Mistakes are a part of life, but if you’re a small business owner, there are many you’ll want to avoid. Keep reading to learn about five of them.
Mistake 1: Not Having a Business Plan
Would you drive somewhere you’ve never been before without directions or a navigation app? The answer is probably no, so you shouldn’t try to run a business without guidance, either. A business plan, as writer and business expert Rich Longo puts it, helps entrepreneurs “achieve short-term and long-term objectives” and is invaluable for obtaining funding from lenders and investors.
Mistake 2: Neglecting Tax Payments
Businesses are responsible for tax payments throughout the year—not just when tax returns are due. You can learn more about federal taxes for businesses here. Keep in mind that there may also be tax liabilities on the state and local level, too.
Mistake 3: Keeping Business and Personal Finances Together
Another mistake is mixing your personal and business finances. Be sure to set up a separate account for your business as soon as you can. You’ll thank yourself come tax time and whenever an accounting task is necessary.
Mistake 4: Not Taking Advantage of Debt
As a small business owner, you might be understandably leery of taking on debt. But you shouldn’t be overly cautious, either. For instance, responsibly used, a business line of credit can be a flexible option for many expenses. Business loans can fund expansions, equipment purchases, and other opportunities that would be too expensive otherwise.
Mistake 5: Not Having Emergency Funds
A small business that does not have emergency funds on hand may coast along for a while, but eventually, the unexpected will strike. Keeping a pool of money in reserve for unforeseen expenses is critical to the long-term success of your business. In fact, it’s so important that it’s a good idea to build saving into your business’s budget. A good starting goal is to build up six months of operating expenses in reserve.
Be sure to come back to our blog soon for more business advice from Lionheart Comercial Capital.