Everyone wants to be their own boss. But, running your own business takes a ton of effort, time, and most importantly, money. It involves a lot of sacrifice and many nights of burning the midnight oil to keep things running smoothly.
It’s fairly common to come across success stories about budding entrepreneurs who have managed to build their businesses into huge empires over time through a combination of sound business decisions, determination and sheer hard work. But, it isn’t very often you come across people who share tales of woe about how their entire world came crashing down on them.
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There is a barrel full of reasons why some businesses fail. The factors that lead to an entrepreneur’s eventual downfall are numerous. Sometimes the fall can be quick and sudden, while in other instances it could be akin to a car crash in slow motion.
At the end of the day, it all boils down to how you, as an individual running your own business, manage your own finances. Without good budgeting and proper financial planning, your business could sink faster than a sumo wrestler on a paper raft.
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To keep you from committing professional hara-kiri, we’ve put together a list of 5 terrible financial habits that could seriously cripple your business and dent your plans for world domination.
Piling up Credit Card debt
This is a strict no-no, regardless of whether you have a business to run or not. Many entrepreneurs make the mistake of running up huge bills on their Credit Cards in order to pay for a whole range of things like office supplies, computers, furniture and more.
It might seem like a good idea if you’re confident of paying off your Credit Card bills quickly, but if you don’t have the funds in place to wipe out these debts, your business will come to a screeching halt even before you’ve begun to oil its wheels.
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Failing to make loan repayments
If you’ve taken out a loan to get your business off the ground, another sure-fire way of dragging it down into the mire is by either delaying the repayments you’re supposed to be making every month, or by failing to make the repayments at all.
This could not only destroy your Credit Score but could put you in serious financial jeopardy, which in all probability will end up with you packing up shop with a mountain of debt on your shoulders.
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Blowing up your earnings
Just because your business has started fetching you returns in a fairly short span of time, doesn’t mean you should spend everything you earn all at once, especially when it comes to spending on frivolous things you or your business don’t really need.
Keeping a portion of your earnings aside every month could save your business from potential financial disaster and could help your venture ride out lean financial periods or a severe cash crunch. By ensuring that profits or earnings are only spent strictly on what the business requires to function, you’ll build yourself a nice kitty to tide you over should the need arise.
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Sure, competition is healthy, regardless of what field you’re in. It keeps you on your toes and helps you push yourself to achieve goals you never imagined you could. However, when running a business, being overly competitive to the point of obsession could spell financial disaster.
In order to stay relevant, many entrepreneurs walk the slippery slope of trying to outdo their immediate competitors by spending far more than their means allow them to. No one wants to get left behind while choking on someone else’s dust, but it would be extremely wise for up-and-coming entrepreneurs to err on the side of caution in order to keep their businesses from tanking.
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Making impulsive or rash decisions is probably the number-one reason for the collapse of many a business. One bad decision could snowball into a series of irreversible events from which there’s no turning back.
This is exactly why sound decision making should be the bedrock on which your business is built. Weighing the pros and cons before making any business decisions could save you from possible financial ruin, not just in the here and now, but also in the future.
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If you happen to run your own business or profession and find yourself guilty of any or all of these habits, then there’s no better time than the present to make amends. And if you ever feel like you’re slipping, all you need to do is picture that poor sumo wrestler floundering about at the bottom of the ocean.