As a business owner, debt is not a word you ever want to hear. You probably don’t even want to think about it. After all, even small debts have a habit of escalating. Left unchecked, they could be the things that tip your business balance off the books. 

Of course, most business owners have to get into some small debt to get started, and these tend to be manageable due to low overheads. In the later stages of business, however, you’ll have staff and larger premises to pay for. Then, debt becomes a lot more dangerous. Unfortunately, it’s surprising how quickly you could find yourself falling down the financial rabbit hole despite your best efforts. 

Keep on reading to find out about three debt-creating mistakes that even fantastic business owners could make. 

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# 1 – Failing to budget fully

You know about a business budget. You’ve got this far, after all, and you’ve become pretty adept at budgeting for staff costs and other necessary outlays every month. But, to be successful, businesses need to do more than survive month-to-month. Instead, companies should keep enough in the bank to budget for at least six months or more if they happen to fall on uncertain times, such as slow sales periods or other setbacks. These funds are vital for avoiding the need for further business loans, and should be something that you save towards at least every sales quarter. 

# 2 – Taking out the wrong business insurance

We’re not here to tell you how to suck eggs – we know that you’re already aware of the need for business insurance in any commercial undertaking. Unfortunately, fewer business owners realize the importance of finding the right industry-focused insurance. While general commercial insurance might cover you for things like office repairs after natural disasters, it possibly won’t cover things like injuries that have happened using specialist machinery, or while employees are out on the field. To ensure complete coverage for every business undertaking, it’s important to do your research or work with a company like Tivly, who can help you secure whatever niche insurance you need. That way, you’ll know you’re covered financially no matter what. 

# 3 – Taking your eye off the financial ball

You’re a busy business owner. If your financial forecasts look good for the quarter, it’s hardly surprising that you might take your eye off the ball. Unfortunately, financial forecasts are as unpredictable as the weather, and they can change just as fast. To keep on top of things like earnings vs profits, it’s important to check numbers at least once a week, either by yourself or with the help of an outsourced accountant. This way, debt can never creep up on you, as you’ll be able to adjust your financial plans according to real numbers, rather than estimates. 

Money is a difficult thing to manage, and it’s all too easy to make costly mistakes as your company grows. Keep your business finances on the right track by avoiding these potentially fatal setbacks.