First of all, congratulations on kick-starting your own business!
It’s a bold move many visionaries are eager to tackle, but considering the competitiveness of almost every possible market, it comes with its set of challenges.
However, your enthusiasm and expertise in your particular niche will not be enough once you hit those bumps in the road that are outside of your skill-scope.
One such realm is the financial aspect of running a business, which you need to consider when you want to register a company.
Without further ado, let’s go through five most common financial mishaps you can avert in order to save your company’s money as well as your reputation.
1. Neglecting your bookkeeping needs
The sooner you find a reliable accountant to handle all your business paperwork, from invoices to taxes and payroll, the sooner you’ll be able to refine your budget for growing your brand.
They will know the specific legal obligations your business has depending on your industry and your country, hence the need to have someone who has a firm grasp of your business’s financial needs and everyday transactions.
By releasing this complex financial task to someone who is indeed an expert, you will not just prevent a wide array of financial issues, but have more time on your hands to deal with other aspects of your business.
2. Not planning ahead
Have you decided that you will go it alone when it comes to financing your brand, or would you rather share the responsibility with an investor?
What about bank loans or asking your friends and family to chip in?
Considering the unstable nature of the modern-day economy and the fact that more companies keep popping up around every corner, you need a solid budget plan to prevent going under.
In fact, your budget is a significant segment and the lifeblood of your entire business plan.
You’ll notice that your budget includes every little pocket you need to invest in, from office rentals, delivering a robust web presence, all the way to acquiring customers, as well as employees.
Failing to map out your business budget can have you in trouble sooner than you think.
3. Failing to form a legal structure
It’s often the case among eager entrepreneurs that they start doing business well before they’ve officially formed an actual business.
This may be perfectly acceptable to a handful of customers whose trust you’ve already earned, but in order to truly have a competitive edge and protect yourself from a vast number of liabilities, it’s best to officially register your business and choose a legal entity.
For example, by separating your personal assets from your business, you’ll be able to protect them in case of a lawsuit in the future.
Then again, numerous tax deductions are available for companies and small businesses, and you’ll be eligible for bank loans and other investment options.
Finally, you can rest assured that when you register a business and opt for a suitable legal entity, you’ll also protect your brand reputation.
Customers appreciate being able to make sure that you’re a dependable business, and these legal steps are vital for establishing a trustworthy image.
Yes, starting a business requires hefty investments.
That, however, is no excuse to instantly buy that snazzy new laptop or a new car, for that matter.
You need to be able to determine precisely which items on your list are must-haves, and which are merely there for elevating your image.
The same goes for your staff. It’s wise to invest in people who will contribute to your business in a meaningful role, such as the aforementioned accountant, but you also need to create a smart hiring policy for your business.
Consider outsourcing for one-off projects rather than taking on full-time staff, or applying similar strategies to cut costs whenever you can.
5. Forgetting about emergencies
The business paradox most entrepreneurs struggle with is the idea of planning for the unpredictable.
You should assume that there will be some form of a disaster rushing your way when you least expect it, and use your emergency fund precisely for these occasions alone.
However, keep in mind that your disaster plan is more than just a budget – it should entail all the details, such as a step-by-step process in case of an emergency, your contingency plan, an insurance policy, and a line of communication.
Making even just one of these mistakes can set your business back significantly.
In order to prevent them, you need to avoid a “go with the flow” mindset that will have you basing your decisions on improvisation, but create a strong budget plan to support your business in every stage of growth.
Victor T. Miller, a Sydney-based business and marketing specialist who has expanded businesses over 5 years. I am a person who loves to inform people about the latest news in the industry also as sharing tips and advice based on my professional experience and knowledge.