Running a small business is not as simple as it sounds. There is a lot of work involved, especially since business owners have to run a couple of business operations by themselves such as customer service, sales, and marketing. Doing all this work can be tedious and place intense pressure on business owners, which could result in certain mistakes. The mistakes could affect the success of a business or push it into dire financial situations. It is therefore imperative for business owners to learn about common mistakes and understand how they can avoid them.
Here are a few such mistakes:
Taking up too much debt
Most business owners look for financing for a business to help their business grow. The funding that a business gets could be used for acquisitions, settling pending bills, or meeting daily business expenses among other uses. Fortunately, getting business loans is not such a hard task nowadays because you will find numerous lending institutions. In fact, some of the modern lenders have lenient terms.
When looking for a financing option for your business, it is essential for you to take up a debt that you can easily manage. As such, you should check the financial statements of the business to determine the position of your business. This helps you to make sound decisions when borrowing money. Taking up a debt that your business can’t handle could have serious implications.
Failing to pay or file tax returns on time
One of the common small business mistakes that business owners make is not filing tax returns on time. You need to know that when you miss the tax returns filing deadline, your business will be penalized. Usually, the IRS imposes a 5 percent monthly penalty to the business, which will continue to grow until you file your tax returns. Additionally, the IRS charges the business a 6 percent interest on the tax amount it has failed to pay. Therefore, it would be wise to get small business tax management tools or services to ensure that you file your taxes on time.
Mixing personal expenses with business expenses
When you start a small business, it is wise to separate the business account from your personal spending account. Unfortunately, most small business owners are unable to avoid this trap, and this could cause significant problems. How is that? You could make mistakes when you are filing tax returns because the financial books are inaccurate. This makes small business tax management a difficult task. The only way to avoid these errors is by treating the two accounts as separate entities for better accountability.
Disregarding the existing customers
A small business thrives because of customer loyalty, and loyalty only comes when you treat your customers right. A common mistake that small business owners make is ignoring their existing clients. They forget that without these customers, the business is as good as dead. As such, it is imperative for small business owners to improve their customer service and take care of their existing customers by giving them incentives. This will help to retain them and attract new ones.
The issues mentioned above are common small business mistakes. Small business owners need to learn them and devise methods of avoiding them. They are minor issues, but avoiding them could affect the success of the business.