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Expert Answers to Biz Questions
Listen in! Pick up some expert advice to a reader's question that we selected from CyberSchmooz.
The Biz Question
Common Finance Mistakes That'll Sink a Business
Answer from our Guest Expert Rick Murphy
Running your own business is hard work, but when you throw in all the financial decisions that need to be made, it can feel near impossible. Running your business smoothly is a balancing act between making the best financial decisions for you and making the best decisions for your business. One mistake and your business can collapse into shambles. Here are four financial errors that you should never make when it comes to owning your own business.
Taking on More Debt than You Can Handle
It's normal to take on some amount of debt when your company is in its beginning stages so that your business can grow and prosper. However, if you take on the wrong kind of debt it can be detrimental to not only the financial wellbeing of your business, but your own finances as well. High-interest rate loans such as online payday loans often dig businesses deeper into debt than they can handle, so avoiding these types of loans at all cost is a good idea. To make sure you don't overload your business with more debt than it can handle, you should review all of your outstanding loans regularly and come up with a repayment plan that is doable and will get your business out of debt in the shortest amount of time possible.
Investing in New Ventures or Products too Late in the Game
When your competitors already offer a particular service or product it may be too difficult to get your foot in the door and gain customers if you offer the same product or service too late in the game. It's important not to fall behind the curve, so make sure to always be on top of what your competitors are doing at all times. You don't always have to be the first to offer a new product or service, which can actually be a disadvantage because you have to educate the public on the benefits and the usages, but you certainly shouldn't be the last.
Not Having Insurance for Business Risks
You may have the proper insurance when it comes to protecting your businesses' property, but don't forget about your businesses' potential liabilities to ensure that your business won't sink if you are ever hit with a lawsuit. Make sure that your business is covered for any curve ball that may be thrown its way.
Not Having a Large Enough Cash Reserve
Not having enough of a cash reserve to keep your business afloat if anything goes wrong is a sure way to see your business fail. You should make all efforts to have a satisfactory amount of saved money that can at least cover several months of paying salaries, bills, and other costs.
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