There is one primary reason why many people start their own business, and it’s this one: To make more money!
And why not? Starting a business could be the best thing you do today. It can boost your income, give you extra spending power, and give you the ability to give up your day job. What’s not to love? Well, there are all the expected risks for starters. Your business might thrive, but then again, it might fail, especially when you consider the statistics. And why do businesses fail? It’s largely because of financial issues. Still, it is possible to minimise these risks when you know what they are in the first place. We have listed some of them below. Consider each one carefully, especially if you are on the verge of starting your own business.
Risk #1: Giving up your day job
With a regular 9 to 5 job, you have a steady income. It doesn’t matter how large or small your pay packet is, you still have the assurance that there will be money in your bank account at the end of each month. Not so when starting a business. You are in charge of sourcing clients and customers, and the money you make will be variable. You are also responsible for paying your taxes, so budgeting is key.
Tip: Consider starting your business while still having the security of a paid job. By going slow with your business venture, you will gain valuable experience, without having to lose financial security. When you know the ropes, and when you have sources of income to help to grow your business, then consider taking it full time. You should also speak to an accountant, as he/she will help you to manage your finances (including your taxes), and help you to minimise financial risk.
Risk #2: Your financial mindset
You do have to adjust your financial mindset to give your business a chance. If you are too frugal with money, then you may never invest in what you really need to grow your business. If you are prone to wasting money, then you will never have the savings you need when an emergency arises.
Tip: It’s about knowing yourself and your personal habits with money. If you let any bad habits impinge on your business, then calamity won’t be too far away. Therefore, speak to an accountant for advice on saving and budgeting. Research the areas where you need to spend money and weigh up the risks of spending. And learn from experience where mistakes may have been made in the past. Ultimately, you are responsible for your finances, so be wise and sensible, rather than too frugal or too squanderous.
Risk #3: Losing customers
If you lose customers, you lose your profits; it’s as simple as that. They are the lifeblood of your business, and you won’t get very far without them. And if you upset them in any way – rudeness over the phone, lose their data, break promises – they will spread negative word about your business and damage your reputation.
Tip: Customer service is key, so research ways to keep your customers happy. Ensure you don’t fall foul of them and legal matters by adhering to regulatory compliance. Look at what your nearest rivals are doing, and vow to better them in order to keep your customers on your side. And put your efforts into marketing, to ensure you have a steady stream of customers using your service. By doing all of these things, you are minimising the risk of losing money because nobody trusts or uses your business.
Finally
Despite the risks, you may be in danger of restricting your financial future by deciding not to open a business at all. Still, be mindful of the advice in this article, and you will minimise any damage to yourself and your business. We wish you every success.
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