Naperville Business Law Attorney on Avoiding Common New Business Owner Financial Mistakes

Choosing to become a business owner can be on the biggest decisions of a person’s life. Successfully running a business takes an incredible amount of dedication and hard work. However, there are also great benefits, both personally and professionally, to being a business owner. If you are thinking about purchasing a business or starting your own business, learn about the most common money mistakes that new business owners make so that you can avoid the same missteps.

Hope for the Best but Plan for the Worst

You would not be considering purchasing or starting a business if you did not have a reasonable belief in your own abilities. Having confidence in your business ideas and strategies is an important part of being a successful business owner. However, many business owners become overconfident and make irreversible financial mistakes as a result. They may incur a sizeable amount of credit card debt with the hope that profits will grow fast enough to cover the bills. Some owners may underestimate upcoming expenses like federal and state tax obligations. Another major mistake business owners make is not saving enough money to cover a major unexpected expense or emergency. Financial planners typically suggest entrepreneurs keep three months’ worth of expenses in a contingency fund at minimum.

Establish a Budget and Stick to It

You will struggle to become profitable without a clear picture of your financial situation and a budget. Abiding by a budget helps you clarify your financial goals and maintain financial discipline. Without a budget, it can be far too easy to let minor costs accumulate into major expenses. Many business owners fall into the trap of dipping into their business accounts for personal needs. The more you plan in advance how you will spend and save money, the less likely you will be to make spontaneous purchases or other careless financial moves.

Set Realistic Financial Goals

As important as financial goal setting is, it is even more important to set targets that are achievable and reasonable. The race to becoming a successful business owner is a marathon, not a sprint. It will likely take a long time for your business to get off the ground and become as successful as you want it to be. Many people use the acronym SMART to remind themselves to set goals that are specific, measurable, accountable, realistic, and time-specific.

Contact a Naperville Business Law Attorney

For help with business startups, business purchases and sales, contract drafting and review, and more, contact the Gierach Law Firm. Schedule a confidential consultation to discuss your business law needs with an accomplished DuPage County business lawyer. Call our office today at 630-756-1160 for an appointment.

Sources:

CNBC

The Balance Small Business