• Section: Money Guide - Category: Home Business
• Written by Cherie Ang

There are two cardinal mistakes small home based business entrepreneurs make - two mistakes that usually cost them not only their businesses but in some cases may have additional financial ramifications from which it will take years or even decades to recover! The first mistake is the premature purchase of high end equipment, materials, supplies, and shop or office space. The second mistake is the attempt to prematurely grow the business and let it soar.

As odd as it may sound, but premature growth and high end equipment have rung the death knell for more than just one promising business! Consider the first problem: the expenditure of funds for items not yet needed. If you are starting out as a baker, for example, you need an oven. Until you have a lot of business, a small oven will do fine; sure, you may have to spend a bit of extra time baking and moving different dough and pastries in and out of it, but for the time being, you will be able to make do. As your business

grows, you will take in enough money from your profits to buy that bigger oven you need. Next, when your business continues to grow, you now have the funds necessary to buy that huge oven with all the bells, whistles, thermostats, and other gadgetry you have been eyeing for years!

Unfortunately, quite a few entrepreneurs will start out spending money they have not yet earned on buying the biggest oven possible. Going into debt

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