You’ve finally decided to take the leap. You’re going to start your own company. You’re excited to see just how profitable it can be, and you’re thrilled to be your own boss.
Don’t get ahead of yourself. A lot of new business owners make the same mistakes. To avoid them, do these three things while planning and forming your new company.
1. Make a budget.
This critical. It helps you survive when business is slow and keeps you from wasting money when it’s good. It also gives you an accurate picture of your real financial goals so that you can know when you’re on track.
2. Don’t use personal accounts.
Don’t just use your own bank account and credit card to make purchases or deposits — even if you’re the only employee the company has. Set up different accounts. Keep funds separate. Officially establish your company as a separate entity and connect those accounts to the business, not yourself.
3. Remember that emergencies happen.
You can’t predict all expenses and emergencies. If you have $10,000 in operating expenses for the next month and you have $10,000 on hand, you may feel great. But you’re also sunk as soon as the roof leaks or a client pulls out of a deal or your insurance premiums go up. These are just a few of dozens and dozens of potential emergencies, and you must be prepared.
When starting a business, it’s very important to do it slowly and deliberately, really taking the time to understand the process, the legal steps you need to take, and how to set the company up for future success.
Source: The Balance, “7 Biggest Money Mistakes New Business Owners Make,” Ryan Robinson, accessed Sep. 15, 2017