5 Financial Mistakes That Can Put You Out of Business
Don't make these deadly mistakes; they can cost you your company. In this economy, you need to be even more careful.
1. Raising insufficient capital. Even in a tough lending market like today, you still need enough capital to get started and carry you through until revenues come in. Make sure to estimate as accurately as possible what your start-up needs will be so you can find the money you require. Check the SBA's Finance a Startup.
2. Setting your prices too low. The old joke goes: "We lose money on every sale but we make it up in volume." This is no joke if you think you can overcome small margins by selling more. You may need to raise prices, even in a tough economy, if you are to survive. Check on what your competitors are doing so you aren't priced out of the marketplace. Find information about market pricing from the Free Management Library.
3. Failing to monitor cash flow. You've heard it before: Cash is king. You may have booked sales but if you don't get paid in a timely manner you can be short of the funds needed to pay your bills and stay in business. Use tools to monitor cash flow, such as MyBizHomepage. Take collection action if you notice that your accounts payable are aging.
4. Misordering inventory. Like Goldilocks, you don't want to have too much inventory on hand because this costs you money, but you don't want to run short and fail to meet customer needs; you want to be just right. Establish good inventory systems to help you stay on top of inventory needs. Consider using inventory order management software, such as RightOnInventory, to help in reordering.
5. Going without expert help. Usually, you need financial guidance, something you can get by turning to experts, such as:
-Accountants
-Financial planners
-Experts on employee benefit plans
-Bankers
Barbara Weltman, author of several books including her most recent, 1001 Deductions & Tax Breaks 2009
www.barbaraweltman.com
Copyright 2010 Author retains ownership. All Rights Reserved.
