If you’re just starting out you’re probably excited and looking forward to achieving success. It can be easy to get caught up in the potential of new opportunities however, as with any new venture, cautious optimism is important. After all, there are a number of roadblocks that could easily arise, putting a stop to plans.
This is why one of the important traits of an entrepreneur is flexibility, in all aspects of their business. You must be willing to tweak your plans, goals, finances and other aspects without sacrificing quality and effort.
Although there are plenty of factors that you can’t plan for, there are some common obstacles that if prepared, you can easily overcome. Here are four of those common obstacles:
1. Denied a Loan
This is a very challenging obstacle that could present itself very early on when starting your business. After a number of turbulent years, financial institutions are still generally wary of taking risks. If you can’t show an iron clad and probable business plan or if you simply don’t have a lot of experience in the field, there’s a chance you will be denied a loan from a bank.
There are a number of strategies that you can use to avoid this. For instance, banks aren’t the only source of loans. There are industry associations, angel investors and many others who can help provide the fiscal boost you need. However, if a bank does present the best opportunity for your business, the you need to make sure you have all your ducks in a row before approaching a loan officer. By attending these meetings armed with an automated accounting system, you can show an accurate, real-time picture of the business across the board to quell any fears.
2. Tax Penalties
It is essential when starting out that you are aware of all the relevant tax rules for your business, locally, provincially and federally. There is so much to do when you open your business that it can be easy taxes to go unpaid by accident.
The best way to avoid this issue is to stay on the offensive – always be as educated as possible about the applicable tax laws. This could require anything from hiring an in-house accounting professional to leveraging a bookkeeping software. Many of these programs will allow you to set up reminders and attach reports on a centralized platform, so you’ll always have the necessary information at your fingertips.
3. Refused Credit
Many people have been refused credit by card providers at one time or another, however, and this can be devastating it relates to your new small business. In the early days vendors and suppliers might not be quick to give credit terms on good faith. This is more than an inconvenience; such a scenario can have poor effects on cash flow.
When vendors and suppliers won’t play ball, don’t be afraid to shop around. The best choice might not be the financial institution which offers the lowest prices.
But remember there is no harm in asking if the original partner is willing to negotiate, as opposed to severing ties. Making a move requires reports and hard financial data.
4. Money Mismanagement
You probably have more expenses for your business than you dared imagine. They likely have different due dates, different payment methods and each fluctuate in the monetary amount from month to month. This can make it hard to guarantee you have the cash reserves to call on when needed. And when in the infancy of relationships with suppliers, non-payment of bills will not be received favorably.
The complexity of your bookkeeping will go up with each new client and employee, so asking for help early on can prevent many headaches. By using a bookkeeping tool, you can keep track of what has historically been paid, when and to whom, and use this to better forecast the finances you will need for the future.