Major Money Mistakes That Small Business Owners Make
If you have a business in Michigan, it’s critical to stay on top of your finances. The truth is, financing is just as important as finding new customers and retaining existing ones is. However, if you are like most small business owners, you should know that bookkeeping and managing money is a common problem. The best way to stay ahead of the game is by preventing some of the major money mistakes that small business owners make.
Ready to improve your chances for success, and increase your profitability? Below, Business Loans Michigan lists some of the common money mistakes for small business owners and how to avoid them.
Failing to create a budget or sticking to it
Not having a budget for your business expenses is a mistake you should avoid. If you don’t have a budget, or you don’t pay attention to the one you created once upon a time, you will probably forget about all future tax obligations, ongoing expenses, insurance payments, etc. That is why you need to learn how to create a small business budget.
This is one of the main causes of business failure. Small businesses and startups often have it, and it firstly shows up when they start making money and underestimate all the expenses they will incur. You can have plenty of sales, but unless you get paid in advance for them, you will have expenses to pay before collecting from your customers. The problem shows in growing businesses that serve bigger customers or wide markets, but later on need cash to pay for their growing staff, payroll taxes, or overhead expenses.
Overspending in the first months
Next up is the issue of overspending. To prevent it, you’ll need to be realistic about how much business you will do and how fast you will be able to start bringing in new business. However, being too optimistic can lead to overspending, which is why you need to carefully research your needs, put a business plan in place, and create a realistic budget for your business.
Mixing business and personal funds
Whether you are new in the business world or have been running a business for a while, mixing your personal and corporate funds is a recipe that leads to disaster. First of all, you will likely have difficulties keeping track of how much money the business is making or losing throughout the year. Also, you will have big headaches with the tax reports, and will find it difficult to get a business loan in Michigan if you ever need one.
Waiting too long to seek out a loan
Plenty of business owners think that loans are bad for their economic stability. In reality, getting a loan is one of the best ways to grow, expand, update your equipment, invest in new technology, relocate, or hire additional staff. There are plenty of funding sources nowadays and with online business loans, you can get approved in a matter of days using only a simple application form.
We hope that this article helped you understand and prevent some of the costly mistakes business owners make. Now, you can check out our business loan offers and get in touch with our loan advisors for more information on this subject.
Why Business Finance Is Important During Growth Years
If you are new in the corporate world and want to learn more about growth, you should know that business finance plays a major role in successful running of a business. You can’t really get any business off the ground without investing some money into it. But how big does an investment like this have to be, and where do you get it?
What Is Business Finance?
The term business finance basically refers to the practice of managing your money as a business. Obviously, this term can also be a bit vague (especially for new business owners) but covers everything from buying equipment to handling taxes, selling assets, or borrowing money. Some of the most common categories here include:
Each of these relates to the overall flow of assets within a business, which is why you have to maintain a careful balance between all of them. Even one misstep can lead to financial troubles that may last for years or decades.
Types Of Business Finance
In business finance, there are generally two main categories you should be aware of. The first one is debt, or borrowing money from an existing institution such as a bank, and returning the money with interest over time. The second category is equity, which means selling shares of your business to investors. In practice, both of these categories are combined to maintain a solid cash flow.
Next, we have short-term finance, medium-term finance, and long-term finance. As the name implies, short-term finance covers a short period of time which is up to a year, medium-term finance covers a period of 3 to 5 years, while long-term finance are the actions you do for longer periods such as equity capital, preference capital, term loans, debentures, etc.
The Need For Business Finance
If you are wondering why you would need additional finance for your business, there are plenty of things you can do with a simple business line of credit or a term loan, for example. Some of the most common reasons for business financing include:
We hope this guide helped you understand the concept of business finance and the ways you can finance your business for growth. Now, check out some of the best business loans in Michigan and use our online application form to apply for your loan today!
The 5-Step Guide To Financial Recovery After COVID-19
The effects of COVID-19 are still visible all around the world, and the global efforts to contain the outbreak through mobility restrictions have caused drastic shifts in consumer demand and behavior. The financial recovery of businesses is kind of asymmetrical – amidst all of this, economic recovery is crucial in the return to a normal world.
However, such a form of expansion needs to happen on a broad scale with plenty of resources for businesses in all areas and sectors. And while governments are easing restrictions in stages, business will recover at varied paces based on their industry and geography. If your business has been hit by the pandemic, it’s time to think about financial recovery. Below, we are listing the five steps you should consider and start with the recovery process.
1.First of all, think about health and security
COVID-19 is a human problem that requires a proper health response in order to protect more people. In the business sphere, this means starting with health and security – you should make sure you have implemented some of the best practices to keep your employees safe and prevent further transmission. Safe distance protocols, plexiglass barriers, masks in some areas or vaccination entry only are some of the common practices.
If you can’t make this work, make sure there is a way for your people to work remotely. Be sensitive to the financial distress that your personnel may be experiencing and look to build employee loyalty above all.
2.Prepare a communication plan
A solid communication plan should target employees, customers, and suppliers. It should voice a clear and concise message, schedule regular updates and use technology to send out messages to everyone. You should put someone you trust in charge of your communication plan – ideally, look for someone from the HR department to lead it.
3.Contact your customers
Contact your customers and confirm that business is as usual and all the orders or services are on track and/or available. You don’t really need to renegotiate payment terms, but you may need to defer production or loosen some of the terms. There will be some changes in your cash flow, which is why you need to understand the financial impact of these changes and develop a forecast that reflects the changes.
4.Reach out to your suppliers
When it comes to suppliers, there will probably be some delays, so make sure you contact them and know this early – all so you can manage your customers’ expectations and update your plans.
5.Evaluate your capacity, resources, and cash flow
An aligned workforce is the best way to work towards your new projections. Demand may dip, which is when you will want to realign things and see where you can shave costs and discover some other more sustainable cost savings from which you can benefit after recovery. Question which expenses are really necessary and optimize your budget.
If needed, you can always seek out business loans in Michigan and get up and running again at full capacity – there are options with flexible repayment plans and good interest rates. For more information about corporate financing, contact us today!
Working With Your Local Chamber of Commerce to Grow Your Business
If you just opened a business in your favorite neighborhood and completed the paperwork, it’s time to get organized and think about all the ways you can create a solid marketing strategy. Working with your local chamber of commerce should definitely be on your list as one of the things you can do to network with like-minded people, get more potential clients, and discover the best form of support in your journey to growth.
By definition, a local chamber of commerce is an organization that exists to help promote a local business community. In other words, this organization is local for businesses in the area, and its main purpose is to bring together the professionals in town and encourage them to share their experiences, support and learn from each other. Similar to a business network but set up locally, a chamber of commerce is designed to help business owners in a formal environment.
There are plenty of advantages to joining a local chamber of commerce. You can get a publicity boost, discover plenty of networking opportunities, get freebies and discounts as well as open up to a larger target audience. The chamber of commerce can support you online, too, which is certainly some free publicity and positive brand awareness in your region.
Additionally, each chamber of commerce has a couple of brand objectives that are mostly oriented to improving a community’s economy and the quality of life. These include:
Among the other advantages, we can also note that millions of businesses nowadays actively participate in events created by such chambers of commerce, and most of them benefit from the fact that they are recognized locally and can get more consumers to shop with them. Joining a chamber of commerce is a great way to get started with a new business, and working with it is recommended for becoming known in the community.
From invitations to local events to increasing your business exposure, a chamber of commerce offers great networking opportunities and a chance for every business to easily get found locally and online. You can even participate in seasonal campaigns and enjoy a variety of discounts as a member of the chamber – whether it’s in other member businesses or improved banking accounts at local financial institutions.
Plenty of studies show that consumers link chamber of commerce membership with business trustworthiness – one study confirmed this and showed that consumers are 68% more likely to buy from a local business that is a member of a chamber of commerce. Credibility is important and benefits every business owner. For many, being able to establish credibility early on makes the difference between building a successful business and being out of business in just a few years.
Don't hesitate to contact our team if you have any questions!
How To Lead Your Workforce After The Pandemic
We all know that the COVID-19 pandemic has impacted many companies across different regions and industries in many different ways. While many employees and front line workers have continued their work in physical settings, there are still some people that have been working from home.
How To Create A Resilient Workforce?
In times when employee absenteeism in the workplace is high due to the pandemic, many people are likely to experience emotional distress. Below are some of the best ways you can empower your workforce.
Self-care is a vital aspect in the workplace, and there are plenty of ways to encourage it. For instance, you can give away some vacation time without the punishment in the form of more work or special projects assigned to employees who are constantly available.
Document your expectations for “disconnect behavior.” This will help you reduce burnout and prove to your employees that they don’t need to be “always online.” Lastly, offer wellness programs that promote self-care. For instance, a yoga class during lunch, meditation tools after work or an online workout session can do wonders for their overall health.
Communicate With People
Communication is important, and sometimes, it must come in the one-on-one form. Even though it might take some time, it is the first step to understanding what your employees need. Some of the questions you can ask yourself are: What are my employees’ personal and professional concerns? How did COVID-19 impact most of their work and environment? Are they caretakers, do they have elderly relatives, or ill family members? Have they lost someone in the pandemic? Do they have specific workplace safety concerns, or concerns getting to and from work? What do they truly need to feel supported?
Answering these questions can give you a better idea on your employees’ needs and what it takes to properly address them.
Provide Mental Health Support
The number of people with mental health issues has increased during the past year. The direct impact of the pandemic has to do a lot with that, inducing a certain brain fog or triggering issues such as depression, anxiety, or OCD behaviours.
If you have a mental health coverage plan in place, you should do everything to promote it. Let your employees know about it and what it covers. Utilizing mental health services should be anonymous and confidential – but if you don’t provide coverage, try to offer alternatives or low-cost mental health services.
Be There For Them
Employees love appreciation. You should do everything you can to inform them of their successes or new/modified work policies. In this manner, you can celebrate their wins, identify their new or potential career paths, address all workspace changes, and give them a chance to understand all of the policies you have in place, designed for their own well being.
There are millions of workers that are still on job retention schemes, as well as some that are unemployed or underemployed. For many, the financial situation has weakened, and the new virus variants still impose restrictions on economic activity. That is why it is important to be there for each employee and continue supporting their families.
Looking beyond all of this chaos and adapting to the current situation is the only way to grow your business and succeed. Even if you need to get back to basics, do that diligently and find new ways to work efficiently.