Have you decided to fulfill a dream of years and finally start your own independent business? This is without a doubt an especially important and exciting decision that will change your life and therefore, just before you jump into the deep water, you should do whatever it takes for the new business, which you have planned for so long, to lead you to professional satisfaction and financial success. Is it possible to predict in advance the success of a business in its infancy? Well, to some extent. When the first steps in setting up a venture are carried out accurately, professionally and in a balanced way, the potential for success increases. At the same time, setting up a business is a complex and challenging process that, beyond the professional tools that the business owner has in hand, requires careful knowledge, experience, and financial planning. It is at this point that many of the new entrepreneurs who decide to start a business on their own, without business support, “fail”. Read about the common business mistakes that you shouldn’t ignore in this post…
Investing Too Much Capital
Some businesses get into trouble when they invest too much capital upfront and demand doesn’t materialise as they expect. Tesla is currently experiencing this issue as pointed out in an article by Robert Oates, managing director, Arbtech. The share price is high, yet the company doesn’t have the real-world business success to match.
Many of the world’s most capital-intensive companies are struggling to make big profits right now, even with low-interest rates. That’s because the real value in the economy is in the knowledge that people have, not the plant and equipment they own. That’s why Google, Apple, and Microsoft are so valuable, but AT&T and Ford aren’t in the same league.
Errors at the beginning of the journey
Sometimes these are minor mistakes that can be easily corrected. But, when it comes to poor, extravagant and ill-considered financial management, the chances of the venture “standing on its own two feet” and becoming a commercial success are almost nil. Most of these financial mistakes are common to businesses of different sizes and types: Those that belong to areas like industry or technology and those that deal in the areas of freelance, service and sales. Do you know how not to fall into the financial traps of novices? Here is a kind of “checklist” of common mistakes in conducting financial business:
Non-separation of bank accounts
Ask any business consultant – what is the most basic mistake that prevents a new business owner from starting “on the right foot”? The answer will be unequivocal: Managing the finances of the business through the personal bank account. Well, often, founders of exempt or licensed businesses (limited companies are required to open a business account by law) do not think that creating a business account at a bank in the beginning is a necessary action. You should also be well aware of the finances that a new startup will incur. For example costs of equipment, labor and more. Do you need something specific to purchase such as a solid carbide rod if you work within construction, or Dovetail metal cutters for engineering?
This is one of the most important recommendations of business consultants in the financial field: Treat the first year of business as a trial period, in which no large purchases are made. Whether your business needs a massive investment or not, be careful, calculated and rational. For example, it is not advisable to make significant private investments, such as buying a house, car, booking expensive vacations or producing large events. When it comes to personal expenses, try to be economical. And why is it important? Because the future may come as a surprise and your new business, even if it is already profitable, is still not stable enough for you to trust in the long run. Do not try to jump through hoops, invest in what is required, not beyond that. Be sure to look at all the pitfalls before making any huge financial decisions.
With the rise of fintech and digital currency having two or three banks is not a far cry for any individual or company no matter where you are based around the world! Get in touch to find out more…