Financial management is an essential skill that small entrepreneurs must learn quickly when they start working on their own. Balancing incoming streams with short-term expenses and long-term investments is anything but easy, especially if this is not your primary field of expertise. It’s no surprise that numerous startups hit a sudden roadblock that takes them by surprise and submarines their curve of growth, even if most of such incidents can be avoided with careful planning.

Fortunately, it is possible to learn from other’s mistakes and make your business operations more resistant to financial shocks.

Here are some of the most common risks that small companies should steer clear of at all times:

Overspending on advertising

It is important to let everyone know that your company is in business and it’s very tempting to open up the wallet to ramp up your media presence from the first day. However, if the ambitious campaign fails to bring in sufficient number of new customers, it could create a serious hole in your budget. It is probably a better idea to start smaller and only increase the volume of the campaign once it produces some palpable results and positively impacts your monthly income.

Making a wrong investment

Startups typically have limited resources on their disposal and just a single mistake can seriously hamper their further growth. Education is paramount when making costly decisions – according to Ted Thomas tax liens, a majority of small investors are unaware of all the opportunities and risks inherent in the financial sector.  The solution could be to attend a few high-end courses about the relevant markets or hire a specialist for this type of tasks, while also staying away from risky propositions in the early period.

Hiring too many people

Good managers are always looking to make their teams stronger, but this must be done with full respect to the realistic financial might of the company. In most cases, the same amount of work can be completed with a smaller team, albeit with an additional effort. However, these early pains can be a great training ground that helps you identify skilled and dedicated workers that deserve to get paid. That’s a much safer strategy than paying a large number of people and then testing who can do the job.

Enduring an accident

Many companies face challenges when they lose essential equipment to random forces such as a tornado or a mass collision on the highway. While such occurrences can’t be completely eliminated, there are measures that can be installed to reduce the chance of such a catastrophic outcome. Adjusting your delivery schedule to improve safety in traffic or conducting regular fire drills in the manufacturing facility are some of the steps in the right direction that can protect your essential resources from unexpected damage.


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