Running a business is never easy. Financial success takes time, planning, intuition, and a lot of hard work. Business owners are under a lot of pressure and have many responsibilities, often leading to mistakes that can hurt or even ruin a company. Successful leaders recognize potential mistakes before they occur. Avoid the five common small business financing mistakes below and look for ways to grow your business safely and sustainably.
Not keeping financial records up to date
Small business owners make this mistake far too often. Record your expenses and earnings as they occur instead of in a large batch. Proper record keeping will save hours of unnecessary work and will avoid missing any important entries.
Entrepreneurs are often overly optimistic about their business and may make hasty decisions that put a company in debt. Make sure to have more than enough initial capital when starting a business and keep looking for ways to maintain sufficient funds. Be conservative with spending and plan for sustainable growth so your business is protected if profits start to plummet.
Poor planning / not meeting with accountants
Continuous financial planning is critical to the sustained growth of any business. Without proper financial reporting, business owners are blind to financial trends and changes in the market. Partner with your financial planners and accountants and meet with them at least once a month to ensure your business stays on track.
Small business owners can overspend by trying to expand too quickly. Hiring new employees, renting new space, and upgrading equipment are all essential to improving a business, but owners need to make these decisions with caution when first starting out. Small businesses are especially susceptible to fluctuations in cash flow and this can lead to debt and major financial problems when combined with overspending.
Keep your business secure and receive tax benefits by filing as a corporation. Wanting to stay independent is understandable but incorporating protects your business and will help it grow. Filing as a corporation protects your personal assets in the event that your business runs into trouble. Learn about the different filing statuses – LLC, S Corp, or Corp – before you register.
Finally, be sure to consider your options for accessing working capital. Factor Finders offers invoice factoring options for small businesses at every stage of development and can set your company up for continued success. Read more about the benefits of invoice factoring for small businesses then contact Factor Finders for a free same-day quote!