You can never over-prepare for potential pitfalls in business, especially where your own individual finances are concerned. Going into a business uninformed about something as basic and essential as your finances can leave you open to all sorts of risks. This can therefore damage your reputation beyond all repair. If you can’t take care of your business capital, clients will be few and far between so never take a light hearted approach to your finances. Here are 5 life lessons about business finance that you may not have learnt in business school.
Invest Personal Money
Many business owners make the fatal mistake of presuming that they can borrow everything needed for business. Not true. In doing this, you are actually restricting your potential growth, not to mention killing the trust of investors. Business lenders will look to see if you have invested personally in your own business. If you’re not willing to back your business with your own personal toil, sweat and funds, how can you expect anyone else to feel passionate about it?
Don’t Underestimate Business Credit
You wouldn’t apply for your first mortgage with a poor credit rating would you? The same consideration should also apply to a new business venture. A weak business credit score can harm your company reputation so if you value your business, you must take your credit rating seriously. Take the time to browse the right vendors for you and hold on to the ones that can build and boost a healthy credit score.
Set Realistic Financial Models
Ambition is a marvellous thing, but setting the bar unrealistically high when starting out will never end well. Many businesses often rely upon ‘magical’ financial projection. In other words, impractical time periods of 15 years or more as opposed to a simple 2 or 3 year financial structure. Set your sights on more attainable goals – the best you can ever hope to do in business is to have simply achieved, what you set out to.
Don’t Get Complacent
When business is booming, it can be tempting to sit tight and assume things are plain sailing, but this is when you should become more ruthless than ever. In the wake of success and generous cash flow, many business owners need the backbone to protect their franchise. As a rule: if it isn’t broke, fix it anyway.
Consider Your Options
Lastly, carefully consider all the finance options available to you. Embracing a certain financial scheme now may not apply to you a few months down the line so take the time to investigate a financial solution that suits you. Ensuring that you will make the best possible decisions for your business.
Don’t leave your business finances to chance. Enlist the help of a professional consulting firm such as Gibson Hewitt. Whether you need help to deal with mounting company debts or simply need general guidance to keep your business assets in check, a team of professional financial advisers can ensure a healthy future for your business capital.