Posted by: Mark Tayar | July 26, 2009

The seven sins of young entrepreneurs

Recently SmartCompany posted a great article highlighting the top finance-related mistakes of young entrepreneurs. I have summarised these 7 sins here:

1.    Debt – try to balance your loans with equity funding which exchanges investments for part ownership of your company (look at your gearing ratio)
2.    Too much, too fast – growing too quickly can create too much financial risk and create an enterprise too complex to manage.
3.   Living large – Celebrate your success with nice things, but never let bling get in the way of business.
4.    Margin lending – Big margin loans have proven to be deadly in this market and banks are nervous.
5.    Getting out of your comfort zone – focus your business on your core competencies.
6.   Financial reporting – Failure to keep accurate financial records will make your business very difficult to manage and will sooner or later lead to litigation.
7.    Personal guarantees – You may not be able to avoid giving guarantees of your own personal assets on loans, but there still asset protection strategies to avoid crippling losses.

Access the full article here.

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