If you’re starting a business, you’ve probably already accepted the fact that you’ll make mistakes.
And if you haven’t, you should. But this isn’t a bad thing, mistakes can be really valuable if you learn from them, and this includes learning from the mistakes of others. So here are four common money mistakes that most startups make, so that you don’t have to.
- Not negotiating
Newbie business owners often accept the first price that they receive for goods and services. But the sooner you learn that everything is negotiable, the more money your business will save. You can negotiate better deals on everything from your Internet plan to your rental agreement. You’d be surprised what deals and discounts you can get simply by asking for it.
If a provider doesn’t want to offer you a better deal, tell them you’re going to switch to another provider that will. Remember, in this equation you hold the power, as there are hundreds of providers who will be willing to negotiate to get your business.
you need to put a price on your time
- Scrimping on talent
There’s a reason why they say that good employees are worth their weight in gold. It’s true. When you’re just starting out it can be really tempting to hire the cheapest talent you can get as you try to keep costs low. However, this can often end up costing you more in the long run as they might take longer to train and require more hand-holding, something you can’t afford to do in a busy startup.
And it’s not just the financial cost. As a business owner you need to put a price on your time. Having good employees that work autonomously will free you up to focus on driving the business forward. Think of the talent you hire as an investment. The higher-priced talent is more likely to provide better returns.
- Underestimating financial admin
Staying afloat of your financial admin may seem manageable at the start. An invoice here, a bill payment there. But as your business begins to grow it can quickly snowball out of control if you don’t have strict processes in place to manage it. If you’re not on top of your invoices, you might not realise that one of your clients hasn’t paid you. And if your bills are out of control, you can easily miss a payment due date, which can result in a late fee.
You also have legal requirements such as paying the compulsory superannuation guarantee each quarter on behalf of your employees. Hiring someone to manage this financial admin will keep your business running smoothly and save you a whole lot of unnecessary stress. While you’re just starting out, consider getting someone on board just one day a week and increasing their hours as your business grows.
- Doing your own tax return
You might be able to get away with doing your personal tax return online, but your business tax return is a whole new kettle of fish. The taxation system is more complex than you may initially think, with a myriad of rules surrounding what you can and can’t claim as a business expense. Things get even more confusing if you’re mixing personal expenses with business expenses, which a lot of startups do in the early stages, for example, using a home office.
It may seem like a good idea to do your own tax return and save yourself the accountant fee, but this can often end up costing you more. A professional tax accountant can help you get more back in deductions, and you can even claim the cost of their services in next year’s return. Plus, as they know the ins and outs of the system, you can sleep easy at night knowing that you’ve met all your legal tax requirements and you haven’t forgot to dot any i’s or cross any t’s.
As a startup, it’s important to be frugal and keep costs low while you’re still gaining momentum. But it’s equally important to know when you should spend a bit extra. Forking out for things like an accountant and quality staff will cost you more upfront, but the long-term financial gain will quickly outweigh this.