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More and more millennials are starting their own business ventures. Whether your creating your business as a main source of income or as a smooth side hustle, you’re gonna wanna check out today’s post. Thanks to Jane for providing these helpful tips on common financial mistakes new business owners make.
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All-Too-Common Financial Mistakes New Business Owners Make
Starting a business is a very exciting time for any budding entrepreneur. But it can be risky as well. If you don’t make the right financial decisions, you could end up closing your company before you ever really get started. So to keep you from falling into some of the same traps as the entrepreneurs who’ve come before you, we are going to be talking about some of the most common financial mistakes that new business owners make on a regular basis. And how to avoid them!
Making Big Purchases Straight Away
When you start a business, it is easy to let everything go to your head. You can’t wait to jump in, so you start buying all of the equipment you need straight away. While some of the expenses are essential, others can wait until you are properly up and running.
Your best bet is to make a list of possible expenses and divide these up into essentials and non-essentials and put them in order of priority. There are plenty of ways you can save on big expenses early. Like hiring freelancers rather than full-time members. Or starting your business from home rather than leasing office space.
Not Exploring All Funding Options
There are lots of funding options when you start a business, and you need to explore as many of them as you can before you settle on the one that is right for you.
For example, you could look into crowd-funding or angel investors. Otherwise, more specific options like business loans for minority women may be right for you. Make sure to explore all the options in detail before making your final decision.
Not Planning for Lean Times and Emergencies
You never know when your business could go through lean times or face a financial emergency. So you should be prepared to deal with either one of these eventualities by budgeting accordingly.
To make sure you’re prepared, keep at least three months’ worth of expenses in a contingency fund. This way, you can keep afloat and literally buy yourself some time to get things back on track if you hit a bump.
Avoiding Setting Out a Clear Budget
Too many new business owners simply don’t know why they are losing so much money every month. It’s because they don’t have a clear budget in place. Remember, your job is to keep your company financially viable, and if you don’t manage your cash flow closely enough, you will have absolutely no way of doing this effectively.
Create a budget every month and track your income and expenses to see how they compare to your budget.
Not Streamlining Business
Greater efficiency in business is something that you should be striving for at all times. You might implement a new system, automate processes, or invest in technology.
Don’t assume that your business is running in the most efficient way possible. There are always going to be ways that you can make improvements as new tech becomes available and new systems are created for handling your tasks.
Have any additional financial tips for new business owners? Let us know in the comments!
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