Are you a small business owner who has been dreaming of big profit margins but has been held back by past financial decisions? Are you ready to commit to some financial changes if it means greater success for your business in the future?
If you’re like most of us, you’ve made some credit mistakes in the past. Depending on how serious your missteps were, you could still be suffering the consequences today. Unfortunately for business owners, past financial indiscretions can take a major toll on both your personal and professional life. Having poor credit can make it difficult for business owners to obtain the loans they need to scale their businesses.
Fortunately, there are a number of steps that can be taken to put your credit back in order and benefit your business. Here are four financial tips you should be using to your advantage:
- Create a Budget
It may sound like stating the obvious, but the vast majority of Americans don’t operate within the confines of a budget and many businesses are being run with little regard for balancing the books, too. While there may not be one right way to build a budget, every business owner does need to invest time into tracking the flow of money in and out of the company.
According to FreshBooks, there are five basic steps you can take to create a balanced business budget. With this advice, you can easily eliminate unnecessary expenses and prioritize spending on the things that matter most, like your Shopify SEO and social media strategy.
- Don’t Abuse Credit Cards
It may be easier said than done, but abusing credit cards is something you need to avoid at all costs. It’s relatively easy to apply and be approved for a credit card, and it can be tempting to run up the balance as business expenses begin to roll in, leaving you wondering how you’ll ever manage to pay down the debt. Worse still, credit cards can come with outrageous interest rates, making the amount of money you owe even more difficult to repay.
According to Fox Business, the average household has more than $16,000 in credit card debt. This is the result of poor spending habits, which can all too easily cross over into the business if you’re not careful.
- Get a Business Loan (But Only If You Need One)
Like applying for a credit card, you shouldn’t jump the gun and sign up for a business loan just because you’re starting a business. You should have a specific need and a plan for the money before you even apply for the loan and avoid the temptation of borrowing more than you need for the job.
According to Fundera, there are nearly 20 different types of business loans, which means that even after you’ve determined what you need the money for and how much you’ll have to borrow, you still have work to do before you apply. Make sure to compare terms and options and speak with a lending professional about your unique situation before committing to any loan offer.
- Don’t Travel Too Often
There is no denying the fact that travel can be one of the more enjoyable aspects of running a successful business, and while there is nothing wrong with hitting the road when the need presents itself, you don’t want to be traveling too frequently.
First and foremost, it costs money to travel, so you need to have room in the budget for each trip you take, and according to Certify, the average cost of a domestic business trip is approximately $950. That’s not so bad if you’re going to a quarterly conference or traveling to your manufacturer to create a new product line a few times a year, but if you find yourself needing to travel every other week, the expense can add up fast.
This is especially true if you fall into the trap of mixing business with pleasure on your trips; the cost of checking your golf clubs on the flight is an unnecessary expense that no company would cover if you were an employee traveling for work. Keep your business travel expenses to an absolute minimum, especially in the early days of your company.
While none of us is immune to the occasional financial mishap, it’s important to learn from past mistakes and take those lessons into the future to make better decisions moving forward. Once you’ve mastered these financial basics, you can start finding more creative ways to cut costs in your industry.
What financial challenges has your business had to overcome in order to become successful? Share some inspiration in the comments below.