As a new business, you are no doubt aware of the importance of keeping on top of your daily financial planning. There’s nothing quite like making sure that you’re keeping on top of the pennies to take care of the dollars. This can feel liberating as a new startup owner because you feel like you’re doing everything correctly. How could you fail with such foresight?
This pride, unfortunately, can blind you to the real situation. Even the most stringent financial planning can fall at the first hurdle with a bad business decision. It’s important to avoid those as you would do if the plague were still around. It is as destructive to your business and can spread to your employees, your future entrepreneurial hopes, and also your reputation and infect them with malice.
It’s important to be aware of the worst financial mistakes you can make as a new firm, and how to avoid making them in the first place:
Poor Credit Control
Having poor credit control in your startup can strangle the firm before it gets chance to breathe. You might have some form of system in place that allows consumers to acquire your products or service as a ‘loan,’ and pay that loan off later. This often happens with firms you supply to, or bulk orders that you provide.
Without tight credit control, allowing the right people to take advantage of these offers can be difficult, and you might find yourself exploited by those with no real desire to pay promptly. This is why hiring a professional from a credit recruitment agency can be so helpful in giving you that competitive credit edge, and can defend you from the financial incompetencies of future deals gone wrong.
Overblown Promotions
To get yourself noticed on the local scene that your business is concerned with, it can feel tempting to make a large amount of noise and start a promotion that is too good to be true for potential customers. Offering sizeable free samples or sessions, having money off guarantees or simply over supplying orders in good faith all sound great, and they can serve as positive methods of marketing.
However, if you’re a new firm, you can’t afford to forego the profit you would have made off of these products to gain some potential word of mouth. Focus on that once you already have a stable and loyal client base. Don’t run before you can walk, no matter how profound your ambition.
Too Much Trust
As a new business owner, it can be tempting to want to be seen as ‘the cool boss.’ This might be spurned from a bad experience with superiors in the past. You might think this can help your employees feel comfortable at work, and as a result, continue to provide great efficiency. This isn’t a given, and it might make some employees feel they can get away with too much of a relaxed approach. This counts as a financial error because the wages you’re paying your staff should be immediately returned through positive work effort towards your firm, especially in these critical early days. If you feel like an employee isn’t working to the best of their ability, you should consider hiring elsewhere.
These financial considerations in mind, you should be well on your way to running the successful startup you always dreamed of.
