Starting your own business can be a scary process, especially if you haven’t gone through the financing process before.
But there are other aspects that go unnoticed before the big day when you open to the public.
Brenda McDermond, the construction loan supervisor at Stearns Bank, tries to help new business owners as much as possible before they open. She guides entrepreneurs to avoid these common mistakes.
Mistake #1: Overlooking Cash And Supply Needs
Brenda said the first thing that usually gets overlooked is not having cash in the till before the doors are open, but working capital is needed to pay employees.
“New business owners need working capital and opening cash for those first two weeks,” she said. “Another thing that gets easily overlooked is having supplies, especially cleaning supplies and miscellaneous things around the office like tape, staplers and paper clips.
“We go through that process with them. We want to make sure everything is set up properly and to help them through it.”
Mistake #2: Not Planning For All Your Costs
Brenda says it’s important for new owners to monitor what things cost so they don’t go over their loan amount.
“We just try to help them see how much each item is going to cost,” she said. “We fill out a form for them to see how much is going to be spent, but sometimes things are forgotten. We look at the money we give them as a bucket and we have to see how much they can draw from it. Sometimes we have people who have $200,000 loans and don’t get even close to spending that amount.”
Mistake #3: Not Hiring The Right Staff
With so many things being thrown at them at once, Brenda understands the pressure new small business owners are under. Even if you’ve started a business before, certain aspects can get overlooked.
Hiring the right staff can go a long way to helping conquer the first few weeks in business. If you’re starting a franchise, usually the franchiser has things already in place to help you with that process. But if you’re not a franchisee, hiring can get a lot more complicated.
Mistake #4: Forgetting To Track Your Expenses
In your first year of business, it’s critical to put a filter on all of your expenses. Tracking with spreadsheets or other software will help you identify areas where you’re spending too much. Continually tracking your expenses early on is important and will allow you to adjust your spending accordingly.
No matter what, choosing the right lender and financial institution will help you in starting a new business.
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