Entrepreneurs face any difficulty, and whoever drives it should be able to adapt to a changing world.
In the beginning, entrepreneurs make financial mistakes because every start is difficult. For that reason, the success of an enterprise is achieved if faced by determined and persevering people with the strength to face adversity.
Every project arises from an idea that awakens enough interest of some people to start a difficult and uncertain road that aims to bring this idea to reality. We know that statements, desire, and determination are not enough; a well-rounded set of capabilities and an investment to start are necessary.
Most Common Financial Mistakes when Undertaking
To overestimate the time of profitability. It is expected to think they will open a business and immediately have customers waiting. The truth is not like that. Building a company that generates profits takes time. Stability is achieved one step at a time, which takes months, a year, or more.
Mix Personal Finances with Those of the Company
It is a common mistake. It is something that those who initiate and even some entrepreneurs who have been in the business for years often do.
There should be a resounding no for this situation because it generates more problems than you think; for example, it makes it difficult to pay taxes based on your profits or losses, does not allow you to know the actual earnings of the business precisely, and hinders a future society, between fillies.
Neglect Accounting
It is well understood that accounting is not the most fun part of the business. You have trouble understanding the numbers in the accounting notebooks. However, many companies lose money and opportunities for improvement or investment because they do not address the figures.
As an entrepreneur and owner of a company, the accounting of your business is paramount; you should also think that it will be easier as you review.
The idea is to reserve a few hours weekly to evaluate the performance review invoices, receipts, accounts receivable, and pay. If you already have an accountant, you can ask him to teach you at least the basics of reading financial statements.
Hire a Bad Accountant
Related to the previous point, you must hire an excellent professional. This is essential for your endeavor.
With this, you can correctly declare your taxes, manage payroll properly, and offer financial recommendations based on your status.
Do Not Plan the Payment of Taxes
You receive the payment of taxes, you do not separate it, and you do not have the money now to pay. This constitutes an error that can risk the company’s stability.
Not constitute a fund for emergencies
Build an emergency fund for the company without mixing it with the personal fund, which can cover your business expenses for a few months without resorting to additional debt.
Dismiss insurance
Many people do not believe in insurance, but at the company level, insurance is essential because you are protected in case of any eventuality, and the responsibility to cover the payments lies with the insurance company.
In these cases, before the loss of equipment and materials, insurance becomes an investment that will be there for the moments of greatest need.
Ask for financing without a previous plan
It may seem obvious, but before getting into a loan, you must be clear about how to use the money. Ideally, the credits are used for investment to generate more money, new business, or a higher return.
The biggest mistake is to ask for credits to cover the monthly expenses due to problems in the flow and lack of liquidity because once the money is received, it becomes difficult to return the loan; it starts to be spent. The result is indebtedness with the same capacity to produce it, making it challenging to keep payments up to date.
Do not skimp on necessary expenses
When necessary expenses can make the business grow and generate profits, you must leave the stinginess aside, and these expenses are more an investment than an expense. They will bring you insurance benefits for a certain period.
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