Owning a business is more challenging than most people expect. Every decision you make has the potential to affect the bottom line, both short and long-term. Furthermore, the people you work with may not have the same vision for your business as you, or they might not have the same work ethic necessary.
For the same reason, hiring a good, reliable staff can be difficult as well. In the end, you can create a great culture with the best staff and have problems keeping your business afloat.
Not all mistakes are the learning opportunity you hope for. Some mistakes can actually lead to bankruptcy for your business. Here are some tips to help keep you from having to call a bankruptcy attorney.
Beautiful Office Space
Many people imagine their ideal office space location in a downtown hub where all the activity is. A cool office with a great location means real business, right? The reality is, prime office space costs money and adds to your overhead. If you’re just laying the foundations, so to speak, it’s best to start modestly until you can gain your financial footing. Most startups can run from home and are probably better off that way in the beginning. Hold off getting yourself into debt before your business is mature enough to handle it.
If possible, holding off on hiring full-time employees may be a money-saver. If you have a task that needs to be done that is beyond your experience, consider hiring a freelancer. You can budget for particular projects without taking on the overhead of an employee. Many small businesses don’t have the workload to support such an employee early on. Take your business one step at a time.
That being said, if your company is ready to expand, don’t hinder its growth by holding back. Investing in the human capital necessary to grow your business could make all the difference in helping your business reach its full potential.
Always make an effort to save money. Before you even make your first dime, set up these five accounts: income, owner’s compensation, taxes, profit, expenses and savings. Any money that comes into your business should go into the income account. Twice a month distribute the money among the accounts based on a predetermined percentage.
Don’t be afraid to run your business lean. You want to be able to pay your bills, but by limiting the money available for expenses you become more intentional with your spending habits. It also frees up money to put aside for emergencies. Instead of waking up one day and realizing your finances are a mess and you may need a bankruptcy lawyer, you can fall back on your savings to get through the rough patch.
When running a business, it is easy to get caught up in what others are doing. Your business has its own special needs. Maybe you don’t have that fancy office downtown or have the most expensive computers or the largest staff, but you do have a business that is turning a real profit.
If ever you find yourself struggling financially and may be considering bankruptcy, contact Brent George Law, or reach us at 805-494-8400. Our first consultation is free.