Not all business is going to be successful. Most of the small business fail because of financial problems. However, there some small business which are running strong and successfully. So, what’s the reason behind making a business successful? According to the Small Business Administration- half of the small business service for five years only and only one-third of small business can make it to ten years mark.
Financial mistakes are one of the reasons behind small business.
None of us likes to think about insurance. But it’s an essential factor that can protect your business. Most of the small business owner makes mistakes of not filing insurance. You need to make sure that you have the right insurance policies for your business. Insurance will help to protect your business.
Not Renewing Business License
Almost every business needs a necessary license to operate it legally. However, there is a misconception that small business does not require a license, it’s true, but it’s not applied for all country. It does not matter your business is small or large; you must register a license for doing business in a country like Malaysia.
However, there are lots of business who once register a license, but they forget it to renew. As a result, the legal authority imposes fine for not renewing the business license on time. A small business owner should, therefore, be aware to avoid these types of financial problems.
Lack of Reserved Money
One of the mistakes of a small business owner – they do not have any cash reserve. There are many ways to fund a small business, and when you raise funds, you need to have an adequate reserve of cash. You never know when the situation will appear, and if you do not have time to apply for an emergency, you should use instant cash.
Don’t forget to keep some money reserves also in your personal life. It is necessary to keep both personal and business finances separate. You need to take care of individual needs first and wait for your business to be a success.
Neglecting Business Credit
It is true that personal credit is important when a business credit is applied for the first time. But this does not mean that you have to neglect your business credit. Register your business with Business Credit Bureau and find a way to use the number when you complete the transaction. Pay what you owe in time.
Unorganized Accounts Receivable
Set up a system to make sure you’re paid. One of the most challenging situations to deal with as a business owner is to find out what to do when the customer does not pay. You can reduce these situations by being aware of the terms of payment – do you have the printed terms in each invoice and make sure they are clear when you create contracts.
Lack of Tax Planning
Your tax plan for your business may be different from your tax plan for your personal finances. If you are not careful, you may be charged with big tax account. Just as you work to reduce your tax debt in your personal finances, you also need to be at the top of your business tax. You can save a lot of money and keep your business longer. Pay attention to taxes and take steps to reduce legally owed debt.
Plan your business finances carefully to avoid the biggest mistakes and get a chance to succeed for a long time.