Finances can be challenging, especially for those entrepreneurs who didn’t start as the numbers guy in the company. Being an innovator or salesperson doesn’t guarantee that you are a good administrator.
If this is your case, you should hire or associate with someone that does have those abilities. This can save you from ruin. But you should also get involved more because, even if you don’t have innate skills for it, you should know how to keep track of your company’s earnings and expenses especially if you are considering small business loans like the ones we found at Camino Financial, to fund your growth.
Take a course, ask your friends or even the senior member of your finance staff to explain how it all works because you’ll need to steer clear of some issues that can cost you your entire company.
These are some of the most common mistakes a business owner makes:
Misuse of small business loans funds
Some small business loans don’t have a specific requirement for you to use them. That means that you can spend it on whatever you feel like instead of, for example, computers. And some business owners use some of those funds to go on a family vacation or pay their personal debts. Why is it wrong? Because you’ll need to pay back that money and, to do so, you’ll need your company to do better. How will that happen if you didn’t invest the money in better equipment or a geographical expansion? Your holiday pictures will be great, but your company will sink. Use the money for what was intended in the first place, and always have separate accounts for your funds and the company.
Forgetting to pay
This goes for both small business loans and providers. Not having a written down schedule, reminders, good financial planning, and structure to pay your dues can make you go into default and having to pay extra interests, growing debt, and a bad relationship with your financial institution and your suppliers. As a consequence, you’ll end up having to pay higher prices for your operations.
Not keeping track of your expenses
Overspending can be very common. If you are not keeping track of them, you’ll never know when your funds will run out. A weekly or monthly follow-up on company expenses is exactly what you need to know how much you are spending in payroll, petty cash, suppliers of raw material, fixed expenses, and, according to that, understand your sales goals. It can even help you tighten some bolts, so your operation becomes more productive or leaner. This way, you can know how much revenue you have or how much you should have.
Not paying your taxes
This is not only a financial problem but also a very dangerous state for your company. This is an obligation that, if overlooked, can make you lose money in fines and surcharges or, in the worst scenario, land you in jail for tax evasion. And excuses like you didn’t know you had to pay are not valid. If you default, you pay more. If you keep it up, you face the law. There are online platforms that can help you get your taxes in order, but consider hiring a specialist that stays on top of it, so you are always up to date and on the good side of the authorities.
Not pricing right
If you do not price your product or service right, you can lose money instead of making it. Use a spreadsheet to write down every expense that goes into manufacturing your offer, add a revenue percentage, and then negotiate that price with your clients. That is the only way to be sure that you are not wasting money. Make sure that you have the best suppliers that have a ratio between quality and price, to keep costs low and revenue high.
Having a business is more than just opening up a website or selling some novelty. You’ll need to write financial statements and projections, plan and research, keep good track of the money and stop wasting it. Have a company with revenue and not one that gets by.