5 Common Mistakes Businesses Make
Running a business can be extremely rewarding, but it is also difficult, and there are no times that are more difficult than those that happen after a mistake has been made. Businesses lose time and money this way, and in some cases, they lose customers and their reputation. So it’s important to know what the most common mistakes are that businesses make and how to avoid them.
Not Separating Your Accounts
If you worked for someone else, you would have a bank account solely for your income. Just because you work for yourself doesn’t mean that you should forget that – you should still keep one account just for your income and keep your business account completely separate. That way, you can pay yourself into your personal account each month, and you know that what is in your business account is safe and secure. It can be easy to use one account for everything and overspend, causing financial issues for the company as a whole.
This is why having professional accounting software is a great idea because you will be able to see exactly how much money should be in your account at any time. If you only have one account, keeping on top of it will be much harder.
Confusing Profit And Cash Flow
Another common mistake is assuming that profit and cash flow are the same thing. Profit is important, of course, but it’s cash flow that makes the difference. Your profit is how much money you make after all your outgoings have been accounted for on any items or service. Your cash flow is the money going in and out of your business. You can have fantastic profits and a terrible cash flow and therefore be a failing company unable to pay any suppliers. You need to ensure that your cash flow is stable, and then you can work on increasing profits if you need to.
Overspending
Overspending is a huge mistake that can cost the company everything, but it is so easy to do that it needs to be considered carefully. It is especially easy if you have recently received a large loan, or a credit card, for example. Your spending power has just been increased, and so you want to buy all the things that you think your company needs. However, when it comes time to pay everything back, you can find yourself in enormous difficulties. Before you spend on anything when it comes to your business, you need to shop around to ensure you are getting it at the best price. You should also only buy things that the company really needs, not just things that you would like to have. There will be time and money to do that at a later date, so just be patient for now.
Not Keeping Records
A business that doesn’t keep any records, or doesn’t keep enough, will have problems. You need to keep close tabs on everything that is happening in your company, and keeping records is the best way to ensure that you are moving in the right direction as you can compare to the previous month or year. Without good records, you won’t understand where your business is going (or if it is even going anywhere), and you won’t be able to grow.
Continuing To Push Forward
Sometimes, even when all evidence points to the contrary, business owners keep trying to push their business forward when it’s not a good idea. Not everyone is cut out to run a business, and not every business is worth pursuing. In the end, it doesn’t matter how much work or money you’ve put into it, if the reports and audits show it’s not making any money – or not making enough money to keep going or for you to live on – then why keep trying? You’ll simply exhaust yourself and become stressed. Sometimes it’s better to cut your losses and try something else.
If you love the idea of business but aren’t sure running your own business is a good idea for you, what about becoming a business broker or some other job that offers you the best of both worlds (working in business without being a business owner)? There are many options open to you. Of course, folding your business isn’t always easy, especially when you have staff, but if you were to sell it rather than simply dissolve it, this could help you out hugely. It’s certainly an avenue worth exploring if you find yourself in this position.
Having said that, if your business is viable, then do keep pushing, and do keep moving forward. It will be worth every moment of hard work.
