Home Business Growth on a Shoestring Budget

Author Name: W Brumm

Home Business Growth on a Shoestring Budget

There are two cardinal mistakes small home based business entrepreneurs make - two mistakes that usually cost them not only their businesses but in some cases may have additional financial ramifications from which it will take years or even decades to recover! The first mistake is the premature purchase of high end equipment, materials, supplies, and shop or office space. The second mistake is the attempt to prematurely grow the business and let it soar.

As odd as it may sound, but premature growth and high end equipment have rung the death knell for more than just one promising business! Consider the first problem: the expenditure of funds for items not yet needed. If you are starting out as a baker, for example, you need an oven. Until you have a lot of business, a small oven will do fine; sure, you may have to spend a bit of extra time baking and moving different dough and pastries in and out of it, but for the time being, you will be able to make do. As your business grows, you will take in enough money from your profits to buy that bigger oven you need. Next, when your business continues to grow, you now have the funds necessary to buy that huge oven with all the bells, whistles, thermostats, and other gadgetry you have been eyeing for years!

Unfortunately, quite a few entrepreneurs will start out spending money they have not yet earned on buying the biggest oven possible. Going into debt – in some cases making questionable financial decisions with respect to credit cards and second mortgages – will mark the beginning of the consistent potential for financial ruin. Failure to grow equipment gradually in keeping with the business is at the root for a high likelihood of fiscal ruin.

The second mistake is a bad as the first: trying to make the business fly before it can crawl. A business needs time to catch on and build a solid base of repeat clientele. Sure, you may get the windfall of that big client that spends more money than half your small clients put together, but if that contract is taken from you tomorrow and you do not have your well developed base to fall back on, the odds are good that financially you will not be able to sustain your business.

Home business growth on a shoestring budget is always gradual and deliberate, appealing to a small niche rather than chasing a mass market appeal. In this manner the business will weather economic downturns, the loss of larger clients and in some cases also the need for the replacement of durable equipment. Failure to heed this advice may leave you with a second mortgage, unpaid bills, repossessed equipment, and in some cases even the need for bankruptcy protection.

W Brumm is the owner of CashDr.net and writes on a variety of subjects. If you are interested in this topic it is recommended you visit: CashDr.net


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