Like any other business, startup business owners deal with different challenges. This includes marketing their startup, attracting the right target audiences, and making conversions. But among the most difficult things to handle is your business finance. Since you are still relatively new in the business, it can be quite easy to make mistakes that can ruin your budget and put your startup at great financial risk.
Making the right financial decisions is crucial for the success of your business. You don’t want to end up hurting your personal and business credit, accumulate debt, and spend more than what you make. If you want your startup business to thrive and succeed, make sure you steer clear from the following financial decisions.
Choosing the Cheapest Suppliers for Your Business
Many startup business owners would choose the first supplier that can give them the materials they need at the lowest price possible. Remember that the best price does not always translate to good quality. You might think you are lucky enough to find a supplier who can deliver your goods on time and at a cheap price. But if the quality of their offers is not good, know that it is your business that will suffer in the long run.
When choosing a supplier, be sure to shop for suppliers that offer quality materials at a reasonable price. For instance, you need to find a specialty electronic part seller. Ask for recommendations, do local research, and don’t hesitate to ask potential vendors with relevant questions. Find a reliable vendor that can deliver quality materials on time, is easy to communicate with, and makes use of ethical sourcing. Working with the right supplier can help you reduce your costs, increase your savings, and add value to your offers.
Skimping on Self-payments
Some startup business owners would skip paying themselves during the first few months of their business. Remember that even you have personal bills to pay. If you don’t set a monthly salary for yourself, you can end up putting all your money back into your business. You will find it hard to finance future unexpected finances. If your business fails to succeed, you won’t have anything to secure your financial future and will only cause you additional stress.
Make sure to pay yourself first even if you have more than enough savings to live a comfortable retirement. Treat this as your incentive for all your hard work. You can set this aside later for future expenses or investments. This will give you more reasons to stay motivated and committed to your brand.
Failure to Plan Your Taxes
Everyone has taxes to pay. When it comes to your startup, you don’t want to end up missing tax payments, have a hard time managing your cash flow, and make errors during filing. Have a game plan in mind and never take your tax filing for granted.
A licensed accountant can help you manage your taxes for you. This frees you up with the valuable time you can use in improving your business. They can audit your brand’s account, ensure timely tax filing and payment, and even reduce your tax costs.
Using the Wrong Business Tools
Business owners make use of different tools in order to support their brand. Some use different communication tools to interact and engage with clients. Some make use of tools that can help them expand their network and collaborate with other business owners under the same industry. Failure to leverage on the right tools can put your business at a financial disadvantage.
For instance, if you are still sending invoices manually, you can end up getting late payments. Errors are easier to make when you still make the invoices on your own. But with the help of reliable accounting software, you can start automating your invoices and start getting paid on time.
Ignoring Business Credit
Some startup business owners ignore business credit. This is especially true for individuals who managed to maintain a high personal credit score. But if you want to make it easier for you to separate your personal accounts from your business accounts, reduce business costs and easily secure funds when scaling your business, it is time you start building business credit.
You might find it difficult to separate your personal credit from your business credit. After all, you will need to open another bank account for your business and create a business entity along with other steps. But this can help you protect your personal finances if ever your business runs into some financial issues.
You’ve invested a considerable amount of resources just to set up your startup. Make sure you take great care of your finances if you want to achieve better results. Avoid these financial mistakes and you can increase your chances of writing a successful startup business story.