Conducting business of any kind will be difficult at times, but businesses can often survive a lot of mistakes. When you are self-employed and have a smaller income, mistakes could be much more costly and could even put you out of business. Here are six mistakes the self-employed need to avoid.
Poor Time Management
You have as much time in a day as the most successful business. How you use it will determine your profitability and success level. Many distractions, such as social media, the Internet or TV, could keep you from performing your best, but getting control of your time by setting a schedule can enable you to be more successful while working fewer hours and still able to enjoy fun activities, family and friends.
Careless Money Management
If you become careless and do not keep close track of your cash flow, it is not likely your business will be operational for long. You need to know at all times where your money is going, who owes you money, and how much money you bring in each week. Your purchases should depend on your cash flow, enabling you to keep some cash on hand. You also need an emergency fund that will enable you to cover three to six months with no cash in the event you get sick or injured.
Good record-keeping is also necessary to get more tax breaks and deductions. There are many available and understanding what they are and the type of records you need to keep will help ensure you get all of them. They may include:
- Travel costs and vehicle expenses
- Equipment costs
- Phone and Internet service
- Office equipment
- Entertainment costs
- Subscriptions to industry-related magazines and periodicals.
Every year, you will be required to pay taxes. If you make enough money, it is necessary to make quarterly payments to Uncle Sam. Money needs to be set aside regularly for your taxes (income and self-employment tax), which requires accurate records and receipts. Using financial software will make it easier to keep track of your money and taxes – as long as you keep up with it weekly if not daily.
Misusing Credit Cards
Credit cards are easy to use – in fact, too easy. When you are running short on cash, it is very easy to put your purchases on a card. This is a serious problem that can get you in debt quickly. The only exception should be if you are sure you will have money coming in very soon to cover it – and then you should only spend what you are sure will be coming.
Not Setting Financial Goals
Just like you need to set business goals, you also need to set some financial goals for yourself. These goals need to be specific so that they motivate you to continually aim higher. The goals can be in many forms, but you might consider setting goals such as: what percentage of your last quarter’s income do you want to increase in the next quarter, etc.?
Failing to Market Your Business
Your business will only grow if more and more people learn about your services or products. Word-of-mouth will help but it is slow. You need to get your ads in front of a large number of people and you must keep on doing it. Having a website is a start, but using social media frequently will help it grow, along with more traditional marketing methods.
Are you self-employed? Do you have any tips? Share them below!