Because of lack of experience or financial knowledge, every entrepreneur is bound to make some initial and crucial financial errors. However, these can be avoided by following some simple steps and seeking simple solutions to these problems.
Listed below are 5 common financial mistakes all start-ups make and how to avoid them:
I. Problem: Overpaying taxes
This happens because a lot of people aren’t sure about the taxes which cause mismanagement of the taxes to be paid and you end up paying extra.
Solution: In order to combat this problem, you should start keeping a track of the taxes you have paid and constantly monitor the future taxes that need to be paid. By taking these simple steps, you can save a lot of money which can be pumped into the business.
II. Problem: Spending impulsively in the initial days
Entrepreneurs tend to buy a lot of impulsive stuff during the initial days which might not be required later.
Solution: Start making a list of the things your enterprise cannot function without and spend money on buying only those things to save money.
III. Problem: Mixing business and personal finances
No matter what the situation is, your personal and professional expenditure must be separate. The money saved for your business shouldn’t be used for purchasing personal luxuries whatsoever.
Solution: Create separate bank accounts if required; one for your company and one for your personal use and never use one for the other.
IV. Problem: Incorrect hiring
Hiring the right kind of people is an art which necessary for a start-up to function smoothly which is usually not looked after by most entrepreneurs and leads to serious financial problems in terms of salary and money spent on training.
Solution: Hire an experienced human resources manager who can initiate the process smoothly.
V. Problem: Not setting clear goals
Often we tend to go with the flow and not set clear, focused goals to work upon which hampers the financial aspects as the expenditure goes haywire.
Solution: In the beginning, you must set clear goals so that you are aware of the amount you need to spend to achieve it.