When you first start out setting up your business, it can be easy to feel like a fish out of water. It can seem like everyone around you doing the same thing is sailing through the process, which can leave you feeling a little intimidated. The important thing to remember is that you never see the struggles and the lows behind anyone else’s business; only the achievements and the highs. In real life, there are plenty of common mistakes made by fledgling business owners in those first few months. So, it makes sense that to get your business off to the best start possible, you find out what these mistakes are so you can avoid them should they ever head your way. More often than not, a lot of them relate to finances. After all, money makes the world go round, and it certainly rules almost every aspect of your business. If you’ve been pretty lax with your personal finances in the past, don’t think for a second that you will be able to take the same approach with your company. Here are a few common slips first-time business owners make with their finances, so you know exactly what to avoid.
There is no way on earth you’re going to be clued up on all the ins and outs of business on your first try – but that doesn’t mean to say you shouldn’t be wary of scams. A lot of young entrepreneurs end up getting scammed by people posing as investors, collaborators and even customers, so it’s vital that you know the warning signs. Typically, if a deal seems too good to be true, it probably is! Take the time to perform background checks on anyone who comes into contact with your business and never exchange money or services without drawing up a contract first.
You might groan internally at the mere mention of taxes – but sadly, they are an everyday part of business life. However, you need to make sure that you are doing them right, as tax laws can differ from country to country and from state to state. It can also be worth having a system in place to help you keep on top of your taxes, such as sales tax automation software. This removes the need for an accountant (which can be expensive when you’re just starting out) but also means that you have all your tax information in one place, making it much easier to digest.
Starting a new business is exciting: there’s no denying that. But, what can run your fledgling company into the ground before it’s even launched is getting carried away with your spending. Sure, it would be great to max out on a cool and quirky office or treat yourself to a company car. But before you do so, stop and think about whether these kinds of purchases are integral at this stage. Be frugal at the start, and then one day you will find yourself in a position where you can simply go ahead and say yes to these things.