Common Spending Mistakes in Small Businesses

easy way

There is no denying that running a business is not always easy. There are plenty of challenges that reverse growth or halt progress. Precisely, if these challenges have a direct impact on business finances, it may cause several other risks that your business needs to face. In other words, managing finances is pivotal to stay on top. And if you’re a startup, finance management becomes as important as serving existing customers or finding new leads.

But, if you are like business owners who find managing money or bookkeeping a daunting task, you must know your common spending mistakes to stay ahead in the business domain. This is one way you can mitigate not only financial risks but also monitor the cash flow of your business. In other words, by controlling your spending and cash flows, you improve success chances and your profitability also.

We have enumerated a few common spending mistakes to help you steer clear of the financial management of your business.

Common Spending Mistakes in Small Business

1.     Failure in Keeping Personal and Business Expenses Separate

This might sound trivial to you, but many business owners when entering the business world make this mistake. Remember that you are in the early phases of your business, it is vital to keep the expenses separate. Although sometimes you need to rely on the personal finances to support business expenditures, you need to ensure that you h have a separate budget for your business.  Also, relying on the personal expense to fund business may cause problems in the long-term.

Once your business is operational and starts serving the customers, separate finances by making a separate business credit card. Make sure you have a separate bank account for your business. Doing so can be extremely helpful in managing tax problems and avoiding bookkeeping confusion subsequently.   It will also empower you to evaluate potential or existing cash flow issues and overall business finances before they turn into a major problem.

2.     Not Creating a Budget

You might find easy budgeting, but you cannot deny its long-term value that outweighs all initial stress and effort.

Creating a budget means analyzing how much have you earned and how much you can invest. An organized budget helps you make informed decisions about all business matters that include everything from supplies purchasing, staffing, and training to inventory. Conversely, when you work without a budget, all these tasks become challenging and may cause you significant cash flow problems. This particularly affects your business if it works with seasonal shifts, and you need this cash flow to maintain business operations during the slow months.

Fortunately, there is a wide variety of apps such as Scoro, Centage, and Adaptive insights that can help entrepreneurs not only create but also maintain a budget. Not to mention how these budgeting apps keep track of your business expenses and send you a handy report at the end of the month or year. This allows you to do preparations for tax seasons and review performance.

3.     Failure to do Financing at the Right Time

All business owners know that working capital is an essential thing to operate the business and increase its growth. If working capital runs low, your business might face a lot of issues that not easy to resolve it right away, and that may vary from unpaid bills, mounting fees to lower credit scores.  Not only that but making payrolls also become a challenge while tackling such issues. The situation may create problems when it comes to retaining your potential employees. The problems like staff shortage, inventory, and supply management lead to decreased revenues and unsatisfactory customer services.

Ultimately, the failure to meet your business financial obligations can impact different areas of business. That is why it is important not only to identify but also address the cash flow issues and to prevent poor working capital in a easy way. It is better if you seek assistance about taking control of financial matters before they become problematic for your business.

4.     Ignoring Poor Credit Scores

Recognizing the right time to consider alternative financing options like a line of credit or loan is important. However, your due diligence will not benefit you if you fail to qualify as a borrower. That means, it is essential to be vigilant about both your personal and business credit scores.

It is also important because your credit scores impact your ability to use financing solutions with suppliers or vendors. The arrangements often help business owners easy fill the gaps in their cash flow.  Moreover, with a good business score, you can reduce the insurance premium and interest rate on your loan.

Sometimes, your credit scores contribute to secure many affordable financing terms; particularly when you opt for loans, credit cards, and line of credit.  The phenomenon is confusing for many people since they are advised to keep their personal and business financing separate as an ideal practice.  

However, it is important to understand that when you sign a lending agreement as a primary applicant,  banks use your credits to determine your eligibility, repayment terms, and interest rates.  Customers are sent an annual credit report, and it is good to use it for your advantage.  Although the business credit report is hard to obtain, you can get them through various platforms.

5.     Overspending on Startup

When starting a startup, you are naturally optimistic that your business will produce good revenues if you invest a large amount in it. This optimism sometimes leads to overspending, which is another common spending mistake. To avoid overspending, research carefully about how much inventory or staff you need to take a good start.

Final Thoughts

When running a business, you may face many financial issues, and to plan for all potential scenarios is not easy. However, when it comes to cash flow, various things can be done to avoid cash flow issues. The most important thing is to be proactive in whatever approach you use to manage your business finance.  Besides this, budgeting and healthy credit scores play an important role in keeping business finance issues at bay.

Thus, the given spending mistakes are very common when a business is in establishing phase. However, you can avoid them by planning and evaluating everything in advance.

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7 New Year’s Resolutions Your Business StartUp Needs To Make For 2018

With the New Year on the horizon, now is the time to take stock of your business and make the necessary changes to ensure you have a successful 2018. While you may be making personal resolutions to lose weight, exercise more, or save more money, your business startup can also benefit from a set of resolutions that you stick to throughout the year. Try incorporating these resolutionsinto your company strategy for 2018.

Start showing your employees more appreciation

At the very heart of your business startup are the employees that work for you. Without their trust and loyalty, your company’s performance may begin to suffer. Show your support of your staff by appreciating them and the work that they do for you. You need to recognize a job well done and take time to say thanks when warranted. Your employees will be more receptive to your feedback and be motivated to do well throughout the year. Your business startup will benefit from added productivity with a well-appreciated team that wants to do well and exceeds expectations.

Listen to feedback from your customers

It can be easy to put blinders on and think that your products and services are serving your customer to the best of your ability. But, your customers are a valuable tool to help you improve your business startup and make your products and services even better with each generation. Ask your customers for feedback and truly listen to what they have to say. Make the changes that they are asking for and you will see your company flourish in the New Year as their demands are met. Use these feedback to your advantage and think of how it can benefit you to be better than your competitors going forward.

Place more focus on your budget

Taking a long hard look at your company budget can help you identify areas where you are overspending. Cutting these costs or finding ways that you can streamline your business startup without sacrificing your operations. It can allow you to go into 2018 a little leaner and save where in the past you were splurging. Having a plan in place that helps you stick to your budget in the New Year, will allow you to keep your spending in line and prepare for the large expenditures that you may need to make over the next year.

Get to know your numbers

Being a business owner means you need to get a handle on your financials and not just let your accountant handle matters. You should know all aspects of your business startup’s costs, profits, and overhead. Nothing regarding your financials should come as a surprise as you should have the foresight to see where your business is heading based on the numbers at hand. Make 2018, the year that you hone in on your company’s finances and become in control of the numbers that control your business. You’ll have better management of your business startup and feel more empowered to make decisions that impact your company.

Concentrate on customer service

Use the New Year as an excuse to overhaul your customer service approach. Placing more emphasis on customer service can help your business excel past your competition. With customers becoming more and more frustrated with a lack of customer service from many companies, you can make your business startup standout by going above beyond with yours. Take this opportunity to make it a priority throughout the year,and you’ll be amazed at the loyalty you gain from your customers because of how well they were treated by your business.

Embrace change

Don’t be stuck in your ways for 2018. Allow this to be the year that you look for factors to enhance your business through the realm of technology offerings that are available. Use these technologies to your business startup’s advantage and integrate them where possible in throughout your company. This can work to enhance the customer experience as they desire more ways to connect with your business through technology. It can also help to streamline your operations and make your business more efficient in its capabilities. Embrace change in 2018 and watch as your business startup moves to the next level.

Make a social media strategy

If you have been stalling with a social media strategy, now is the time to jump on the bandwagon and take full advantage of the platforms available to your business and customers. Social media is an effective way to reach your customers and promote your business with minimal investment. Your customers are already on social media,and you need to be theretoo. For 2018, social media should be your mantra,and you should develop a strategy to target your clients and market your company’s products and services on Facebook, Instagram, Twitter, SnapChat, and LinkedIn.

Be more environmentally conscious

Being more environmentally-friendly in 2018 should be a concerted effort that your business startup makes in 2018. Start by creating processes that produce less waste and recycle with abandonment. You may even benefit from a tax credit for your endeavors as you add more energy savings materials and technologies into your business operations. You’ll feel better about your contribution to the earth,and your customers will take notice of your efforts to be a greener company.

Make 2018, your year to succeed with these New Year’s resolutions that are sure to get your business startup on a better track. You’ll see your business evolve and transform in a positive way that benefits you as well as your customers. Be sure to stick with them for the entire year and adjust as necessary to align with your business vision and goals. Your 2018 can be more everything you desire if you take the required steps to create a strategy now for the New Year that allows your business to excel and meet the demands of your customer base. So, good ahead and jot down those resolutions for yourself and also for your business startup. Happy New Year!

More detailed information and useful advice can be found at Funded.com If you need to access our network of angel investors or a business plan for start-up funding visit Funded.com

Business Plan for Buying a Business

Business plans are developed for new businesses and when buying an existing business. Sometimes, entrepreneurs want to buy an ongoing business because they believe they can grow a business with new ideas and approaches. When buying a business, it’s still important to write a business plan to ensure that all aspects of the purchase have been considered and future growth is planned. In many cases, the business plan is also used to attract investors like venture capitalists or angel investors.

There are advantages to buying a business and those advantages should be highlighted in the business plan. The first advantage is the fact the company already has a financial record. That can make it much easier to attract investors if there is less risk of business failure. However, if financial projections are made by the current business owner, it will be important to verify they are not inflated. You will want to develop your own sales and expense projections for 5 to 10 years based on plans for business expansion.

Another advantage of buying an existing business results from the knowing the market already exists for the business. Current customers are identified and market proven, making it much easier to identify potential growth areas or new niche markets. Since the basic customer profile is already developed, you can build on it rather than starting from scratch.

It’s also good to enjoy the advantage of having access to insider information. Since you’re buying the business, the current owner is going to be willing to share a lot of information you would have to research if starting a new business. This information can be incorporated in the business plan, making it clear that the plan is based in solid facts and information.

Buying a business can give you a competitive advantage because the name, location, products and services, and customers are already in place. The business plan goals are to develop that competitive advantage to attract investors and to plan growth. It’s always nice to begin from a point of success.

Browse www.funded.com for more advice about getting your business funded

Enter the Angel Investors at the Startup Stage

Financing a small business is done in stages with angel investors usually funding startup expenses. The amount of startup funding needed is figured in the business plan financial section along with projected revenues. Startup funding is actually just one stage of business financing because a new business must be funded from idea conception to expansion.

Businesses operate on a continuum. Initially, seed money is needed to do the original product development, business filings, research and market survey. The  entrepreneur often gets the seed money from personal savings, family and friends, or personal loans. Some even use their credit cards or house equity. In other words, seed money usually comes from personal resources because at this stage the business is only an idea and the risk of losing the money is too high.

Once it’s determined that the idea can be turned into a solid business, the picture changes. The business plan is prepared and the enterprise begins operating. At this point, the first revenues are generated which establishes the fact that the products or services are market viable. It is at this stage, often referred to as the series A or first round investment, that angel investors are approached. However, sometimes entrepreneurs will look for outside investors who will actually pay for startup. In other words, the business doesn’t begin operating until funding is obtained from venture capitalists willing to accept higher risk investments.

Angel investors can also be approached during the second round or series B investment stage. This is the stage at which initial expansion after startup takes place and funding is needed for inventory, staff or marketing expansion.  Later expansions using angel investments would be referred to as series C, series D and so on. In this way, each investor knows by investment reference how their investment ranks in the history of the business funding.

Eventually, a successful business will look for a larger funding source like a bank to finance a major expansion. Angel investors play an important role in the launch of new businesses and enter the business at one of its most critical stages. It’s no wonder they are called “angels.”

More detailed information and useful advice can be found at http://www.funded.com/ Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.

What is your Business New Years resolution?

What is your business New Years resolution?

Say goodbye to 2011 and say hello to 2012 but before welcoming 2012, have you listed down your New Years resolution? It’s the beginning of a New Year and most small business owners are making their New Year’s resolutions about their businesses. But before doing your list you can back track your previous resolution and see if you were able to accomplish those. Pull out your business plan and any other planning documents such as last year’s action plan and review last year’s goals. After that you can go ahead and do your resolution. We have come up of some list that you can add on your New Years resolution.

Budget, Your budget doesn’t have to be in a fancy spreadsheet with graphs and charts. A simple, hand-written list of expenses and incomes can get you started, and can be expanded later if needed. A budget will help keep you organized and have a plan as to where all your money will go. Budgets should include the amounts that go to bills, your savings, as well as leisure and other spending.

Save, saving money may sound so easy but really, its not. Getting used to money-saving techniques can be a lengthy and involved process, especially for those of us who haven’t had much experience with it. It’s also a good idea to learn how to save more money and become more pennywise. Using coupons, looking for store discounts and sales, tracking our expenses, and utilizing a budget are skills many of us have learned to do without until recently. Once you become thrifty, it’ll be hard to go back to spending so freely.

Debt free, freeing yourself from debt. Whether this is a realistic and attainable goal is really dependent upon your financial and debt situation. The easiest way to living debt-free is to cut your spending and put the extra money in your budget towards paying off your debt a little at a time. The key is sticking with it.

Start investing; having an extra income or other investment can be your financial resolution. Even if you can only afford putting away $10 a month, you can still find cheap quality stocks or mutual funds one share at a time. They are a nice introduction to the investment game and a great way to begin to secure your future.

Keep track of your Tax record, this could be the hardest task you will encounter over the year but if you are using a computerized accounting program, this resolution should be pretty easy since the software will do the work for you. Enter your accounting receipts on a daily basis. Your software is only as good as the information you give it.

We all know how important business planning is, but it’s easy to put off in the press of daily events. Hopefully this year end checklist has inspired you to get to it and made your business planning easier. Though goals take discipline and motivation, all you have to do is remind yourself how bad bringing on debt is and how nice it would be to be able to retire one day.

More detailed information and useful advice can be found at http://www.funded.com/ Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.