One of the most rewarding experiences of an entrepreneur is starting a new business and seeing it blossom shortly thereafter. However, this not always the case for many start-up businesses because with great success comes huge risk, especially in terms of developing a business plan that leads to solid financial gains.
A good business plan will accurately include itemizing the cost of doing business. Many small and medium- sized businesses do not appropriately utilize financial projections, funding sources, tax planning, and marketing trends which represent some of the most common mistakes and ends up making business fail.
According to multiple research studies, the decisions made by owners within the first three to four months are the most important in achieving success or failure. A number of problems mainly connected to business owners and regularly neglected can seriously affect one’s ability to make sound decisions.
If you want to improve your businesses’ likelihood to succeed and be profitable, you need to avoid making the following common small business mistakes.
Not Enough Cash
Inadequate cash is among the top reasons a business fails. Startups tend to have unrealistic expectations about how soon their business will generate profits, and estimate their expenses too low. However, startups are certainly not alone at risk of failing as a result of limited access to cash.
For example, if your business gets off the ground with consistent sales, you can still face cash problems in various ways. The first way is not understanding the difference between having a great deal of sales and not getting paid when the sale is made.
You may be waiting weeks for your customers to pay you to cover expenses when your business invoices customers. It gets really challenging when one or more of your larger customers pays late or doesn’t pay at all. This puts your business finances in a bad position and maybe even your credit, if you paid for goods or services with a business credit card.
Not Securing Credit At The Right Time
Most people seek a business loan or line of credit when they most need it which turns out to be the absolute worst time. It becomes pretty much impossible to get approved for funding once your bills are one or more months past due. The best time to apply for funding is when your business is very sound to show the lender you are easily able to pay back what you borrowed.
If you were self-employed or owned another business for the previous two years you can seek help from a mortgage broker to get a bank statement loan from the equity in your home or investment property. Of course, this is based on your personal credit.
The type of business you operate, the purpose of the funds, and the loan amount will determine the type of credit to apply for. Based on what your requirements are, the available sources will range from traditional banks, online lenders, crowdfunding, and niche lenders.
It’s not recommended to rush or accept the first funding source that offers you cash due to the widely varying interest rates and terms. And if local banks reject your application don’t become discouraged. There’s a lot of online lenders. Some are even collateral based on your home or even digital assets such as cryptocurrency.
Business Tax Problems
Small business owners are not known for being up to date with the latest tax law changes or very good with taxes overall. Rather than spending time attempting to do your own business tax returns, think about meeting with a CPA or tax services provider who can do them for you so you can focus more time on managing your business.
Perhaps after a few years of noticing what your tax professional does on your returns, you can do the same in the future or continue to let the professionals handle it. Keep in mind there are many business owners who get into trouble with the IRS for tax mistakes they made years ago.
So, while you may feel that doing your own taxes is a form of cost savings, it could become a very expensive mistake later on if you or your tax software is not preparing the returns properly. Think of your tax professional as your insurance if taxes paid are not enough.
You are required to make estimated quarterly payments to the IRS as a self-employed individual or corporation in order to avoid substantial tax payments and penalties when April rolls around. It is very important to be accurate and plan accordingly for your type of business.
Lacking A Social Media Plan
Although a lot of social media applications are free, they still require time to be invested into using it effectively. Your time is valuable, so there is a price to pay. Set up a social media marketing plan or pay a professional.
Each of the major social media platforms includes fields for businesses to put their company and brand details into their profile for posting and engagement. You should address any negative comments from unsatisfied customers in a polite and professional manner.
You or your social media expert should quickly respond to comments and engage with your audience. Social media for a business is not just promotion, selling or controlling the messages.
Many just want simple information and have less interest than someone responding to a Google paid advertisement. The return on investment within social media frequently lower but it is still a necessary marketing channel for most businesses.
If you are interested in even more business-related articles and information from us here at Bit Rebels, then we have a lot to choose from.