(855) 558-8433 info@hedgecommcap.com

Many Americans still dream of starting their own businesses. However, a significant portion of new businesses fails within their first two years. Therefore, it is vital that you learn about the mistakes these business owners make and develop key strategies to avoid them before you open your small business.

Create a Business Plan

It takes time to create a well-written, detailed business plan. If you are like most, you may think that you should just open your doors and build your plan as you go. This is a mistake that many business owners make. Once your doors open, your time will be filled with other tasks.

In addition, a business plan gives your company its foundation. It outlines your purpose, vision, core business, mission, strategies, and analysis. It is a blueprint that keeps you focused on your business purpose. Any financing company you work with will require a business plan to show that you did your research and analysis, built a solid roadmap, and understood your market and competition.

Build a Rainy-Day Fund

As you begin to operate your small business, you may find unexpected expenses that could affect your ability to meet your obligations. Therefore, as soon as you are making a profit, start putting money aside. Work these savings into your budget so that a portion of your income is automatically saved in case of an emergency or unexpected expense. When you treat your savings as a monthly expense, it doesn’t become a burden to save. Ideally, you should have enough money in your business savings account to pay your operating expenses for at least six months.

Separate Your Personal and Business Finances

Whether you start out as an independent contractor or freelancer or you formally start a company, you need to separate your finances. When your finances are combined, you can become personally liable for business debts and other liabilities. This can place you in a precarious situation financially and legally.

This separation also helps you keep your records separated and organized. This allows your taxes to be easier to prepare and you can keep track of all the money coming in and going out of your business. Therefore, as soon as you apply for and receive an approved business license, open a bank account. Only use your business checking and savings to receive payments and pay business expenses.

You can achieve the American dream of owning your own small business. By researching common mistakes and developing strong strategies to avoid or address them, you place yourself in a great position for success.