Image – https://www.pexels.com/photo/shopping-business-money-pay-50987/
For start-ups, the odds are not in your favour. But you do not need to worry about statistics and percentages. Your start-up is individual, and you need to do everything in your power to ensure you become one of the success stories. One of the best ways to do this first and foremost is by keeping your start-up out of debt. This sounds a lot easier said than done, but there are a number of steps you can take to give yourself a great chance of avoiding being sucked into the debt cycle.
Get educated – There is only one place to begin, and this is by educating yourself. There is so much to learn when it comes to the financial side of running a business. Not only do you need to learn about the best budgeting and forecasting methods to keep your business on the right track, but you also need to learn about debt too. What causes businesses to get into debt? What happens when you get into debt? What is a Director’s Penalty Notice? What should you do when you receive this notice? Learn as much as possible about everything to do with business finances and debt so that you can be best prepared to steer your company in the right direction.
In the early days, you need to live lean – You should make a list of all of your personal expenses. You should then list these items in order of importance. This will help you to determine what you really need and what you don’t. In the early years, your personal finances will impact your business finances, so you need to get both in order to stay out of business debt.
Create other income sources – Yes, you want to pour everything into your business. Nevertheless, the harsh fact is that most businesses do not start making money straight away. It takes time for start-ups to start seeing money coming in. of course, the length of time this takes mainly depends on the nature of your company and the products or services that you sell. Nevertheless, instead of waiting around for the money to accumulate, why not look into other ways of making some money? You could offer your services on freelance websites, for example.
Only use borrowed money for activities that will generate revenue – This is an important rule to follow. You should only borrow money if it is going to be used in an activity that is going to generate you more money in the end. A lot of business owners make the mistake of borrowing money for items that are not bringing cash directly to your bottom line. Office furniture and depreciable assets like this are a prime example.
So there you have it: some of the important steps to take to make sure that your business does not end up in debt. Debt can seem like an inevitability for a start-up, but it does not need to be. This is not something you should just accept. Use the advice that has been provided and you will give yourself a great chance of keeping your head above the water.