7 business financing mistakes to avoid

When it comes to financing a small business, you are often walking on very thin ice. It is important to understand what some of the common mistakes are so you can do all that you possibly can in order to avoid them. In order for your business to survive you will need to acquire financing but you need to go about it the correct way in order to actually start your business or to ensure its survival. To help you out, we have put together a list of business financing mistakes that you need to avoid in order for your business to survive properly.

Mistake # 1 - Asking for too much money
This is a huge mistake you must avoid if your want your business to survive. You need to get a good estimate of what your costs are going to be and to roll with that number. It will make your life much easier as you are able to get the right amount of money to start with and you won't have too much debt to try and repay. Many business owners will ask for an enormous amount and then they are penalized if they try to repay the loan before its deadline.

Mistake # 2 - Failure to keep your books in check
A big mistake you can make is by not recording your expenses and income. It is vital to your small business that you keep your books in check so you don't go into the red and to ensure you have plenty of money to operate the business. It doesn't matter how much money think you have, you never really know until you take the time to record the information in your books and to keep track of them.

Mistake # 3 - Not understanding your cash flow
Your cash flow is the lifeblood of your business and it needs to be managed effectively in order to keep your business afloat. Without knowing what your cash flow is or without predicting your cash flow numbers, you can be in serious trouble. What will happen to your business if you suddenly need to purchase something? How about paying your employees? You have to know your cash flow or your business will not be run in any type of direction.

Mistake # 4 - Not having working capital
In order to operate your business you must have working capital. The working capital is used when you are ready to expand your business and it provides you with sufficient funds to operate the business each month.

Mistake # 5 - Improper accounts receivables
Where do you get the money for your business? It comes from your customers and you must focus on getting your customers to pay their bills on time. What type of timeline are you offering to your customers to get them to pay their bills? Offering several payment options will help and you also want to focus on getting your customers to pay within days of their order instead of giving them weeks or months. Hire a collection agency to help you out if you struggle to get your customers to make their payments.

Mistake # 6 - Failure to pay vendors
Another big problem you may have is not paying your vendors on time. It is common to see a lot of business owners wait until the date the bill is due or they will not pay the amount in full. Vendors report information to the credit bureaus and this could significantly damage your company's business credit.

Mistake # 7 - Poor marketing
A big part of running the business will rely on the marketing department to attract customers. You must focus your efforts on proper marketing in order to get people interested in the company. It is also important that you market within your means and compete in the small business industry. Avoid paying for expensive marketing programs that will not work well for your business.