For all your online business building info! , 2020-07-10 04:24:19
Common Money Mistakes Young Business Owners Make
Launching a business and keeping track of the finances, business and personal, can be challenging. This is especially true for young entrepreneurs, who often just starting to learn the business side as well as the financial side of doing business. So today we will look at some common money mistakes young startups owners make.
Below we will look at some common personal-finance mistakes that young startup owners make and of course how you can avoid them:
A common mistake young entrepreneurs often make is that they spend their business savings too freely and even worse, they often do this to look more professional. They tend to overspend on things that aren’t absolutely necessary, such as office supplies (nice desk for example) or on electronic gadgets. There is even a group that spend all their startup money before they even have a product or service to sell. You better spend your money on making a good product or service. Spend your money on building your business, not on things you don’t directly need to do business.
Young business owners often try to cut corners, for instance on legal and accounting advice. In the long run this can backfire, so hire an expert in the specific field that you need. For example an accounting mistake that is often made, is paying too much personal income taxes.
Not Paying Yourself
A common mistake that is often made is that young entrepreneurs don’t pay themselves a salary. They tend to mix personal and business finances. Don’t to this! Keep your personal and business finances separate. Give yourself a realistic salary and leave the rest in your business so it has enough to operate.
Plan for the Worst
Young people often think that they can take on the whole world or that they are bullet proof.
This is the same for young business owners and you can see it in their business planning. They tend to plan to optimistic instead of planning for the worst.
Mixing Business and Personal Assets
A lot of young business owners mix their personal assets with the business assets. For instance they rely on personal credit cards to front money for business money or even worse use business credit cards to buy things for personal use. They forget what will happen if the business ever gets audited?
Another example is that they often get loans from parents, family or friends, especially in the startup phase. They forget that the business could fail and that those people could lose their money.
Up and Downs
A lot of young entrepreneurs forget that business will know high and lows. Some months you will outsell even your own expatiations and the next month you could sell nothing! Often in those months where they sell a lot they become overconfident and they start spending the business cash indiscriminately. Instead of building a buffer for those low sale months. A lot of young startup owners have drained their business in this way.
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