Avoiding the financial blunders of small businesses

By Vida Denning

Starting a new business can be an extremely exciting and daunting adventure to take up. The world is your entrepreneurial oyster and like all small businesses, the owners dream of world domination and financial freedom. It is possible. The world domination may not be as achievable as owners of small businesses may believe, but with some savvy financial education funding for small businesses can be achieved, however there are several mistakes that should be avoided to ensure long-term business and financial stress are kept at bay.

Credit too early

Using your business as leverage against your credit card way too early is detrimental to the future of your small business and is one of the key reasons for it going under. Using your credit card to fund your business means you are paying almost double for putting your product out there. Interest charges eat into any profits and additional funds you may bring in, and you eventually end up feeding a monster. Avoid this by putting any profit you make, back into the business and fund it from the businesses money, as opposed to a credit card which is not building your business but rather eating away at any future profits.

Credit rating

All small businesses are represented largely by their credit ratings. The funding and credit you apply for as a small business owner, will only be granted once your credit rating is determined and if it’s negative, your business will suffer for it. Avoid this kind of negativity by keep an eye on your personal and company credit rating. If small businesses want to grow they need to ensure their ratings are positive as that can be the fine line between success and failure if you desperately need the finances to take on a big project.

Safeguard credit documents

Many small businesses have been victims of fraud by employees or unscrupulous people. Ensure you keep all your business documentation in a private space away from prying eyes. It’s easy enough for someone to apply for credit on the business name if they have access to enough information which is gleaned easily from documents left lying around.

Pay attention to the fine details

Accounting for small businesses can be a painful experience, but it’s a large part of the backbone of any small business. Hiring a bookkeeper can also be helpful, but that doesn’t mean you shouldn’t be involved. Small details such as interest on credit cards for small businesses are fine details that can ultimately cost you a big fortune if you don’t take notice of it. Bookkeepers will help you stay on top of these little details while helping you keep your financial house in order.

As a prolific freelance writer Vida Denning has had to deal with her fair share of small businesses as she freelanced for a few at a new office space in Miami and San Francisco. She learned quite a lot about funding for small businesses.