Any business requires an ample amount of capital. There are some lending companies in the market that provide the required initial capital for starting a business. However, the success of the business depends on the effective use of these acquired funds. Failure to do so will result in the business facing debt problems.

Below are a few common mistakes that new entrepreneurs make forgetting his debts:

1.       Lack of Capital – The required amount of capital or cash for starting a business is not normally available, which results in the business taking up huge debts. Makesure you have sufficient cash available for your business to operate for at least the next twelve months. Then, maintain a proper cash management system, recording the inflows and outflows on a daily basis. Once your business is settled down, then you can take debts to expand it.

2.       Plan your Expenditure – At the start of the business, most entrepreneurs spend all their capital without proper planning. New entrepreneurs generally have a misconception on how a business is run, and therefore spend their initial capital without waiting for the revenues to come in. To avoid that, seek advice from experts before making any financial commitment.

3.       No Bank of Cash – Most entrepreneurs fail to set aside a certain amount of money as cash reserves that can be used during difficult times. There may be changes in the market, with costs of the inputs increasing if you are a producer, for example. Make sure you don’t use up all of the money available and set aside a certain amount to face future uncertainties.

4.        Hunger for Growth – When a business faces success, the entrepreneurs often get greedy for more. Consequently, they tend to make business decisions without proper consideration to their ability and the availability of the required amount of cash. They even fail to perform a proper market and financial analysis before basing their decisions. To avoid this, have realistic goals set up in advance and then move up the ladder accordingly.

5.       Location of your Business – There are many factors to consider when deciding on the location you would want to operate your business from. At the inception of your business, go for a cheap location. Keep in mind a few points such as the competitors located nearby, visibility of your office from the street, parking spaces available for the employees etc.

6.       Inefficient Internal Controls – As new entrepreneurs lack experience, they fail to incorporate proper internal control system within the business. They should have the right people having appropriate skills and proper financial controls in place.

7.       No Business Plan – A business plan is the basic foundation of your business. You will not get to know what you need to as you wouldn’t know what your business is aiming for. Make sure to have a motivating and realistic business plan so that you plan your finances and its expenditure accordingly.

8.       Lack of Effective Marketing – Needless to say, in order for your business to get noticed by the people, you need to tell them that it actually exists. Therefore, having an effective marketing strategy is a must, something which most of the newentrepreneurs fail to incorporate. Also, the finance required for marketing should also be available. Within your affordability, come up with good advertising and promotional campaigns.

9.       Competition – Maintain a healthy relationship with your loyal customers. In order to stay alive in the market, you need to have revenues coming in. For that, obviously you need to have a good customer base. Many new entrepreneurs fail to retain their customers. They should keep pace with the competition.

10.   Accept Changes – Be flexible and adapt to new changes. Most new entrepreneurs stick to the same routine that they are used to. Look for positive opportunities and be able to integrate them into your business.

Nobody’s perfect, mistakes are bound to happen. However, one can take some precautionary measures well in advance to avoid some of these.

If you’ve failed to do so and are deep down in debt and yet want to continue in business find a debt settlement program from companies like Consolidated Credit.