Common Money Mistakes Your Business Can Avoid With These Tips

Common Money Mistakes Your Business Can Avoid With These Tips
  • Opening Intro -

    Any number of variables can be the primary cause of a new business having to shut its doors, but most pivot on money management.

    Avoiding these common errors might help you to prevail.

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Relying on credit cards

Relying on one or more credit cards during early stages of developing a business creates debt with very high interest rates. Whether you have your own operating capital or have to get it elsewhere, credit card reliance for early operating cash isn’t a good choice.

Underpricing

You might underprice your goods or services at the beginning in order to stand out from the competition, but you might be apprehensive about raising your price or rates in the future for fear of losing new or existing customers. Reassess your pricing strategy every few months and study pricing strategy advice. You’ll find your base profit line, and then you can work from there.

Comingling funds

If you start your business by mixing your business funds and your personal funds, you’re creating difficulty in ascertaining how much money your business might be making or losing every year. Should you want or need business financing in the future, your lender will want to review both your personal and business finances. Separate personal and business bank accounts and credit cards and records increase the likelihood of getting a business loan.

Insufficient cash reserves

Any business requires capital to get started, but it might take a year or more to finally begin realizing a profit. Failing to prepare might be preparing to fail. Be prepared, and open up with sufficient cash reserves. You can also consider using LoanBuilider for fast business funding. You don’t want to be forced to close your doors six months after you’ve opened because you never really gave yourself a chance.

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Failing to make quarterly tax payments

By failing to set aside 18 to 22 percent of what your business earns for quarterly tax payments, you’re shorting yourself every quarter and scrambling for funds to pay penalties and interest. Some small business owners even use funds set aside for taxes for other purposes. Diligence in segregating funds specifically for taxes will help you avoid burdensome penalties and interest when tax time comes.

There are no guarantees in life or in business, but money management in both can be the difference between thriving or diving. Business is all about making money. Avoiding common money mistakes early on can keep you well above that dreaded red line while developing money management discipline too.

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Categories: Business Financing

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