn basic financial analysis

• Set up automated reporting

• Consider a part-time accountant

• Join business finance workshops

Conclusion

The difference between thriving and struggling businesses often comes down to financial management. Every day, successful Nigerian entrepreneurs are using modern tools to:

• Track and improve their cash flow

• Get paid faster with professional invoicing

• Make data-driven pricing decisions

• Build emergency funds systematically

• Generate instant financial reports

Don't let poor financial habits hold your business back. Take control today by using Bumpa to transform your financial management. With expense tracking, professional invoicing, and powerful reporting tools, you'll have everything needed to make smarter money decisions!

Subscribe to our Blog

If you love tips & content like this that will help with your small business marketing and growth, then you’ll be excited to know we have more! We could always send you notifications when they are published if you share your email with us. We promise to not be a bother, and you can always unsubscribe anytime!

Subscribe Now

Want to Learn More about Bumpa & How to Grow your Business with it?

You can sign up to Bumpa in 5 seconds as a small business owner and let us begin the journey of growing your business with you!

Sign Up Now