Starting a small business of your own can be an incredibly fulfilling move for a keen entrepreneur with a bright idea. But sometimes the bread and butter of running your business can get buried under the responsibilities of navigating tax laws, understanding employment duties and ensuring you are fulfilling all other legal requirements.
To avoid your SME getting in a mess, take note of these 5 commonly made mistakes.
1. Using your business account for personal purchases
It’s incredibly easy to fall into the trap of thinking that it’s your business, so therefore the business accounts are your accounts. Business and personal finances should always be kept separate. No matter how small your start-up, open a dedicated business account and ensure you only use your business bank card for business purposes and vice versa. The odd mistake can be forgiven, but seriously mixed up finances will cause all manner of difficulties when tax season rolls around.
2. Throwing away receipts
Again, this basic mistake can cause trouble when it comes to totting up your taxes. Losing and throwing away those small slips of paper is easy to do – set up a simple filing system to keep everything in place, or try scanning them and keeping digital records.
3. Trying to be all things to all clients
You can’t do everything at once, especially when you are a small enterprise with limited staff, time and resources. Pinpoint what you’re good at and stick to it. Learning to decline requests from clients which would stretch your skill set to breaking point is just as important as winning business in the first place.
4. Not reinvesting your profits
Hedging your bets by taking profits out of the business is tempting. After all, it is money you have worked hard for. But keeping those first profits reinvested in the business is necessarily to secure long-term performance, acting as precious resources that could be vital in the future.
5. Expanding too soon
Expanding your business can be a clever move when the timing is right. But leaping into new premises and stockists or escalating the scale of your operation starts to sound like less of a good idea when you don’t have enough cash or equity to back it, or the key staff, business systems and supply lines to support such a move. Sitting down to make a thorough expansion plan and costing will make it clear whether your business is ready or needs to grow first.
With the right research, organisation and planning in place, your business will avoid these common issues. Protection is a key player in ensuring your personal finances won’t take a hit if your business suffers a loss. Hinks Insurance are experienced in arranging all kinds of business insurance for small and large organisations, so talk to us today on 01482 323424 for a consultation.