The Biggest Financial Mistakes Businesses Make & How to Avoid Them
Ask any business owner, and they will not lie when they tell you it isn’t easy starting your own business. There are many ways to do it wrong, but also many ways to do it right. The main detriment to a business usually comes back to financials. If you don’t have the money to run your business, the end result is an unfortunate closing of doors. Checks out the biggest financial mistakes a business can make, and how you can steer clear of them.
Keep Your Business Above Water by Avoiding These Easy-to-Make Slips:
1. Hiring Before You Receive Revenue
A big mistake a business can make is hiring a large staff before they have the money to support the payroll. Nothing will get you into debt faster than that. It is best to hire the bare minimum to support your business. Then once you have enough funds (and then some) to afford more employees, add them to your team.
2. Setting Unrealistic Goals
Setting unrealistic financial goals for your business is only putting stress on you and your staff. Set goals that are realistic, time specific, and measurable. On the other hand, undershooting your goal can make your staff turn lazy and not live up to your business’ potential. It is important to set your goals as high as you know you can realistically achieve. Then when you do better than you thought, you are left with a pleasant surprise and can increase your numbers for next quarter.
3. Solely Counting on One Major Payment
Many businesses make the mistake of holding their business up by a few major revenue sources. This will not only slow down your business’ growing process, but will put you at a major risk. If one of those major clients drops off, you are left with a big dent in your bank account. Although you may be busy serving those larger clients, it is important to have other sources coming through to provide a cushion.
4. Putting your Prices too Low
This may be an appealing tactic to your customers, but can be detrimental to your business. Selling fewer items and at a high cost is the best way to sell your products. Having a large inventory of low cost items will turn you into a company making very little money. Once you set the prices low, there is no going back. A delayed increase in prices will turn away customers who have become accustomed to your prices and your brand will lose its value.
5. Taking out a Bank Loan to Fix Debt
Finding your business in debt is a situation no owner wishes on their worst enemy. Receiving a loan from the bank is not a solution to this problem, it is making the problem bigger. Bank loans require you to put up assets as collateral, which can very quickly turn into a personal finance issue. If you have slow paying clients but need your invoices paid right away to take care of bills, invoice factoring is the appropriate route. Invoice factoring is an advancement on your invoices from a factoring company and then your customers pay the factor at their convenience. You will never have to put any assets up as collateral and can start and stop when you want to. This process leaves you debt free and gets you the money you need to grow your business.
Let Our Marketplace Help Your Business Grow
Most small business financial issues are unavoidable. If you take the proper precautions, your business will succeed without problems. One way to make sure you have the funds is to invoice factor. Our marketplace is filled with various factoring companies. We can assess your business, listen to your wants and needs, and partner you with the best factoring company in your industry. We want to see you succeed just as much as you do. Don’t let another quarter go by without having the funds you need grow.