Starting your own business is easier said than done. For one, there are a lot of things that you have to consider, and that includes getting the right paperwork done, setting it up correctly, and ensuring that you keep it up and running. These are good to hear on paper; but if you put that into actuality, you have to be ready to go through a lot of roadblocks. The challenges of being an entrepreneur are far and wide, and there is nothing else that you have to do except to focus on what you are doing. If you want to be successful, you need to focus.
Many people dream of having their own business that others even try it on their own while keeping a 9-to-5 job. But in time, many realize that maintaining a day job is way easier than keeping an enterprise. It is because, with a business, you need to ensure things are working efficiently from start to finish. From the day your business opens until the time it closes, you need to ensure that everything is going smoothly.
The situation is different from when you need to work for a company. When you are an employee, you only focus on one thing, and that is your job. When you work for the accounting department, you don’t have to worry about administration, operations, sales, and marketing. And when you work for marketing, you don’t have to worry about lapses in the operations of the business. Imagine the stress of someone managing the entire enterprise. He/she would need to keep an eye on every department of the company. No wonder why many entrepreneurs say they experience a lot of stress day in and day out. Although the returns are high when the conditions are favorable, the stress gets insurmountable at times.
Many startups fail in the first five years of operation because of money issues. Many think that with good startup capital, they can ensure a smooth-running enterprise. Unfortunately, that is not always the case. The company’s funds run out sooner than expected, and the owner is forced to close the business despite his/her drive to continue with it. You wonder, how can this happen when you keep close watch of your finances? And how could this happen if you are careful with your company’s spending?
As you can see, managing a startup’s finances is more difficult than you think it is. It is not like managing household expenses where you only have to think of income and cost, and then checking how much you save in a month. With a startup, there may be things that you are doing wrong that is causing your business to fail. Most often, mismanaging your finances does a lot of harm to your business.
As every startup owner would want it, you want your business to succeed. But before you go any further, you need to ensure that you are managing your finances well. Here are some of the common saving mistakes that startups are making that you need to take note of. Avoiding these can save your business from bankruptcy:
Mistake no. 1: You don’t know the fundamentals of accounting
When you are an entrepreneur, you are in the business of making money. Therefore, you need to ensure that you only don’t know the ins and outs of your products and services. Aside from that, you also need to know how to manage your accounts. You can visit TempCFO to get an accountant or bookkeeper, but you, as the owner, must know how to handle your enterprise. You cannot merely put accounting as your last priority because it is, in fact, the lifeblood of your business.
If you are not a business or accounting major, you can consider enrolling in a short course. You need to know the basics, so your staff will trust that you know what you are doing. Also, it will ensure that you know exactly what is happening to your enterprise finance-wise.
Mistake no. 2: You get excited about investments
For any person, having passive income is exciting, right? Anyone would love to have money without having to spend countless hours into earning it. Any person who would be given this chance will most likely take it. That is why the idea of investments sounds exciting. However, when you are a startup, you work with limited capital. That means you don’t have much of a liberty to do anything you want with your money. Every cent counts when you are a startup, so you need to ensure that you are spending your money wisely.
Short and long-term investments call for a lot of risk-taking. When you are a startup, make sure that you know the risks involved. Better yet, hold off investments for now until you get to the business size that you want to be. Reach your goal first of going beyond a startup, and when you start making money to spare, that’s when you can begin venturing with investments.
You don’t have to be a startup forever. Aside from being passionate about your brand, you need to know the ins and outs of accounting. Also, it is best to avoid the common saving mistakes that startups are making, so you can grow your business to where you want it to be.