After a career in corporate America IyaSokoya Karde turned her love for gymnastics and retirement savings into a new venture: opening a youth gym in her community. It wasn’t enough to have a passion for a business to make it sustainable. She said that one of her first mistakes was not being paid a salary.
Karade, the owner and CEO at Athletic Arts Academy in Orange (New Jersey), said, “Pay yourself. Because you will run into complete brick walls when you have debt, obligations.” “You must provide your service product, and you’re looking around for nothing.”
Karade has had the support of a team to help her change her business focus and her mindset.
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She said, “You need to invest in a legal department, you have to put money in someone who will look at the money to tell you the truth.” “Mistakes can lead to triple the costs on the back end. It could be the end for your business.”
Many entrepreneurs make the mistake of not paying their employees a salary. Wave Financial’s March 2022 survey found that more than 25% of small business owners consider it to be their worst financial mistake.
Separate business expenses and personal expenses
Another financial blund is the fact that more than one-third (35%) of entrepreneurs who were surveyed admitted to using their personal checking accounts for business-related expenses.
Wave Financial CEO Kirk Simpson said, “Many new small business owners don’t have enough time to keep their books current.” His company sells small business accounting, payroll and payments software. Simpson recommends having a “true base” to see how your business is performing.
Simpson said that cash flow is essential for any small business’ survival. Many businesses focus on getting paid faster, but this is not the case for many.
One of the leading reasons businesses fail is running out of cash. Wave survey results showed that 57% of small business owners (57%) said they had less $5,000 saved for an emergency.
Simpson stated that firms should be focusing on their accounts receivables during inflationary times and getting paid quicker, especially if there is no ability to raise prices.
IyaSokoya Karde, also known as Coach Iya, teaches students at Orange’s Athletic Arts Academy in Orange.
Entrepreneurs who are often not financially prepared for unexpected changes in the economy, their industry, or their business are advised to plan ahead.
However, nearly half of small business owners polled said they wouldn’t be in a position to create additional revenue streams in the event of a financial crisis.
“The key is to recognize and recognize what works and what doesn’t work, and to most importantly, recognize that being a business proprietor means a serious, continuous stream of pivots,” Winnie Sun, cofounder, managing director, Irvine, California-based Sun Group Wealth Partners, and member of the CNBC Financial Advisor Council.
Karade decided to make a pivot and open a licensed child care facility in the gym after the pandemic. It was a difficult move that required her to go through many protocols and tests, but she was able to reopen because a child care center was considered essential business.
Karade stated, “It was something I had considered, but I never had enough money to do it because it was expensive,” Karade said.
Experts say small business owners have tried other methods to keep their businesses afloat.
Zoom culture can be used by businesses to reduce the amount of office space.
Sun stated, “You could even find a corner in the house and recreate it so that it looks exactly like what you want your audience thinks you are at.”
You might also be able to rent out a space you pay for. You don’t have to be afraid to try new strategies.
She said that “Some things don’t work well, some dreams do not pan out, some products don’t connect with consumers, but that’s okay.”
Disclosure: Comcast Ventures is an investor in NBCUniversal.Acorns.