Common Startup Traps to Avoid That Could Lead to a Chapter 7 Bankruptcy
In the 21st century, building a company from the ground-up is every budding entrepreneur’s dream. But things aren’t always peachy when it comes to doing that. Starting a business of your own not only requires your complete attention, devotion and untiring efforts, but it also requires you to make really smart decisions. And when we talk about smart decisions, we mean decisions involving the finances of your firm, because that is what’s keeping your business afloat. More often than not, start-ups fail in this day and age, and the biggest reason for that is the owners of these businesses exhaust their money and go bankrupt. So how can you avoid committing the same mistakes that others commit, and prevent from going bankrupt? Simple, by reading this article!
Handling finances is like trying to balance on a seesaw
Imagine expenses and revenues on two opposing ends of a seesaw. The heavier side goes lower, and consequently, it pushes the other side to the top. When working to grow a start-up into a full-blown company, expenses need to be considered cautiously. The initial phase of everything, let alone starting a company, is the hardest and the phase where you have to spend the most money. In such situations, you have to carefully consider your choices to develop into a prosperous company in the future. This means balancing your expenses and revenue so revenue is heavier.
If you are a freelancer, you can work alone, but when you are starting a company, you quickly realize that this isn’t the case. You’re not a superhero anymore, at least not in the sense to where you can do everything alone. When looking to hire employees, you need to consider your finances as well, because everything is ultimately associated with money. Hiring smart doesn’t mean you should hire a person that can do multiple jobs while you’re paying him or her for the post of one person. It means to know when to hire a jack of all trades or when to hire the master of one special skill. A good balance between the two is the key to success.
Hire a professional to help you navigate the terrain
At the beginning of every startup, money is always tight. And during circumstances like this, most entrepreneurs think it’s a waste of money to hire help that isn’t related to their core work area. That is one of the biggest mistakes you can commit because hiring a good lawyer is the difference between developing a small budding firm into a multi-billion dollar industry… and going out of business.
Follow the Warren Buffet rule
When it comes to investments and handling money, Warren Buffet is the go-to name. When trying to get your company off the ground, if Warren Buffet has something to tell you, you listen. The legend himself wants you to have more than one source of funding at all times, so the next time you are out looking for sponsorships and funds, make sure you look for more than one source.
Manage everything intelligently
Employees not only cost money, but they can also cost some serious amount of money if they are caught doing something they shouldn’t be doing. For instance, getting sued for any kind of harassment or foul business play is a costly venture. Make sure all of your finances and business practices are done honestly.