Starting a business is definitely not easy. It requires a lot of passion and hard work. However, one thing which is of utmost importance is to get your finances right. Often, it has been seen that startup companies make some very crucial finance related mistakes that lead to unnecessary expenditure, thereby burning a hole in their pockets.
Lack of funds is one of the major factors that leads to the closure of a firm which would have otherwise started off as an enterprising idea. If you are a wantrepreneur or an owner of a startup company, you would definitely want to steer clear of these mistakes.
Going Overboard with Taxes
Of course, you have a social obligation to pay taxes. However, the system of taxation for business can often be quite complex leading to unnecessary confusions and mix ups. The result of this is that you may end up paying more taxes than what is required. Also, many a times you may not manage your expenses properly. This may result in miscalculating the amount that you owe to the government.
In order to save yourself from committing this mistake, getting professional help would be a great idea. Also, keeping a track of your expenses and understanding the taxation regulations would help in ensuring that you pay only what is due and not in excess.
Trying to be at Par with Competition
Just because your competitors spend a lot of money in advertising to make the customers happy does not mean you should follow suit. Remember that they have been around for quite some time and may have their finances sorted. As a startup, your focus should be on enhancing the profitability of the business and making more revenues. Hiring more employees than required and laundering away money on unnecessary expenses should be avoided.
As a startup, excitement is in the air, especially when your balance sheets show some profit. Getting carried away by the initial success and investing the hard earned money in buying gadgets and other things for the office can be a bad idea. Get a grip on your expenses and spend only on things that are of utmost importance. This is precisely how you should manage during the initial startup days and months.
As soon as your product hits the market and you get positive response from the clients you may be propelled to launch another project. But, if experts are to be believed this is a premature decision and should be curbed right at the onset. You just can’t go ahead and launch a new product. For that, you need to spend a considerable amount on research, development, marketing and launch, which is definitely not a good idea for a startup.
The wiser decision would be to wait for the first product to catch up and your firm to show profits before thinking of diversifying into other products and services.
Being Busy does not mean Being Productive
Just because you are busy all the time does not mean that your business is really productive. Sometimes, erratic working hours could be due to lack of organization and a proper strategy. However, if you really want to earn money, you need to hold a meeting with your staff and plan out realistic goals. You also need to zero in on the best strategies to achieve these goals.
You also need to have a little cash tucked away for the rainy day as there are no guarantees in business. Keeping an eye on all the expenses and spending diligently is the only way to ensure that you do not commit the common mistakes that most startup firm commit.
Published author, dreamer, entrepreneur and believer. When not running Contenuto, her freelance content vendor firm and writing the next novel, Deepa loves to catch up on her favorite US TV Shows. Loves spending quality time with her family and constantly hallucinates some 'me' moments in a far far away Austria.