You’ve heard the sayings.
I’m starting a business to have more free time. You have to spend money to make money. Financial numbers don’t matter anymore.
While there may be a kernel of truth hidden in these age-old adages for some business owners, these misguided beliefs are regularly impacting business’ bottom lines and killing otherwise perfectly good businesses.
To make your efforts starting a business go as far as possible, you need to know the difference between time-tested financial wisdom and financial fallacy. That’s why we’ve identified where these misconceptions go wrong, so you can stay on the straight and narrow rather than spiraling down the rabbit hole.
I’m Starting a Business to Have More Free Time
Every once in a while, a business starts in the right place and the right time and it just works, and the owner’s job is simply to manage the growth. Even when this happens, successful business owners don’t create more free time than they had working for someone else.
More often than not, businesses struggle to find their customers or clients. Every waking hour that an small business owner isn’t devoting to running their business they are trying to find new ways to grow it. If the definition, ‘Entrepreneur (Noun): A person who works 90 hours a week to avoid having to work 40 hours a week for someone else,’ doesn’t sound right, then odds are owning a business isn’t going to be the lifestyle for you.
You Have to Spend Money to Make Money
The truth of the matter is you have to solve a problem to make money. Once you’ve determined the problem you’re going to solve for your customers, you have to figure out how to do it most efficiently. This step includes hiring staff as well as professionals such a business attorney to protect you from liability, a marketer to promote your business to a wider audience, an accountant to help you manage your tax burden (and ensure you know what is going on within your business financially) et cetera.
Financial Numbers Don’t Matter Anymore
The recent infatuation with entrepreneurs getting investments from venture capitalists has led to a common belief that a business doesn’t need to make money to be a business; all that’s needed is an idea and a team to turn that idea into reality.
Unfortunately, for every business like Facebook that didn’t turn a profit for years, there are thousands of businesses that failed because they didn’t pay close enough attention to their financials. By keeping up-to-date books, a business can see what’s going on and control any costs before they spiral out of control. Believe us: it is not a myth when we say every dollar counts.
Before pursuing any business venture, we recommend speaking to a qualified group of professionals to ensure you start out on the right path. For any accounting advice, feel free to reach out and give us a call today.