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Avoid getting into debt by splurging on luxuries

By unknown | Jun 28, 2007 | COMMENTS [ 0 ]

Many small businesses are started by using the owner's money or retrenchment package.

Many small businesses are started by using the owner's money or retrenchment package.

Most unemployed black people will start a small business to make a profit from the money they have and they seldom consider other forms of investment.

Since you have chosen business to make a profit and as an investment, you must ensure that you have enough money to last until your business starts making a profit.

So be careful about the way you spend money.

The first few months of your operation will reveal costs that you forgot to consider in the planning stages. Try to avoid getting into more debt at this stage of your business though thoughts of applying for a bank overdraft might arise.

An overdraft facility might look like a convenient business tool, but you need to think about the risks that might follow. What would you do if the bank asked for immediate payment of the loan?

Think deeply about such threats and you might realise you can manage without adding another cost.

Be careful about long-term contracts for things such as cellphones and property rentals. You don't know how your business will perform and you cannot be sure about the pattern of profits.

Be careful with the money you make and avoid extravagant spending.

"Success comes from doing small things in business exceedingly well," says Paul Karasik, a US writer, speaker and consultant.

To avoid financial problems pay attention to every detail of your business, such as paying all the fees you are obliged to cough up.

Many small business owners ignore paying government levies and minor accounts like the stationery bill.

Bob Bly, a copywriter and consultant, warns against ignoring these details because he lost a lot of money in this way.

But above all, experts warn new entrepreneurs not to waste money on expensive material possessions. These goods usually drain your profit rather than adding to it. Avoid spending money on fancy cars and cellphones.

Rather have money in a bank account than a collection of depreciating possessions. Money in the bank will help in hard times.


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