Handling the finances of a small business is a job all on its own. You have to deal not only with the day to day of expenditures and cash, but also with assets and financing. It can be overwhelming, and the potential for mistakes is huge. Knowing some of the most common blunders to look out for can help you avoid them, however.
Ignoring the Details
The fine print is there for a reason. It contains important information, and generally it is information that the other party is hoping you will not see. Details such as fees, penalties, and more are often included in the fine print, and ignoring it could be costly.
Preparing for emergencies before they happen is much better than taking out an emergency loan. Setting aside a budget for the unexpected and a line of credit available as backup will ensure you do not have to take out a costly loan to handle such issues. Of course, a line of credit is still financing, but if you get it now, when you don’t need it, there is time to shop around while securing the best rate and terms.
Taking Out a Loan for Extra Cash
This is a mistake that is more common than you may think. It can be a scary thing when receivables are slow and the cash isn’t flowing. A loan is an expensive and time consuming way of handling this. A better option is the aforementioned revolving line of credit. It is always available for use as needed without the added time and cost of applying for new money whenever necessary.
This is a bad deal all around. If your bookkeeping is sloppy, or worse, non-existent, you will not know what you can afford as far as financing. Further, you will not know where you stand with current financing, or even if you really need financing or not. In addition, you will have no clue whether or not you are making money or where your money is going.
Not Taking Care of Your Personal Credit Score
You may not realize it, but your personal credit score can be affected by your business, and it can affect your business as well. If you are using personal money to finance your business, be certain you handle things in a way that you score doesn’t suffer, and if it does, know that it could affect your ability to obtain small business financing.
Settling For the First Loan You Can Get
Shopping around is as important in lending as it is with any other product or service. If you want the best deal you have to comparison shop. Taking the time to do so can pay off big in the end.
Not Paying Attention to Lender Requests
You know those letters you get from your lender from time to time that you just throw in the pile with the rest. Don’t do that. If they happen to be asking for information, or requesting contact, or anything else that requires action, ignoring them can jeopardize your current loan and ability to obtain a loan from them in the future.
Using Credit Cards to the Max
If you max out your credit cards, you are going to struggle to keep them paid down. Interest may very well put you back up to the max without any additional spending.If you have them maxed out it is likely you are relying on them, and now there is no room for additional spending anyway. Do not get caught in this trap.
Not Knowing What You are Looking For
Basically, you should do enough research to know what is out there, what you are eligible for, and what you want. Knowing this ahead of time will reduce your time spent looking for a lender tremendously.
Not Having a Plan
Once you have your funds, what happens then? You probably know what you are going to spend the money on, but you need a plan, steps to follow, in order to achieve the goal the funds are meant to help you a achieve in the most effective and efficient manner possible.
Biz2Credit can help you find the perfect lender for your needs, saving you time and money in the process.Visit Biz2Credit.com today to find out more.