After working with business owners all across the country for the last several years I have seen one common mistake that almost guarantees the failure of a business. Now this may sound simple, yet you would be amazed at the number of entrepreneurs that don’t follow this simple advice.
#1 Tip – Don’t spend money you don’t have!!!
That’s right, don’t spend money that isn’t in your checking account. Business owners too often rely on what their customers, vendors and/or banks tell them. A customer that owes a business $5,000 and said they will pay on Friday may or may not pay. The business should not write checks assuming the $5,000 will be deposited on Friday.
Another example that happens often deals with merchant accounts. When a business accepts credit cards they run the card through their merchant account. The merchant account bank and processing company typically take 2-4 days to deposit the funds from the charge into the business’ checking account. I have seen business owners rely on this money and write checks thinking that money would be in the account and ready to use. Merchant account processing companies and banks can decide at any time to hold the funds for a longer period of time. Then you have a check written on funds not yet received.
Never write a check or pay a bill unless you have the cash to cover it in your checking account.
Simple and True!
David Gass
