Part of the fun of running a business is learning what is profitable and what is a financial burden.
There is no right or proper way to making a profit as each business leader will have their own style of trading.
Making mistakes in a company is part of any learning curve, and there is, unfortunately, no way of avoiding all errors.
But, there are occasions where some business leaders make mistakes of epic proportions. Usually, this is down to naivety, ignorance or just plain forgetfulness!
Could your business be making any of the following financial faux pas? Read on to find out more, and learn how to get around such mistakes!
#1 Hiring people without having money in the bank
Believe it or not, many businesses take on extra staff on the promise of getting a lucrative new contract with a client.
What they should be doing is waiting until an order is official before making such decisions.
#2 Borrowing money
If your business is doing well, your bank may well try to tempt you into taking out a loan or a corporate credit card with them.
If you don’t need to borrow any money, what’s the point of doing so? The only entity that will benefit from such offers is the bank – not your company!
#3 Not having an accountant
You might think that you can save money by doing your own accounting.
The truth is, it usually pays to hire an expert. Accounting for businesses is considered an essential expense just like insurance or utility services.
When you use an accountant, you can be sure they’ll know the best ways to save you money on your tax bills. Is that something you can be confident of if you did your own accounts?
#4 Not paying your staff on time
When you hire staff, it’s crucial that you pay them on time.
Your employees keep their end of the bargain by working for you, and you must keep yours by paying them for their services.
If you don’t pay them on time, they might assume your business is in financial turmoil. And, in a worst-case scenario, they might even sue you because you’ve not paid them!
#5 Forgetting to research the real value of your products and services
You can’t just pluck a figure out of the air and expect people to pay it!
Whenever you sell something, you need to research what people are willing to pay for it.
Thankfully, the task is made easy thanks to the Internet and the plethora of online tools at your disposal.
#6 Giving all of your customers a credit facility
Yes, I know, it’s often standard to offer repeat customers a credit facility.
That in itself isn’t a bad thing, as long as you know what you’re doing! Before you offer a customer a line of credit, verify they will have no problem paying you back.
The easiest way to do this is by carrying out a credit check on them.
#7 Putting all your eggs in one basket
Reliance on just one major client for your revenue is not a good idea and often ends in disaster!
What happens if your relationship with them sours? Or they decide they no longer need your products or services?
Is your business facing these issues? Share your comments and thoughts below.