Personal Finance Blog by Debit versus Credit

5 Common Financial Mistakes Entrepreneurs Make

December 29, 2008 | Filed in: Business/Entrepreneurship | 1 comment

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Today we’re featuring a guest post from Trisha Wagner of DestroyDebt.com.

The decision to start a new business is never easy; deciding to launch a new business in the current economy can be downright frightening.  Statistics show that you are just as likely to fail as you are to succeed, and one of the main culprits that shut down new businesses during the start up period is money.  Either the lack of money or accumulating debt can cripple your best efforts.  If you are considering following your dreams and striking out on your own in 2009, consider these common financial missteps that often stop a business before it gets off the ground.

Attempting to do too much too soon.

A common mistake that many entrepreneurs make is taking on too much too soon after launching their business.  There is some truth to the age old saying that you have to have money to make money.  While you may be bursting with great ideas and endless energy when you start out, you must remember to take things slowly.  With limited capital to work with you could easily be tempted to start numerous projects to get things rolling quickly.  However each new project requires time and attention to be successful.  If you stretch yourself too thin, both personally and financially you could be setting yourself up for failure.

Not sticking to necessities.

When you are first starting out, you have to remember to think small.  It takes both time and money to build a successful business and unless you have unlimited funds to start out, you could quickly go in the red by not sticking to necessities.  Use less expensive alternatives to accomplish core objectives and increase expenditures only as your revenue allows.  Once your business is off and running you can re-evaluate your spending to reflect increased cash flow.

Trying to do everything by yourself.

You are only one person and it is important to remember to delegate.  Even if you are starting out with a skeleton crew, remember you are the idea person.  It is natural to be tempted to have your hand in every aspect of your business, and of course you should know what is going on on all fronts.  However you are doing a disservice to yourself if you insist on micromanaging and not focusing on building your business.  Let your employees do the job you are paying them to do.

Racking up debt early in your venture.

Try to keep a handle on your expenses and pay the bills as they come in.  Many people are tempted to use a shiny new business credit card to keep cash on hand.  This is a common mistake that can have drastic consequences as your business grows.  Just as interest and accumulating debt can be a death sentence for your personal finances, the same theory applies to your business.

Failing to collect accounts receivable.

Sure you are just starting out and want to establish good relationships with your clients, but you must stay atop money owed to you.  Don’t be afraid to be a bad guy, you are providing a service and in order for your business to thrive you have to be able to collect payments in a timely manner.  A client who doesn’t pay isn’t a client you should worry about keeping.  There are numerous invoicing tools available that make it easier to collect accounts receivables, which ensure your business will have the capital needed to survive.

Trisha Wagner is a freelance writer for DestroyDebt.com, a debt community featuring debt forums.  Trisha writes regularly on the topics of getting out of debt and personal finance.

Tags: Debt, Economy, Entrepreneurship, financial mistakes

Apple: Are They Unstoppable?

October 22, 2008 | Filed in: Business/Entrepreneurship | 3 comments

Through my daily readings I came across several articles about Apple’s (AAPL) quarterly earnings report and was pleasantly surprised to find that even in the midst of an economic slowdown they made fantastic earnings and even broke a quarterly sales record for their flagship line of Macintosh computers.

Some of you are probably aware that I’m a recent convert to Apple (I bought a MacBook Pro in January of this year) and also that I hold several shares of AAPL stock in an investment portfolio.  I’m probably, then, slightly biased but I just can not help having a healthy level of adoration for this company.  They really seem to have their stuff together.

Apple is (according to AMR Research) the most well-run company in the world when it comes to supply chain management (see the Supply Chain Top 25).  They have an extremely healthy trio of products, between their iPods, iPhones and Macintosh Computers.  They have the support of many educational institutions far and wide and also the support of audio and visual professionals around the world.  They also have a devout following among “Apple geeks” in the computer world.

Honestly they’re one of my favorite companies, not only for their products but for the amount of respect that they deserve for the way that they run their business.  So then I was happy to find that their quarterly earnings report was better than expected.

The company posted revenue of $7.9 billion and net quarterly profit of $1.14 billion…

That quote is from Digital Daily and the remainder of the article can be found through the following link: AAPLause, Please.  I really like this quote from Steve Jobs which he said sometime during the earnings report.

We don’t yet know how this economic downturn will affect Apple. But we’re armed with the strongest product line in our history, the most talented employees and the best customers in our industry. And $25 billion of cash safely in the bank with zero debt.

What a great position to be in.  Zero debt and billions of dollars of cash just sitting in the bank. Like them or love them you have to admit that Apple is one very well run company.

Congratulations Apple on a great quarter (and year) and may your future be filled with all the success that you’ve found over the past several years.

Tags: Apple, Earnings Reports

The Importance Of Planning And Ideas For Fundraising Activities

September 12, 2008 | Filed in: Business/Entrepreneurship | 2 comments

In any given community there are a number of organizations and associations who rely heavily upon fundraising methods. Often the success that they have in fundraising allows them to stay operational, provide services, purchase needed supplies, etc. In fact, if looking at the budget of any not-for-profit in your community one would find that their reliance upon public donations is a major percentage of their revenue.

In order to be successful in this important endeavor, fund raising plan should consider a number of components. These components could include having sufficient resources, does the fund-raising match the organization’s mission and drawing from a pool of specific ideas.

Sufficient Resources

Before undertaking any fundraising plan it is important to evaluate the capability of the fundraising group. One of the major considerations before embracing specific ideas for fundraising activities is to evaluate whether there are sufficient resources.

One critical resource to being successful at any fundraising event is to determine whether there are a sufficient number of volunteers. For example, many special events require a large number of personnel to plan and prepare for the event. In addition there is the selling of tickets and the actual staffing of the event on the day that the fundraiser will be held.

Another resource that may be required to be successful with implementing ideas for fund-raising activities is money. The old axiom is true that it takes money to earn money. Therefore, before undertaking any ideas for fundraising activities, it is important to understand that there will be costs associated with fundraising. Those costs may include the use of office supplies, transportation, purchase of consumables, insurance, etc.

Matches The Organization’s Mission

Another major consideration before undertaking any ideas for fundraising activities is does the fundraising activity match the mission statement of the organization? For example, if the organization is against alcohol consumption, then a wine tasting party would certainly be a mismatch as an idea for a fundraiser.

One other example of appropriately matching a fund-raising activity with an agency’s mission would be holding a banquet rather than a golf tournament. This would be especially powerful if that agency was a health providing agency and the individuals that were being honored at the banquet had saved a life. A fundraiser honoring these individuals and promoting the agencies mission would be better served in the dining room rather than on the golf course.

Specific Ideas

There are many tried and proven ideas for fundraising activities. Some of these activities include walk-a-thons, carwashes, selling of candy and magazines, auctions, fundraising dinners, etc.

However, it is important to note that with the increase of not-for-profits it is becoming increasingly difficult for these agencies to raise the needed revenue to meet their operating costs as well as providing services to others. Therefore, it is important that new and creative ideas for fundraising activities are generated.

One of the more creative and newer ideas for fundraising activities could be a no-show ball. The concept of this no-show ball is that the donors are sent an invitation and are allowed to check off their excuse for not attending. However, the beauty of this no-show ball concept is that no one shows, but the donor still sends in their donation. This speaks loudly to the donor in that the agency appears to be very creative and understanding in regards to the time demands placed upon the donor’s time.

Tags: Fund Raising, fund raising ideas, Not-for-Profit Business

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