When you're devoting all waking hours, blood, sweat and tears to launching your small business, the last thing you want to do is make decisions that lead to setbacks rather than successes. Consider these five pitfalls that can lead to problems.
1. Involving the wrong people. Not like in high school, when your parents warned you about getting involved with the wrong people who might lead you down an unsavory path. In business, the people closest to you may be the wrong people. Partnering with a friend or hiring friends and family can often lead to relationship strife, and therefore business strife. On the other hand, a stranger who possesses the expertise or know-how, but whom you know little else about, could be problematic down the road. Spend some time considering your partner choices for business and personal compatibility, and keep an arms length from well-meaning family members.
2. Over-spending on supplies and technology. The gold-embossed sign, coordinated desk supplies, the latest iPhone might be enticing. You want your new space to look cool and inviting, and what business doesn't need the most up-to-date smartphones and laptops? But are they necessary expenditures? Really look at your business goals and consider whether your current office supplies and equipment are enough to get you started. As you venture into a profitable future, start to assess what items would help with your bottom line, make your bricks and mortar shop more inviting to customers, or just make you or your employees happier. If you can justify the spending, then work the fringe purchases into your budget.
3. Spreading yourself too thin. You've held on to your original job while trying to make a go at your business and now both need your attention. Which do you attend first? If you are truly dedicated to making your enterprise successful, you have to know when to cut the cord and focus on your start-up. The safety net, while giving you courage to move forward, may in fact be holding you back.
4. Accepting capital you simply don't need. It's always good to have that extra funding in your back pocket. But with funding comes responsibility. Either you have to pay it back with interest or you've relinquished a percentage of your business to your financial backer. Before you accept someone's offer to help out, make sure the money is necessary, and you have a plan to make it boost business forward.
5. Charging ahead without financial certainty. There's usually a flipside to any piece of advice. While you don't want to be unnecessarily indebted, you also don't want to make purchases you can't cover, promises you can't deliver or find yourself otherwise in over your head. Any business owner should be aware of his or her financial status at all times, and able to access capital if the need arises or cut back on spending if the capital is not available. Financial certainty can change rapidly, due to changes in the market, damage from a natural disaster, competitor activity or even just a road closing down the street that redirects traffic away from your location. Have a plan to access funds, either via a reliable investor, small business loan or alternative funding solutions.
Making smart decisions seem easy in the big picture, but day-to-day decisions or changes may divert you from your plan. Questions about alternative financing such as cash advance or merchant cash advance? Contact a professional at Bizlender. Our personal account managers can help find solutions to your cash flow needs.
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