When it comes to starting a business, it’s all about the budget. Maintaining a healthy bottom line is the key if you want your fledgling venture to take flight and grow.
Too often though, small businesses make a variety of financial mistakes that allow their hard-earned money to leak away.
Here we present to you 6 financial mistakes that small businesses usually make:
1. Overpaying Their Taxes:
Every Business has a social and legal responsibility to pay tax, but some companies overpay simply by misunderstanding the complex system of tax codes or mismanaging their expenses.
Therefore keep track of all your receipts and pay your taxes wisely.
2. Being Dazzled by The Topline:
Its easy to be blindsided by the competitors and their extravagant spending, but the bottom line is much more valuable than the revenues at the top.
Therefore always be thinking about profitability before hiring and renumeration – small businesses operating with higher level of profitability, are stronger organisations overall.
3. Impulse Spending During The Startup Phase
When Starting a business, its easy to be swept up by the excitement of it all – buying a luxurious workplace, grand furniture or company cars. But before you know it, you’re eating into the bottom-line and your profit margin.
Therefore, you must always scrutinise every expense for cost-benefit; every penny should count towards improving the businesss in a measurable way.
4. Diversifying Prematurely:
After initial successes, businesses generally look to the future. But rather than investing in their own business, some owners decide to diversify before they are ready.
Therefore, before embarking on new business or diversifying your business model, ask yourself why you’re doing it and if it is good or not?
5. Confusing Being Busy With Being Productive:
If you think getting more from your business means running yourself ragged, your strategy is flawed. Money is earned or saved, by working more effectively with the resources you already have.
Therefore, always plan the strategies of your company in advance.
6. Not Keeping A Case Safety Net
The reality of any business is that cash flow experiences ebbs and flows. This is no issue if you have savings at hand, but if not, then one dry spell could be detrimental to your business.
Therefore, you must always be strict in maintaining an account balance equivalent to atleast two months of operating cost. That way, you can weather any rough patches and give yourself time to turn things around.
By Avoiding these common mistakes, you can protect your business’s future and transform it for the future.