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They always say that the toughest part of starting a new business is surviving the first five years. But what if you had a blueprint on how to avoid mistakes that business owners typically make? Well, Yahoo Small Business Advisor reports on the “10 Mistakes New Business Owners Make (That You Can Avoid).”

Among the biggest mistakes is not using a contract. When someone hires you or your company for work, you can’t trust that you’ll be paid just because of someone’s word or a handshake. A contract will also spell out in detail what is expected of you, so that if there are later complaints you can go back and explain that you have fulfilled the terms.  It can be hard when a client insists a contract is unnecessary, particularly when you’re just starting out or working with someone you have a pre-existing relationship with. But in the long run, it is the only way to do business fairly — for you and your client.

Another big one is not understanding payment terms. For a small business, when one client doesn’t pay it can have a snowball effect for paying your own bills. It is important to have a buffer fund to handle your urgent bills each month even when clients don’t come through.

“Owning your own company has its drawbacks and at first, payment schedules are one of them. Be prepared to wait for payment, even if you’re an independent contractor in business by yourself. Know your contract — and know what the terms mean and how soon you can collect. The bottom line is that you can’t pay this month’s light bill with money you won’t see until 30 or 60 days after the job is completed,” notes the article.

Yahoo Small Business Advisor also gives a great list of important small business tools. Some of the standouts include:

• Freshbooks – an affordable online billing service
• Tax Receipts – a resource to maximize your tax deductions with an organized system, and learn what deductions you can take in plain English
• Outright – a simplified, secure online bookkeeping service
• Our Deal - contracts that are easy to understand and can be signed online

Strong business money management skills can strengthen your brand, grow your customer base and increase your business profits. Better business money management skills can also help your business to thrive during economic downturns. At its core, managing business money is akin to managing personal income. Poor handling of either can find you struggling to pay lenders, clients and the IRS.

Getting a Handle on Your Business Cash Flow

The first step to better business money management is figuring out how much time lapses between the time you make a customer sale to the time you receive payment for the sale. This is referred to as cash flow. It doesn�t matter whether you�re a freelancer, independent contractor or business owner with one or more employees. To keep your business financially solvent, you must get a clear understanding of your business cash flow.

You can project daily, weekly, monthly, quarterly and annual cash flows. If your products and services have final due dates, consider using these as the date when payments will flow into your business. For example, if you offer customers the option of purchasing electronics on monthly payment plans, calculate the percentage of customers who are on payment plans. You can make this easier on yourself by setting the same monthly due date for all customers (e.g. 15^th of the month).

If 10 percent of your customers generally pay late, project the date you�ll receive their money 5 to 10 days out. To make up for the slow payments, consider adding a late fee to these payments. Make sure you communicate the late fee policy to customers in writing when they make purchases, keeping in mind that late fees can encourage customers to pay on-time.

More About Business Cash Flows

Next calculate the amount of expenses you must pay out to vendors and lenders each week, month, quarter or year. Types of expenses you�d include in these calculations are your business utility bills, business insurance payments, rental fees, payroll expenses and sales taxes.

Figure the total amount of cash that you expect to generate at your business each day, week, month, quarter and/or year. If you�ve been in business for a year or longer, this should be relatively easy to do. Subtract correlating expenses from these weekly, monthly, etc. numbers. Remaining amounts represent money you have to create new products, services, etc. with. You�re also encouraged to deposit a portion of the money into investment and/or savings accounts as business cash flows frequently change or fluctuate.

Practical Ways to Increase Business Sales

Should you see that your business is spending more on expenses than it receives via customer sales, consider:

• Running a sale on popular products/services (measure the results of sales before you extend them)
• Offering free shipping with select purchased items
• Contacting vendors and lenders to work out a temporary or permanent revised payment plan
• Offering discounts to customers who pay for services early
• Reducing staff hours
• Reexamining real estate expenses; if possible eliminate offices that aren�t critical to your business operations

Women make nearly 85 percent of all brand purchases in the United States according to She Economy. Before making these purchases many women study the market, comparing prices, quality, warranty statements and product return policies. This same focus and attention can help you to effectively manage your business cash flow, investments and savings. Absent a strategy with which to track and manage business investments and financial commitments, you could find yourself tapping into your personal savings to keep your businesses afloat.

Rhonda Campbell, an East Coast journalist, is the owner of Off The Shelf radio and publisher of Long Walk Up and Love Pour Over Me.

(Entrepreneur) — Silicon Valley startup guru Cynthia Kocialski says just about every company can benefit from retaining a group of advisors with pertinent expertise in the company’sproduct, service or industry. The sooner, in fact, the better.  ”They should establish them right out of the chute,” says Kocialski, who has started three companies, advised others and written Startup From the Ground Up: Practical Insights for Transforming an Idea into a Business. “Early on, they simply don’t have the resources to hire every possible job function that they need.”

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