October brings all kinds of spooky ghosts and goblins, but unlike those that show up on your doorstep on Halloween night (at least in non-pandemic times), the ghosts of financial mistakes can haunt you for a long time. future. The best way to avoid this is to not make these mistakes in the first place – and I’ll tell more about how to do it. But, for many reasons, you may have already made some of these mistakes. I’m going to share what you can do now to help make these spirits a thing of the past.
Here are three common financial mistakes that can come back to haunt you:
1. Take too little money.
While being a conservative can be good, it can also leave you without the funds you need to grow and succeed. When asking for money, think about what you really need to fuel your growth, support additional hires, fill seasonal downturns, expand into new markets, add product lines, fund marketing programs, or whatever is in your business plan. Don’t be so careful that you end up without the working capital you need.
2. Take too much money.
On the other hand, what could be wrong with having a lot of cash on hand? It’s tempting to take as much money as a lender will give you, but borrowing more than you can afford could mean higher payments and more interest.–that you cannot afford and negatively impact your credit. You’d better take just what you need and pay for it to establish credit. You don’t want to pay interest and fees on money you don’t need right away.
If you find yourself in any of these situations–if you have ever taken more or less than you need–What can you do? Go back to your lender and share your concerns. Ideally, you have established a relationship of trust and have a good working relationship. Better to be honest now and work together on a plan than to not grow or continue to deplete your cash reserves while paying off your loan, while falling behind on payments.
3. Falling behind on payments.
Speaking of payments: we all know that late payments are something you want to avoid. It is a stressful situation that can quickly become unmanageable. Penalties and fees can start to add up, making it even more difficult to pay off your next payment and get back on track. It can also negatively impact your credit and your ability to obtain financing in the future. Understanding your business and finances before taking out a loan or financing is essential to ensure that you can pay it back quickly.
If you find yourself in a situation where you think you are having difficulty repaying a loan, it is best to contact your financial partner in advance. But even if you’ve already missed a payment, contact us. Most partners will work with you to put together a repayment plan that’s right for you and will help get you back on track.
Businesses have many responsibilities including forecasting, budgeting, and financing, which can be difficult. Just melook at all the businesses that were on the right track then the pandemic hit with supply chain issues, labor shortages and changes in buying habits. There will always be changes and problems, but the best thing is to have a solid understanding of your business finances and plans as well as a trusted lender with an open line of communication. Then the only ghosts that will visit you will be the cuties who ask for a treat.