Whether you’re planning to start your own business or wanting to invest more time in your side hustle, it’s important to avoid making mistakes with your money.
It’s all too easy to dive into a new venture thinking you’ll make some extra cash, only to wind up losing money because you didn’t plan ahead.
In fact, most small businesses that fail do so because of a lack of money.
Here are some common money mistakes to avoid as you build your business.
Mistake #1: Not having a budget
Even for the smallest of side hustles, you need to have a budget.
The saying, “You have to spend money to make money” is true. From supplies and inventory to advertising and marketing, every business has costs associated with running it.
In order to have a profitable business, you’re going to need to have a budget in place that helps you prioritize your spending.
Some questions to ask yourself:
- How much money are you willing to invest in this business venture?
- How much are you willing to spend to increase conversions and sales for your business?
- How will you make the money to fund your budget?
Understanding the ins-and-outs of you business will help you build and stick to your budget.
Mistake #2: Not saving money for the unexpected.
Even if you follow all of the above advice and set a budget, there’s no guarantee that everything will go according to plan.
Every business will have unexpected setbacks and you’ll need a financial cushion in order to get back on your feet.
By setting aside money for emergencies, whether it’s a dip in sales or the need for supplies, you’ll be better able to weather any storm that comes along.
Don’t rely on credit cards or loans to make it through; save money for the unexpected.
Mistake #3: Financing your business with a credit card
Credit cards are an easy way to buy things without having any cash on hand.
However, they can be a major roadblock as you go about building your small business.
Because of the high interest rates and fees that come with using a credit card, it’s best to wait to use a credit card for business expenses until you have the cash on hand.
If you need a cash influx to help fund your business, consider a small business loan.
The rates are usually more reasonable than a credit card and you’ll be better able to plan your payback schedule.
Reserve your credit card for purchases you’ve already got the cash for so you can pay it off right away and avoid interest charges or finance charges.
Mistake #4: Not being willing to invest
Every successful business is going to have expenses, regardless of whether it’s a side hustle or full-time business you’re looking to scale.
While it’s ideal to minimize expenses, being able to recognize which costs are investments and learning to view them as such will help you think and act like a business owner.
One of the best ways to ensure you’re only paying for the things you need is to take advantage of free trials.
Being able to test-drive services before paying for them will help make sure you’re optimizing your expenses. Just remember to cancel any you don’t intend to keep using.
As a note, free-trials aren’t just good for managing your expenses, they may be a great way for you to pitch your own services!
Mistake #5: Not taking advantage of free resources
Being your own boss can be incredibly liberating, but it doesn’t mean you should reinvent the wheel.
There are plenty of options out there for services and resources to help you with all aspects of running a business and they’re available at no-cost to you.
To determine which resources will best suit your needs, do some research into what’s out there.
Once you’ve found what makes sense for your business, make sure to take advantage of them to ensure the success of your business!
Running a business isn’t cheap, but by avoiding the mistakes above you can make sure you keep the focus on building a profitable one.
Being attentive to your business finances will ensure you maintain the cash flow needed to keep your business going and growing.
Remember: it doesn’t matter how much money or wherewithal you have; everyone has to start somewhere.
The most important thing is making sure you keep learning and growing as a business person, and that you’re willing to make adjustments when necessary.
Understanding that there’s no such thing as a perfect plan or 100% success rate is the best way to avoid making mistakes with your money.