Starting a business is a time-consuming and costly process, and many entrepreneurs feel uncertain about the financial future of their startups. Securing funding and managing business finances in the first several years of business can be a daunting task, but if you follow these tips from Scott Crocket, Everest Business Funding’s CEO, you will have a better shot at making your business successful in the long run.
Tip #1. Know What Loan You Can Afford
As tempting as it can be to accept a bigger loan, taking out only what you need is the best strategy to follow. This way, you will not end up owing high monthly payments and ruining your credit by not making these payments on time. It’s better to wait and see if you actually need additional financing in the future and act accordingly.
Tip #2. Set Up Automatic Loan Payments
Life can get busy, so setting up automatic loan payments can be a lifesaver when it comes to your business’s financial health. Responsible repayment of your business loans is vital in retaining relationships with the lender and keeping your credit score high. There is nothing worse than missing payments and acquiring fees and penalties on top of them. If you believe that you will not be able to make the next payment, contact your lender and work with them to set up a plan that works for you and your business.
Tip #3. Create a Budget and Avoid Overspending
Entrepreneurs are usually very optimistic in their projections of when their business will make a profit. However, until you see a consistent flow of money coming in, try to stick to your budget and don’t get too excited about splurging on new equipment or office upgrades. Staying conservative with your money is always a good idea since most startups fail due to running out of money.
Tip #4. Keep Your Records Organized
Keeping records organized is the last thing on the list of entrepreneurs’ priorities. Unfortunately, this task often falls through the cracks unless delegated to an accountant or bookkeeper. Even if you are a small startup, regularly putting your expenses and income into a spreadsheet or accounting software is critical when the time comes to file taxes or find that one invoice you desperately need.
Tip #5. Pay Taxes on Time
Depending on the type of business and the state where you operate, your tax obligations will vary, but most companies are required to make estimated tax payments throughout the year. Setting aside a percentage of your profits is essential to ensure that your business doesn’t end up owing a considerable amount at the end of the year. You should also keep records of your business expenses to reduce what you owe at the end of the year.
Tip #6. Get Business Insurance
Many startup founders forget that just like they need to have insurance for their health and property, their business needs insurance also. Enrolling in the correct type of insurance for your business will help protect you in the case of business property damage, theft, or liability claims.
Tip #7. Have a Business Emergency Fund
Difficult times happen, as we’ve seen with the recent pandemic. Ideally, to help your business stay afloat during economic crises or downtimes, keep at least six months to a year’s worth of business expenses in your emergency fund. This will ensure that your business is financially protected no matter what the circumstances may be.
About Scott Crockett
Scott Crockett is the founder and CEO of Everest Business Funding. He is a world traveler and serial entrepreneur with an impressive track record in the finance sector. Scott has raised over $250 million in capital and helped create thousands of jobs during his 20+ year-long career in consumer and commercial finance.
