Bankaholic: Entrepreneurs are the brave souls who make our economy go, or at least they were when our economy was actually going anywhere. Especially in this currently questionable financial climate, starting your own business is undeniably a dicey proposition. Start-ups go out of business all the time, often before they even have a chance to even really star up at all. The main culprit in the savage slaughter of these young establishments is the same perpetrator behind the bulk of our fiscal difficulties: Debt.
As an emerging entrepreneur, it is very easy to quickly accumulate debts that are substantial enough to kill your burgeoning business before it even gets off the ground. But it does not have to be that way. Take the time to examine your business workflow and you will likely discover a number of extraneous costs that can be eliminated to improve the health of your bottom line.
Here are eight common practices that lead to common results; learn to avoid them and you will be uncommonly successful.
1. Not sticking to the necessities.
As good a place to start as any, this is an all-encompassing, catch-all principle. Be a good bootstrapper by spending money only on what is absolutely necessary to operate your business.
2. Trying to do too much too soon.
If you jump the gun and attempt to launch too many projects at the same time, your limited capital will severely limit the time and budget that can be devoted to each distinct venture.
3. Not designing for scalability.
There is little worse than achieving initial success only to be undermined by your initial lack of vision and poor preparation. If your business design cannot be scaled up when you hit it big then you may be forced to absorb all sorts of unexpected expenses as you are attempting to redesign from scratch.
4. Failing to delegate.
Always remember, you’re the big idea man; don’t spend your time performing tasks that could be done just as well by a cheap hired hand.
5. Buying in bulk.
If you are starting a small business, don’t worry about having a year’s supply of copy paper on hand the first day that you hang up your shingle. You will have all sorts of expenses in the early stages of your start-up and you will need all of the ready cash you can keep your hands on.
6. Paying your bills late.
Whenever possible, meet your expenses with the cash that you have one hand. Rack up big bills on that shiny new business credit card and you could end up putting as much money towards accumulated interest and late fees as you are towards growing your business.
7. Throwing away your receipts.
It is difficult for many entrepreneurs to learn to separate their business expenses from their personal expenses, and this can end up costing a new business owner thousands of dollars in lost tax deductions. Be fastidious about saving your receipts and you will be in much better shape come tax time.
8. Failing to collect accounts receivable.
Sure you want to be the nice guy as you are starting your new business, but you need to make sure that you get paid as well. With the available tools for notifying clients of payments that are due, there is no excuse for not being on top of your accounts.
8 Easily Avoidable Causes of Business Debt [Bankaholic]