Starting a business from scratch as a young entrepreneur is not an easy task. It comes with a lot of risks that can seriously affect your business. However, these risks are avoidable if you learn to avoid some common mistakes.
Growing your new business is a process and this can be achieved by following the right steps. One of these steps is consciously avoiding common mistakes made by new and young entrepreneurs. Here are five mistakes you should avoid as a young business executive:
- No Personal Budget
In his book, Your Money or Your Life, Vick Robbins says, “keep a Daily Money Log to become conscious of the movement of your life energy. The life energy here is money. As a young entrepreneur, working without a perfect personal budget is like a real-time disaster. A budget keeps track of all your expenses and it provides a real analysis of your income and expenses. But it is not enough to make a budget, you need to diligently stick to it.
- No Emergency Fund / Debt Plan
“Whether you have a mortgage or student loans, or both, it’s crucial to have a debt plan in place” – Becca Williams for Under 30 CEO. A good debt plan will help you repay your debts quickly from paying off smaller debts to those with high -interest rates.
Also, an emergency fund is very important for a young entrepreneur. In the case of unexpected events, a solid emergency fund helps you tackle the issue without touching your business funds.
- Mixing Personal and business finance
This is one of the most common mistakes young entrepreneurs today make. Once you’ve launched your business, it is very important to separate your finances from business funds. When you mix personal and business funds, it gives you a vague view of your business revenue and your earnings.
- Lending Money
You are a business owner and not a money lender! Lending people money and not getting repaid will not only affect your business finances but also personal issues and conflict of interests. Entrepreneurship involves being able to make firm decisions. When a request is likely to damage the business, pick up the courage and politely refuse such requests.
- No Insurance Plan
The HNI Risk Advisors define insurance as a safety net for when risks go wrong. Getting an affordable insurance plan can save your business in case of a business crisis or downturn. However, it is advisable to look out for the best plan for your type of business and also consider the credibility of the insurance company.
In the words of Robyn D. Shulman, Generation Z is beginning to make its way into the workforce and they are confident, strong and ready to make significant changes in the world.
To make these changes seamlessly, you must avoid the common financial mistakes other young entrepreneurs make and stand out of the crowd.