by OldManBurns

Created on: September 02, 2009

Being your own boss is a wonderfully liberating experience. You have proved to yourself that you can create your own destiny and are following your dreams. Starting your own business is however only the first massive hurdle that you need to clear. Surviving the first few years without your business failing is most definitely a harder task. Here are a few classic mistakes to recognise and make every effort to avoid.

Always make sure you have enough cash!

This sounds really obvious, and it is, but it must be realised that cash flow is the blood of any business model. Just ask any British bank! Living on eternal credit may work for a while, and is certainly necessary in the early days of a firm's existence. However, it should be remembered from day one that it is imperative to keep costs to a minimum (without affecting crucial tasks) and start making more money than is being spent as soon as possible.

If it can be foreseen (as it should be) that there will be a future cash flow issue, then steps should be taken to secure more funding straight away, as securing capital from external sources is a lengthy process. Don't ever assume that you have enough money as a start-up, even if progress so far seems good. Lack of extra capital may in a few years time be seen as a fatal mistake.

Handle your suppliers with extreme care and caution.

Suppliers enable you to function. You need a bank, accountants, maybe a lawyer and suppliers of services, raw materials and stock. Without them you cannot do business. And if you lose a supplier after you have come to depend on them then you really will have a headache. So don't let it happen! Suppliers take understanding and skill to handle. They are in business the same as you are, and rely on you for their cash flow. However, they are usually better established than a new start-up, and therefore have more financial clout and influence. And importantly, they can refuse you service if you don't keep them happy. This means paying them on time and being honest with them.

Certain suppliers may be essential at first, and you may have little choice initially in using them. So the trick is to keep them happy by keeping on top of your credit account with them, but realising that everyone has a competitor, and trying to find theirs for possible future use. Or finding alternative products to use alongside the ones you sell of your main supplier. Don't ever rely solely on one supplier, because if they decide not to deal with you anymore

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