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Common startup financial mistakes and how to avoid them

Managing finances for a startup is similar to managing personal finance. This is due to the fact that there is often a lack of managerial knowledge. It is really important to make smart financial decisions as a startup. While with personal finances you always have access to extra loan options like ElcLoans, with a startup it is much harder to get liquidities if problems appear. This is why you need to avoid the following common financial mistakes.
Not hiring an accountant

In an attempt to save business operation costs, we often see startups that hire accountants just for a limited number of tasks. It is actually better to have an accountant on staff because of many reasons. Your accountant person will be careful and will always let you know if there are some potential problems that can appear. At the same time, it is easier to save money when an accountant helps the startup. The company is more effective from a financial point of view.

No clue what is happening

One of the important things to remember about managing a company’s finances is that anything can go wrong at any point in time. However, there are almost always some signs that something bad is happening. When you notice a problem, it has to be analysed. The mistake is to not actually know what is happening with the finances of the startup. You need to always focus on company finances and know if everything is going well or not.

Fixed cost additions

So many businesses will end up with huge financial problems because new costs are added at a casual rate, without a good feasibility analysis. You may hire someone too fast, rent an office that is too large or even buy an internet package that is too fast. There are countless ways in which a startup can add costs and especially when business goes great, this happens often. This is a mistake because costs add up really fast - remember that business growth is not about the extra costs added - do be sure that you focus on stability instead of constantly finding new things to spend money on.

Not doing anything

Entrepreneurs are notoriously optimistic. Unfortunately, when you are way too optimistic all the time, it is really easy to miss out on the options you have to get out of a problem the startups have. A really common mistake is to think that things will get better and just wait it out. Reacting way too fast is usually a mistake but not reacting at all is a sure recipe for failure.

Get it right!

To conclude, it is vital that you know exactly what finances are available, what you spend money on and what should come in. The more you know about the flow of your company finances, the higher possibility that you will make good choices that will save the startup. Failure to do something normally leads to bankruptcy.

7 Apr 2017 17:20

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About Boris Dzhingarov

Boris Dzhingarov graduated UNWE with a major in marketing. He is the CEO of ESBO ltd brand mentioning agency. He writes for several online sites such as Tech.co, Semrush.com, Tweakyourbiz.com, Socialnomics.net. Boris is the founder of MonetaryLibrary.com and cryptoext.com.




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