Businesses, irrespective of their sizes, take up every requisite step to expand. In doing so, they are often found struggling with finances, which happen to be one of the core areas in enterprise infrastructure. This will even remain lifeblood for any organisation and a simple mistake or lack of knowledge in resource management can prove to be detrimental for its future endeavour. In this blog, we would like to point out certain mistakes that owners experience and at the same time, suggest some strategies that can help businesses to overcome such financial pitfalls.
Before you embark on a plan to start a business, there are some critical decisions that are necessary to make. It is very important to have personal cash in reserve. Moreover, if the cost of setting up a business is not that high, there is no surety that you will start earning profit from the moment you have entered into the market. However, you cannot ignore tax payment and other bills. This is when you need to meet up these expanses from the reserved cash. So, plan accordingly and save, to stand against unforeseen challenges.
Financial and credit crisis are somewhat unavoidable. The intensity of crisis may vary but every business faces this issue at some point of time. Before looking into the options like taking a loan from a trusted source or organisation, it is better to check the savings. If the amount is still high, you can go ahead with the options.
If you think deferring tax can help your finance, it is better to reconsider the thought. Looking at the long term aspect, this can affect you business as the amount keeps on increasing. So, clear off your taxes up front. If you are really thinking of saving at the time of taxation, get help from any of the experienced financial advisory services of India. For instance, if you purchase corporate owned life insurance, it can be one of the compensations along with deduction enjoyed for health insurance premiums. However, the laws and tax amount varies according to the size of the organisation. So rather than getting confused, hire a consultant to get a clear guidance.
It is very important to understand the meaning of saving and investing. By saving you mean, the amount which should not be lost and by investing you mean, the amount you are ready to use. Hence, do not invest money into something that you cannot afford. Moreover, if you are an emerging entrepreneur, separate personal finances from business finances. This reduces personal liability, adding creditability to your business and it even helps you in managing taxes, bills and other payments.
If you have a project in hand, try to raise an invoice and get an immediate payment of at least 10% to 25 % percent of your fee upfront rather than waiting for the entire amount of 30 days. This reduces strains concerning working capital.
Economic downturn can come up at any point of time and it is essential to take up prior precautions rather than strangle in financial instability.