They say that preparation is key, and it’s is never truer than for any individual that is starting their own business. Every little detail needs to be put in place before you can get your product out there, your staff are hired, and even before you go to the bank for a loan. The finance aspects are major turning points for any business. It’s also a veritable Catch-22 situation, you need money to make money, and so the cycle can be getting yourself into debt to push your services a bit further. But you don’t want to end up getting into that debt cycle, which can be a struggle, not just financially, but emotionally on you. So how can you prepare your business to avoid these typical financial pitfalls?
Don’t Quit Your Day Job Just Yet
Yes, it’s very tempting to jump in with both feet, but the fact of the matter is that you will end up treading water for a long time. It’s better to build up a roster of clients and contacts alongside earning a full-time wage, so by the time you have got enough work as a freelancer that the scales can tip in your favor, then is the right time to set up your business.
You Don’t Need An Office
There are plenty of people that run a business from home successfully in the first year of their business, so take this on board if you are trying to find ways to cut back on expenses. The working at the kitchen table scenario may not be beneficial for everybody but you can find ways of renting out a small office from an existing business, or you could become a member of a co working space. As long as you have somewhere that brings minimal distraction, this will be the best way to focus your efforts and your finances.
Look At The APR
Of course, if you need to borrow money to cover a certain expense, or you are onto something that you feel deserves financial backing, there are various ways to get financial loans, but you need to weigh up the pros and cons, as well as the interest rates on each loan. A site like businesslineof.credit shows the options for a business line of credit and the various criteria you need to possess in order to be granted this line of credit, which shows there are various interest rates attached. If you feel that your business needs this financial injection in the short term and it will prove beneficial, only you can decide. But beware of the additional interest rates on top that could add to your expenses.
Use Limited Staff Where Possible
If in the first year you can get by with just you and your laptop, then great. If not, then hiring staff on an as-needed basis is far more beneficial for you and your bank balance. You can use plenty of websites like upwork.com for short-term freelancers. Beware about scaling up your business too fast, because you need a skeleton staff to bring everything off the ground, not a full fleet of workers.
Preparing a business for these pitfalls is a very common issue, but there are plenty of ways around it.