No new business is devoid of setbacks and challenges. Even companies that go on to make millions of sales and find great success often make many mistakes in the early stages. While some business knowledge can only be learned the hard way, there are a few mistakes that can be avoided by learning from others’ experiences. Here are a three of the top financial mistakes to avoid as a fledging company:
1. Not Having a Cash-Flow Plan
Becoming successful takes more than just opening the doors or placing your first inventory order. A new business can require some serious working capital to do everything marketing to restocking inventory to paying employees. Making sure your company has enough cash reserves to get started is the first step, but planning what to do with those resources and any cash you acquire through early sales is essential to making sure your business STAYS open. This include making a budget and a plan for how growth will occur. Staying on track from the beginning will help in the future when it comes to acquiring new business funding through venture capital or business loans.
2. Having High Fixed-Costs
There are fixed-costs for any company, like office rent or employee salaries. Do not get stuck from the get-go with fixed-costs that are too high for your revenue to sustain. Carefully think through each fixed-cost before entering into a contract and make sure you can completely justify the price tag.
3. Forgetting to Keep Financial Tabs
Making a financial plan is not of much use if you do not follow through with it. The only way to follow through is to track your progress. This could include using financial software to keep track of your cash flow and your profits. Being able to go through these records can help you spot financial missteps as well as see where you have done well.
With a little research and planning, you can avoid some of the most common mistakes made by first-time entrepreneurs. This will help keep your business well-funded and on its way to success.
