outline how a business can protect against overextending its finances.
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Avoiding Over Extension of Financing and Other Resources
There are many tips for a business of any size and type to avoid overextending financially including:
Business planning: This involves the completion of cashflow projections, preliminary establishment cost, personal finance budgets and financial statements of position, along with the setting of the business’s goals and objectives
avoiding an over dependence on debt finance: This helps avoid problems during weak economic periods when lenders or creditors are unwilling to wait for the business to overcome difficulties
long term financial planning: This concerns not just the current financial aspects of the business, but anticipating future problems and planning of the business’s direction in terms of growth and expansion
a small start: Many businesses ‘walk before they crawl’ and quickly find themselves in difficulty. It is important to start slowly and allow the market to determine the right time for expansion and growth.
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