According to data published by the Department of Labor, 20% of small businesses fail within their first year of operation. It can be tough getting a business off the ground. If you want to avoid any flatline blunders, you’ll need to think ahead, put in the research hours and always keep an eye on your wallet.
Get Debt Under Control
If you need funding for your business, you may need to take out a small business loan. To get approved on more generous terms, make sure you take steps to improve your credit score such as paying down debts. Keep in mind that a credit score over 740 is considered an excellent score.
Avoid Frivolous Spending
It’s tempting, as your business gains momentum, to increase spending, but unnecessary purchases will quickly derail your cash flow and multiply your problems.
To limit your spending, it’s always worth scouring second-hand marketplaces (rather than buying brand new) other businesses may be getting rid of equipment at a reduced cost.
Ensure Your Business
Insurance can feel like a grudge purchase when you’re trying to stretch your dollar, but, when the rubber meets the road, it’s not something you’ll want to be caught without.
Since there are a number of ways you can ensure your small business, it’s not always necessary to start off with the most comprehensive, expensive policy on the market. A broker can help you identify and prioritize the right insurance plan and explain any exclusions or potential areas of exposure.
Hire An Expert
Having a business comes with financial requirements that are quite different from your personal accounts. There are tax obligations, payroll functions, and HR duties that require expert knowledge.
Hiring an accountant can take this burden off your shoulders by ensuring that all your financial responsibilities are met, and keep you updated on where you’re falling short. This will free up more time for you to spend growing and marketing your business.
Learn To Spot Counterfeit Money
By learning some rudimentary methods to identify counterfeit bills, you can prevent your business from becoming an easy target for fraudulent transactions. Simple approaches might include learning the layout of serial numbers or investing in an ultraviolet scanner that can detect the authenticity of a bill by its color.
Separate Business And Personal Expenses
There are many unforeseen circumstances that can hinder growth or cause a business to fail altogether. By separating your business expenses from your personal ones, you’ll minimize the risk to your individual financial standing in the event that you are forced to liquidate.
This also helps your cause when seeking investors as they’ll be able to evaluate the true merit of your business and will ultimately take your proposal more seriously.
Save For Emergencies
When you start turning a profit, your first instinct may be to reinvest as much as you can into the business, but the value of saving for a rainy day shouldn’t be underestimated.
Even if you are insured, you’ll need to make sure you have the deductible on hand in the event of a loss. You should also be aware that insurance does not cover every possible loss, so if the issue you’re dealing with is excluded, you’ll need the extra cash flow to keep your doors open.
Having a small business can lead to financial independence and grant you opportunities beyond your wildest dreams, but the first few years of getting it off the ground are by far the hardest.
If you’re mindful of the potential financial errors you could be making, you’ll save yourself time and money, allowing you to invest these resources into your business.