As a new business owner, with so many balls in the air, it’s not uncommon to drop a couple. Here are 5 financing mistakes new business owners make.

5 Financing Mistakes New Business Owners Make

• Not meeting with an accountant or financial professional frequently

Remember, running a small business is an incredibly complex situation from a financial standpoint. You’re a small business owner, not a financial expert. If you were, you’d be working in finance, tax law or financial analysis. So it’s OK if you are not perfectly up to speed on everything you need to know about the finances of your business. Just don’t guess because that’s a recipe for disaster that may lead you down a muddy path of expensive and time-consuming mistakes, that may have tax and legal ramifications. Consult a financial professional to make sure you have the finances of your business all sorted out, and make sure that you meet with them on a regular basis.

• Not cleaning up your personal credit

When you’re applying for new business loans or new business credit lines, your personal credit score will be taken into consideration by lenders. If you haven’t demonstrated sound budgeting in the past, it’ll be all the more difficult for you to prove your capabilities on the business side of things. Be sure to pay all of your monthly bills on time and minimize inquiries to your credit report in advance of applying for funds.

• Mixing your personal expenses and your business expenses

This is a huge no-no. Unfortunately, it is one of the most common financing mistakes new business owners make, and make all too often. When you are a small business owner, the grey lines between business and personal affairs inevitably blur, especially if you are working out of your home or are employing other family members. However, it is extremely critical that you keep your personal finances separate from your business finances. What’s the big deal, you’re saying right now? Well, small businesses are often afforded special tax breaks that others are not. For example, they can deduct home office expenses, mileage, business meals, utilities, and travel expenses. However, if you start overdoing it with these kinds of deductions, you could trigger an audit and land yourself it some hot water. Therefore, it is crucial to also make it crystal clear when you are spending for business and when you are spending for your personal life.

• Underestimating financial needs

Many new business owners underestimate the amount of capital they’ll need to launch their business successfully and, by default, short-change themselves. Don’t let that happen to you. You need to be realistic about the equipment you’ll need; rent costs (or building purchase); payroll; marketing and of course, an emergency cushion for unexpected expenses. Traditionally, when you’re short-changed, the first cut is to marketing, and that’s not a good idea for a new business, or any business for that matter. When you’ve been around for 130 years like Coca-Cola, then you might get by if you didn’t market for a week or two. For a new business, it’s on the same level as rent and employees. Bottom Line: It’s better to overestimate the amount you’ll need and have an extra reserve to draw from than to have less and require additional funding when you are just getting started.

• Not researching all of your options

This is a big one. There are many new entrepreneurs that mistakenly think traditional bank loans are their only option, and if they don’t qualify for them, they might as well turn of the lights and go home for good. In reality, thanks to massive changes to banking regulations there are a variety of alternative funding methods that may be used with or independently of a loan. These can include, but are not limited to: unsecured loans, inventory loans, receivable loans, factoring, as well as other ways to secure business financing. Be sure you’ve exhausted every option before you give up. Chances are the right firm will be able to get you funded with terms you can live with.

Things have changed dramatically since the fall of 2008 when our biggest recession ever began to settle in. How small business owners and entrepreneurs obtain their financing has dramatically changed and will likely never be the same again.

At Elan Capital, we believe in you. That’s why we are here. Partner with Elan to empower your business with the capital you need to grow. Focused exclusively on the needs of small businesses, with flexible financing solutions, support and expertise tailored specifically to your needs, we’re a partner you can count on to help achieve your business goals and aspirations.

One Call Can Grow Your Business – Toll Free: 888.615.1418

Elan Capital, Inc can give your business access to fast business loans, other types of financing and more. With one phone call you can have dozens of lending sources competing for your loan. Once you have experienced the high level of customer service, competitive pricing and wide selection of financing options you will understand why many business owners view Elan Capital as their most important business asset.