Running a business is no easy task and much of your attention is focused on your progress. Small checkpoints can go by unfinished and little issues can turn into big problems. By the time many small businesses hit a rough patch, it may be too late to salvage their situation. To avoid some of the most common pitfalls, take a look at the top five mistakes that small businesses make.
Sometimes you need money quick, but is it worth ruining your credit or driving your business into the ground? No. Take the time to delve into different loan alternatives. There are many options available for small businesses. Start by examining the companies who will give you low interest rates and affordable payment plans. You don’t want to rush into a decision and regret it for years down the road.
2. Placing Too Much Trust In Their Business Partner
When taking on a business partner, you need to be a detective. Research their credit history, their loan approval numbers and their employment history. Get references and talk to those references in depth. Make sure you make a wise decision because a business partnership is like marriage. Once you’re in it, you’re in it together. Their decisions reflect on you and vice versa. Ask them how committed are they to a long-term arrangement. Ask your potential investors if they would feel comfortable continuing to invest with this person by your side. Don’t place your trust or your company in the hands of someone who you or others feel uneasy about.
3. Not Saving Money For A Rainy Day
Why should you ask others to invest in your business if you’re not doing the same thing? Too many companies reach into their profits to make upgrades or get relief when trouble comes. Don’t be one of those companies! Set up a savings account where you are delegating certain percentages of your company’s funds for a rainy day. Keep an emergency stash for those times of the year when business is slow or when you’re going through a rough patch!
4. Being Disorganized
If your finances are disorganized and unbalanced, the rest of your business probably is too. This is a poor reflection on your branding and your leadership. Potential investors may see this as a sign of weakness and that can cost you much more than the cost of a professional organizer or financial advisor. In order to keep your finances in order, go through your paperwork every week—or even every day. Update your balance sheets, profit and loss statements, payroll, collections and billing on a regular basis—and remember, with organization comes empowerment!
5. Borrowing More Than What They Need
When it comes to vision, yes, you should plan big and plan for 20 years down the road. But when it comes to your loans, you should not borrow for 20 years down the road. Many business owners dream unrealistically and end up with payments they cannot afford to make. Borrowed money should be thought of as merely a link to the next stage, not a crutch for the next 20 years. Before you commit to a loan, stop and think about where that money will take you. Will it take you into the next phase of business? Or will it crush you under the weight of crippling payments and ultimately destroy your business?
Ultimately, it’s not just your business; it’s your livelihood you need to be careful with. Remember that a successful business owner is an organized, well-informed person who makes smart financial decisions and chooses to surround themselves with like-minded people.
To read more on this article, go to http://www.sleeter.com/blog/2014/07/top-5-small-business-financing-mistakes/
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