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Personal Debt, Unnecessary Purchases, and Other Financial Pitfalls for Startups to Avoid This Year

  • Advice on how entrepreneurs can spend wisely and save money when starting a business this year
  • Being cautious in determining whether a purchase is an investment or simply a splurge
  • Wise financial management should extend to personal budget as well

Summary by Dirk Langeveld

As COVID-19 vaccinations proceed and the economy shows signs of improvement, entrepreneurs may decide that this is the year to launch a new business. Bernhard Schroeder, director of the Lavin Entrepreneurship Center at San Diego State University, recently shared tips in a Forbes article on financial mistakes startups should avoid if they take the leap in 2021.

Schroeder says some people start a business trying to be as frugal as possible while sink a large sum of money into the endeavor in hopes of attracting investors. He suggests that whichever method you choose, you should try to save money where possible and spend wisely.

Schroeder recommends being cautious about purchases, scrutinizing which ones will contribute to the long-term success of a company. He also suggests that entrepreneurs should take steps to minimize their personal debts and spending, as they may find themselves reducing the income they receive from their business during rough patches.

The article also recommends that new businesses have an emergency fund capable of covering at least three months’ of expenses, and that they consult with a tax advisor to make sure they’re complying with tax requirements.

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