FAccording to Fundera – genuine financial advice for small businesses, about 70% of the startup does not exist pass 10th year. There are numerous causes that led to failure, the main one of which is the risk from the financial mistakes.
In fact, many businesses have products and excellent service song is still to be closed because of the many barriers in addition to the expected. Therefore, from the beginning, the company need to control and plan specific to avoid these financial mistakes is not worth having. Let’s PSO points 4 financial mistakes most common of the startup:
Financial mistake of pouring money in the wrong place
With any one any business, capital is considered the blood stream to feed the living. When starting a business, many businesses are very excited with the financial planning long-term. They usually start pouring money into factories, office rental, long-term machinery and equipment. However, the capital of the company, starting a business is limited, after investing in the account “death”, the startup will dry up capital for production.
So, when to start a business, you should focus more on the investment in the production of products/services, to minimize the unnecessary costs such as office expenses, prepaid expenses, minimize the cost of purchasing fixed assets, machinery and equipment by the lessee to finance. You will find there are many machines just serve a number of needs that certain.
For example, a manufacturing enterprise backup charger on the car, the only focus cost in the production of products. don’t spend too much money to rent, lease, workshops, pre-paid, buried the capital, and then fell on shallow capital.
Wrong product price
This is a financial mistake not worthy of many startup. When starting to go into operation, many startups choose to take advantage of the resources available as borrow the ones where the production, office, or themselves business owners take delivery.
These costs or the business owners overlook when calculating the price of products, which leads to the calculation of product prices and profit margins are not correct. Therefore, when expanding investment, product prices do not compensate well the cost, leading to investment costs, the greater the revenue and your business will soon be closed.
Therefore, you must recalculate the price to price consistent with real production costs, at the same time, there must be a source of financial folded dozens of times now to upgrade from the scale “the words” to the scale of production medium.
Capital mobilization wrong way
When in shortage of funds, many startup looking to raise capital for your business and send the plan to the investors that they know. This will make them harder to find is investor enthusiasm, which again reveal the financial plan of the business.
Also for the founders too cautious, they do not dare to venture capitalists and lose the account capital contribution giant because of the fear of the acquirer if the scale of success. Do not accept the trade-offs when to transfer, receive capital contributions, operator assistance, many models business start-ups still lay lắt in small scale.
There is a plan to mobilize long-term funds to have enough capital for a business plan is necessary for business, avoid the prospect of “off the shoulder half way”. In addition, you should also have a plan for the divestment and there are alternatives to help startup more active in the financial management.
Goal setting is not clear
Many businesses always place the great expectations on revenue but don’t set clear goals for each stage. This is also a financial mistakes downloads. The leader should have a general overview and control everything in the framework, decisions, adjust the plan incomes and expenses, reasonable, in the right direction.
The statistics shows that more than half of startup can not survive after the first year for reasons considered mild, setting financial goals, lightly cost of sales compared to revenue. Many businesses dependent and have the “debt trap” from credit mistakes in financial control lead to failure unpredictable. In the beginning stages of a business, the role and leadership of the head should be focused on.
Here are 4 financial mistakes downloads the startup common. Consider the problem on the journey, starting your career will reduce a portion of the risk related to finance.
Reference services financial advisor business HERE.
Source: ISB
1 Comment