“A clever person solves a problem. A wise person avoids it.”
You may be new to the business space. But there have been many that have walked in your shoes.
Therefore, you have the opportunity to learn from their mistakes as it will help you to steer clear from the pitfalls of owning a business.
One of the most crucial parts of running a business is associated with how you handle your finances. They are your source of income and the investments required to support the company’s growth.
Thus, one wrong step and you are out of the competition.
Scared? You should be!
Running a business is no child’s play. That is why you should do your research before making any transactions.
Here are a few financial decisions you should never make:
1. Boundary-Less Budgeting
The first rule of business planning is creating a budget.
So before you start your business, sit down and make a budget plan. Be sure to include everything from marketing, operations to minor expenses in the plan. Doing so will provide you with a clear picture of where your money is going and how much you can afford to spend.
More importantly, your success lies in how well you stick to the set budget at all costs. Otherwise, your finances will be a chaotic mess you won’t be able to clear.
2. Taxing Matters
In case you want to be an outlaw running from the IRS, we suggest that you address your taxes before the bill piles up to an inconceivable amount. One effective way to remember the tax obligation is by including it in the budget plan from the get-go.
Moreover, you should research and learn about how much your company is expected to pay. This is to ensure that the tax bill doesn’t put a massive dent in your bank account.
3. Purchase without Sales
Never ever ‘count your eggs before they hatch.’
In the initial years invest in things that are mandatory for your company profile. Like a well-designed website, high-quality equipment, and a proper insurance policy. Then gradually move towards the smaller stuff like success bashes, corporate trips or marketing expansions.
Keep in mind to get the revenue before you plunge deep into purchases. Or else you will be drowned in debt before your first major sale.
4. No Backup Plan
Do you save money for a rainy day?
You should because unforeseen calamities can happen anytime. Most finance gurus advise their clients to save three months of profit for emergencies. Without saved funds, you will be left begging for loans. Not only will it tarnish your company’s image, but it will also tie you up in interest-ridden money problem.
In short, wise businessmen know that losing money is easier than earning it. That is why they keep a check on their expenses and avoid indulging in extravagance. As a whole, they prefer to aim for profits rather than showcase their success.