- April 14, 2014
- Category: Business
Many otherwise intelligent small business owners get swept away in their emotions and make critical mistakes. Financial and operational errors can cripple your venture before you even get started growing your business. Learn from the mistakes of seasoned veterans. Avoid these top 5 mistakes of small business owners to save yourself time and stress.
Renting Space You Don’t Require
If you are a new small business owner you usually don’t need to rent out space for an office. Bootstrapping entrepreneurs can start out conducting business in a home office. Save on your tax bills, boost your cash flow and save yourself a commute. Renting space is an unneeded, costly expense. Ditch the idea of renting a fancy office in a commercial building. Work from home.
One glaring mistake plagues many small business owners. Hiring employees before you need them saps your cash flow and bloats your venture. Why take on workers if you can cover the job yourself? If you feel overwhelmed consider hiring workers from a temporary agency to work for you on a contract basis. If your business slows down do not extend the temp worker’s contracts. Paying unemployment taxes, withholding state and federal income tax and paying for worker’s compensation eats into your time and cash flow. Hire contract employees until you absolutely need to take on full time staff.
Blowing Money at the Outset
Your small business capital is precious at this stage. Investing heavily in business cards, office equipment, supplies and furniture can cost you a small fortune. Run your business in Spartan settings instead of overspending too much money at the beginning of your venture. Bootstrapping your venture teaches you a valuable lesson in restraint. If you learn how to build your business from a disciplined space you’re setting the framework for a successful venture.
Expecting to Be Profiting Quickly
Profitability will likely come about in a year or two from the beginning of your venture. Do not burn through your savings or quit your full time job if you need these income streams to pay bills. Be cautiously optimistic. Dream big but back up those dreams with logical, sensible thinking to rein in your enthusiasm. Support yourself during the start up period by doing what it takes to generate steady cash flow outside of your business.
Taking out a Massive Loan
Borrowing huge sums of money to grow your business is a common error among entrepreneurs. Leveraging your financial future on a single start up is a risky proposition. Many small business owners fail to adopt a long term approach to running a venture. Taking a short term view of running your small business influences you to take huge gambles now without thinking about the consequences should your business fail. Being stuck with a $500,000 debt to pay off after you’ve burned through your cash stores and flamed out on the business front can be a terrifying experience. Grow your venture on a shoestring to avoid owing a heavy debt to any bank or financial institution.
Kelli Cooper enjoys blogging about all things business, especially tips for those new to the game.
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