Bangkok: In the business world, generating high sales is often mistakenly perceived as a sign of success. However, many businesses with impressive customer queues and seemingly thriving operations have faced closures or severe liquidity issues. Coach Jakkapong Mekphan has offered crucial advice on managing finances to prevent such scenarios.

According to Thai News Agency, the first step for entrepreneurs is to distinguish between sales, profit, and cash. High sales figures alone do not guarantee a business's survival, as they can lead to losses if not paired with actual profits. Profit represents the net amount after cost deductions but might not equate to cash received, especially in credit sales. Cash flow, the actual money circulating, is vital for a business's health. A business that is both profitable and maintains good cash flow is more likely to thrive.

Entrepreneurs should also be wary of fixed costs and understand the concept of the break-even point. Fixed costs such as rent and employee salaries are unavoidable, and knowing the break-even point helps determine the necessary sales volume to cover these expenses. Achieving this point swiftly is crucial for financial stability.

Expanding too quickly or mishandling inventory can also jeopardize a business. Rapid expansion might drain capital in construction and decoration, while ineffective inventory management can tie up funds. To prevent liquidity issues, categorize products based on their turnover rate and avoid stocking high-priced, infrequently used items unless ordered.

The significance of accounting, finance, and taxation cannot be overstated. While business owners need not handle accounting themselves, understanding financial statements is vital for operational management. Accounting aids in tracking expenses and trends, finance assists in making expansion decisions, and taxes, particularly VAT, must be diligently managed as they are based on sales volume rather than profit.

Entrepreneurship demands multitasking across various sectors, making it essential to hire a meticulous accounting consultant. Regular financial statement reviews can help identify and resolve potential issues promptly.