by Bridget Galbreath
You need to spend money to make money, and that is the adage by which all startup companies live. However, spending poorly can result in spending too much or too little, which can lead financial hardships and even a failed venture.
On the road to success, there are sure to be many bumps, but it is knowing how to avoid hitting these bumps that will land you on the path to success. Developing a budget is essential for the success of a startup. However, many people who are starting a business often find that they poorly planned their budgets.
If you are planning on starting a business, take a look at these common budget mistakes so you can avoid them and get on that path to success.
1. No Cushion
Too many startups make the mistake of putting all their eggs in one basket, so to speak. Too much is spent on the various aspects of the business, leaving very little, if anything, for a cushion. What happens if there is a hole in the bottom of that basket? All of those eggs fall out and you’re left with nothing to cook.
While you do need to invest money into your business, putting in everything you have can lead to devastating results. Instead of going for broke, invest wisely and leave yourself a cushion to fall back on, should you need it.
2. Spending Too Much on Branding
Building your brand is exceptionally important; however, spending a ton of money on achieving this task is never a wise financial move. You don’t have to spend a fortune to build your brand. Let your expertise, your knowledge, and proof of quality workmanship speak for itself and help you develop your business’s image.
3. Hiring Too Many People
While you will undoubtedly need help, hiring too many people to help in the beginning can lead to a huge downfall. It’s a portion of your profits that will eventually pay your employees, but you won’t be making huge profits at first. When you’re just starting out, you might very well be paying what little profits you make – and even out of your own pocket – to pay your employees. Try to take on as much work as you can yourself in the beginning and hire more help as you become more financially established.
There are a lot of risks involved when staring up a business, especially in terms of financing. Being mindful of common budgeting mistakes startups make and avoiding them yourself can help you keep more cash in your pocket and can lead you to greater success.
Bridget Galbreath offers startup advice for business, such as creating a budget.