This post is contributed by Jason Dirkham

You’re an intelligent person with a creative streak. So, it isn’t a shock that you are a small business owner. Entrepreneurs love to develop new ideas and make money, and you are no different. However, it’s not just about how you cultivate the green but how you spend it. SMBs and their owners don’t have bottomless budgets, so spending cash wisely is paramount. Unfortunately, lots of “smart” businessmen and women make dumb moves which end up losing the company money. Yep, even the really clever ones do it too.

As a bright person, you know it’s essential to avoid these dumb-as-rocks investments like the plague. Still, you might not be sure what they are or what form they take. So, here are five of the best, so to speak, and how to make sure they don’t harm the company’s bottom line.

Paying Bills On Time

Businesses need to make sure they don’t miss payment deadlines to avoid penalty charges. But, it’s important to keep in mind that the cut-off date isn’t the day after you receive a notification. Usually, creditors give debtors 60 days to come up with the cash before they escalate the case. That’s almost three whole months before you need to wire them the money, and you should use it wisely. For instance, imagine the business isn’t liquid enough to pay its debts. By holding off for three months, it gives you an opportunity to find the money. Making an early payment might put the company in a vulnerable financial position, which is why you should exploit the grace period.

Not Incorporating

Creating a small business is straightforward. In fact, it’s that simple that all you need is an idea and an internet connection. You can work from your living room making money in your PJs if you’re lucky. If you’re unlucky, you could face a lawsuit and have to go to court. As a sole trader, the boss is responsible for any and every incident. And, your assets will be used as collateral to pay any fees which the business incurs. Sadly, it will be your fault because you didn’t bother separating your home life from work. Not incorporating a company is a move that entrepreneurs make to save time and money in the short-term, yet it bites back in the long-term. As a rule, sole proprietorships are risky ventures and it’s better to spend money to have insurance.

Outsourcing

Agreeing to a deal with a third party is a savvy move on the whole. Still, there are tasks which should stay in-house and those that need to be outsourced. The problem business owners have is that they don’t know which ones to “sell-off.” Some people with zero knowledge of IT try to do it themselves because it appears easy. Outsourced IT support is one of the essential jobs as it’s complicated and time-consuming. By getting rid of the hassle, you can concentrate on other areas of the firm. Customer service is another part which should go to a professional as they can increase the standard and save money. What are the ones to keep in-house? A quality P.A can be the difference between success and failure for SMBs.

Using a P.O Box

Wait a minute – a P.O box is helpful. It makes the business look bigger and more professional. Regarding customers, this is true as the address makes it seem as if the company has office space. But, the same isn’t true of banks and private lenders. Because the location doesn’t exist in a way, they can’t drive past the headquarters and check it out. Therefore, they can’t account for the firm and get a grasp on whether it’s a risk or a sure-thing. Lenders won’t take a gamble, which means they will deny the application. Yep, a P.O box could obliterate any future chances of a business loan in the future. In comparison, a credit advance is more important to an SMB than its street cred.

Ignoring Personal Credit Rating

The country has changed since 9/11. Thanks to the Patriot Act, banks can ask for personal credit info as well as business figures. So, there may be a situation in which your business rating is strong yet your personal credit is weak. And, it could be enough for a lender to say “no thank you.” Both numbers have to be on point if there is any chance of securing a loan, which means you can’t ignore a bad score.

Do you make any of the moves above? Are you ready to make a change?