As a small business owner, you are responsible for every aspect of your company. From making sure there is enough money to keep you operating, to ensuring the quality of service is as good as it can be, while also liaising with potential clients and customers – the list can feel endless.
One of the biggest responsibilities that small businesses face is their finances, and it is often where many common mistakes are made. With so many different financing options now on the market, it is important that you take the time to think carefully about the choices you are making and consider the consequences they could have on you and your business.
To provide you with some guidance and advice, we have put together some of the most common small business financing mistakes and our top tips on how to avoid them.
Don’t Wait Until You are Desperate for Cash
The best tip we can give you is to always stay one step ahead of your finances and stay on top of them. You should always be aware of your financial situation, as burying your head in the sand is only going to make your situation worse. Many small business owners delay in sorting out their finances and put off applying for any loans until they are desperate, which means they have less options available to them.
You will find that it is much easier to sort yourself a more favourable loan or financial arrangement when you aren’t desperate or in a rush for the cash. Therefore, even if you don’t think the business needs the money just yet, you can still apply for it before you plan on using it.
Not Having a Business Plan
While technological advancements have changed many areas of society and day to day life, they have also transformed how many businesses run and operate. For example, some businesses now entirely operate online. However, one thing that hasn’t changed, and that many people overlook, is the importance of a business plan.
If you don’t have a business plan when you attempt to apply for business finance, then you are putting yourself at a considerable disadvantage. A business plan not only provides any lender clarity over your current financial state and the status of the business, but it will also give you a sense of direction.
Not Doing Enough Research
Being a business owner isn’t easy, and if you are looking at the different financing options that are available to you, it can become overwhelming. But be sure to take the time to do your research on not only the best providers, but the best providers that offer financial support to businesses such as yours. For example, lenders like Cubefunder specialise in common types of small businesses, such as retail businesses, hairdressers, and auto garages. Choosing the right lender can make all the difference.
Forgetting About Hidden Fees
Just like in every other area of life, it is important that you always read the small print before you sign on the dotted line, and failing to read the terms and conditions could land you with a nasty shock in the future.
Hidden fees can include contract fees, application charges, origination fees, and even added administration fees that you aren’t told about until it is too late. Therefore, we urge you to always check the terms and conditions, and if you aren’t sure about something, just be sure to ask for clarification.
By following our tips and advice, you can navigate through your small business’s finances without finding yourself making the same common mistakes.