There is an excitement as new business owner open their business.  In the excitement this can cause them to make monetary mistakes.  Borrowing more money needed, pricing product/services to low and hiring in advance before there is money to pay employees.  You do not want to make these mistakes.

Borrowing More Than Needed

As a new business owner there are a lot of enticements to borrow money.   Don’t!  Borrowing more money than needed can cause stress on the business, as well on the business owner and their personal finances. As a business owner you do not want your personal fitness affected.  Understand that loan companies and banks are in the business of making money. They will be happy to loan you these funds if you qualify.  Be aware of the amount you are borrowing; be aware of the interest rates and the length of the loan.

The best rule of thumb is to borrow what you need; borrow at the lowest interest rate you can find and only borrow what is needed to grow the business.

Pricing to Low

As a new business owner, you must understand you are not Walmart.  You cannot purchase your products in such large quantities, nor can you price your products/services as they do. Do not price products/services out of emotions or to please someone else.  This will affect your bottom line/profit margin.

Be sure to do your research.  Your research should include cost of materials, labor, and competitors pricing.  Setting pricing should include cost of rent/mortgage, transportation and marketing must be considered.  Pricing includes everything needed to get your product/services to market.

Hiring in Advance

As a new business it is understood that you cannot do everything by yourself.  This is true however you don’t want to hire staff or contractors before you have the funds to pay them.

Best practice is to set up a payroll account, depositing funds when available.   This account will be used to pay staff, contractors, taxes, and any benefits offered.  You want to keep this account separate from your general/capitol accounts.

If taxes are not paid this can cause added stress, interest and penalties owed to the IRS. If these are not paid the IRS can put a lien on your business, personal property or file criminal charges.

Another best practice is to hire when you have the funds to pay employees.  Hire staff when you need them and for supportive areas of need. Don’t just hire to hire. If you don’t know seek a consultant and do your research.

Don’t allow your emotions and immediate needs set you up to lose your business.  Think and make wise decisions. Watch your Business Grow and be successful! Follow us www.theonebes.com