The main reason why you started your own business was to chase a dream, be your own boss and ultimately make money. With the exception of people who start non-profit organizations, making money is one of the chief reasons why people jump into the world of entrepreneurship. It’s okay to want financial success and strive for it, but it is critical to know what to do once you reach that point. Money mistakes and mismanagement are some of the most common downfalls for all types of business owners.
Once you start making money, you may be tempted to celebrate with a big purchase. Perhaps you want a new car or to go on a lavish vacation, but this may not be the right time. It’s perfectly acceptable to celebrate achievements and to spend your money as you see fit, but in the early stages of your business, it’s prudent to think carefully about how you can use your profits to support the long-term success of your company. One of the most common money mistakes people make is to spend their fist profits on personal gratification — being wise with your money means knowing when to hold off on those splurge purchases.
Another money mistake you want to avoid are missteps with taxes. Make sure you are setting aside the right amount of money you need to cover your tax obligations. At tax time, it can be a rude awakening to realize that you have to take money from your personal paycheck or other parts of your business to pay your taxes. Smart entrepreneurs prepare well for what’s ahead, starting with their first profits.
When you have enjoyed a certain amount of success, it’s easy to become overconfident. No matter what changes you make or creative new products you launch, it is crucial not to stray too far from what made you money in the first place. It is possible to expand and grow while staying true to your initial vision. Continue to meet the needs of your customers and you will continue to succeed.
Even with the best original ideas and smartest business plan in the world, money mistakes can lead to disaster. Be smart about your finances, even before you start making a profit, and it will be much easier to manage financial success in the future.
By Meagan Kerlin for Vertu Marketing LLC