Keep Your Company Afloat: Major Money Mistakes You Can’t Afford To Make
Of the many roles a small business owner takes on, often the most important and most challenging is managing the company finances. While you shouldn’t go into business for financial gains alone, there’s no escaping the fact that, without money, your business won’t stay afloat. The biggest issue with this is that most new entrepreneurs have no background in business finance, which can lead to some costly mistakes. Here are six you should avoid.
1. Using The Same Account
In the early days of your business, keeping your personal and company finances together in your usual account may seem like the most convenient option. Unfortunately, it can start to cause problems quite quickly. This is because it’s almost impossible to know what money is yours and what belongs to your company, making it likely that you’ll overspend one way or the other.
2. Pricing Your Products Incorrectly
It doesn’t matter whether you sell physical goods or some sort of service; Pricing your products incorrectly always comes back to bite you. If you overprice these items, fewer people will want to buy from you, leading to a lack of profits, but underpricing them will have the same result. To stay competitive and make money, you need to conduct research and find the perfect middle ground.
3. Ignoring The Essential Purchases
As important as it is to save money in business, some purchases are necessary to survive and grow. For example, if you own a food company, you may need to buy a refrigerated body, from a company like Truckcraft Bodies Ltd. If you didn’t make this purchase, your food might spoil, costing you money. Other essential costs include marketing and professional services.
4. Spending Without A Budget
While you will need to make some pretty big purchases now and then, you should never do so without consulting your budget first. If you don’t have one already, it’s absolutely vital that you create one sooner rather than later. This shows you just how much money is coming into and going out of your business, allowing you to remain profitable and find ways to cut costs.
5. Waiting To Seek Credit
Although it shouldn’t be done without thought, borrowing money is pretty common in the business world. Whether you need to make a large purchase or cover a few bills, there’s nothing wrong with seeking credit. However, you should ensure you do so before you actually need to. You’ll find that lenders are much less willing to hand out cash to a business that is struggling.
6. Not Preparing For Emergencies
Things go wrong in business every day of the week, a lot of the time costing companies more than they can afford to pay. It’s important to have credit available as a last resort here, but, wherever possible, you should avoid putting your company into debt. For this reason, it’s crucial that you build a business emergency fund and invest in proper insurance cover.
Money makes the business world go around, so keep your company afloat by avoiding the money mistakes listed above.