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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.

For a lot of people, running their own business from home can be the perfect career choice. After all, it puts you in far more control over when you work, it gives you the freedom to work from home, and it takes away a lot of the pressure of having a boss staring over your shoulder all day long. Of course, just because there are a lot of positive things about it, doesn’t mean that it doesn’t also involve some challenges as well! One of the most significant challenges that you’ll face when trying to run a business from home is, of course, financial. Sure, you don’t have anyone breathing down your neck all day, but that means that the buck stops with you, including any and all financial responsibilities. With that in mind, here are some ways that you can avoid letting your home business leave you bankrupt.

Getting into debt

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There’s a pretty good chance that, unless you have a pretty hefty amount of capital just sitting around, you’re going to need to take out some kind of loan in order to get your business off the ground. This isn’t a bad thing by any means and many business loans offer fantastic rates, but far too often small business owners turn to creditors to solve all of their financial problems. This can lead to a lot of accumulated debt from a lot of different direction. If you have a look at this debt consolidation loan payment calculator, you can see that, by consolidating your debts, you can make things much easier for yourself. Sure, you’re still going to need to pay back the loan, but having a single, smaller loan rather than multiple debts can be a lot easier to manage.

Undercharging

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When you first start your business, it’s tempting to do anything that you need to in order to make yourself tempting to potential customers. This leads many business owners to make one of the worst possible mistakes: undercharging for products and services. Sure, you might think that by doing this you’ll be able to undercut your competitors but in reality, you’re just putting yourself in a position where you’re not earning a fair profit on your products. Even if it does work, eventually you’ll want to grow your business, and that will require higher earnings, which could lead you to want to increase your prices. However, by raising your prices, you’re likely to end up upsetting many of your customers who were used to paying the smaller amount that you’d been charging previously. There are plenty of ways to compete with more established companies, but undercharging is certainly not one of them.

Of course, this isn’t going to be the only difficulty that you’ll face as a business owner. You’ve got to be aware of just how much responsibility such an endeavor requires. If you’re not ready to deal with all of that responsibility, then running a business might not be for you after all.