Owning your own company or business is the dream of many who may end up turned into a nightmare because of common errors committed finance many entrepreneurs at the beginning of his career. It happens that sometimes the entrepreneurial drive has nothing to do with financial control and in fact many can not handle their personal finances well, the less they will do with the finances of the company.
Balance in red, debts to banks, payment of back taxes, lack of working capital, difficulty in getting money to expand the company, are some of the problems that an entrepreneur may be involved due to ignorance and lack of preparation.
There are many questions that assail the entrepreneurs who are drowning in numbers. Many of these errors could be avoided with some basic management concepts and a little common sense.
Inc. magazine has published a list of what those mistakes that are often in the financial area of the business, so if you are about to undertake a project this list can alert you before your dream becomes a nightmare.
1. Declare victory prematurely. Many entrepreneurs that after signing some contracts, act as if the money in the bank. For what they do to spend lavishly on behalf of newly signed contract and do not measure or calculate the risk that a client hold back.
Just that to happen to the finances of the company from becoming a disaster.
2. Borrow money needlessly. Whenever possible, use their own resources to grow. Knowing which credit lines are available is always reassuring. Without using that credit is foolhardy.
Loans are another reason for concern, especially when the company has no way to pay.
3. Not paying taxes on time. Many businesses make this mistake, believing it will be easier to pay off the debts later. Believe it: do interest and penalties to pay the debt becomes increasingly complicated.
4. Place low prices on merchandise. Lowering prices to sell more and earn more, is a strategy that works only in large retail networks. If you do not get into that pattern, it is better to sell less but at higher prices.
Thus the company will have profit margins well protected the brand value of their product.
5. Allow the purchase in instalments. When a business extends credit to the customer, is creating an unnecessary risk. If possible, sell for cash.
Not all experts agree on that point, but the truth is that many entrepreneurs fail because they fail to maintain a healthy cash flow, largely because of sales to run.
6. Place all your eggs in one basket. Never rely on one source of income. Having a single customer, who pays the bills, seems comfortable and desirable to that customer disappears, taking with him all the utility company.
Diversify to survive is key. That should be the goal of all start-ups who dream of growing up.
7. Hiring people indiscriminately. In the early years, reduce personnel costs is crucial. Check if your employees work with sales, create products or provide any service.
If any of them do nothing about it, there is something wrong with hiring.