The 10 Biggest Financial Mistakes - Small Business Owner's Make

Be aware of the most common mistakes so you can avoid them in your business.

1. Lack of a Budget:

   1. Failing to create and adhere to a budget can lead to overspending and financial instability.

   2. Budgets can be used for each project, department, all aspects of your business.

2. Poor Cash Flow Management:

   1. Ignoring cash flow can result in insufficient funds to cover expenses, leading to operational issues.

   2. Use Cash Flow Statements to know what you're spending, what you're bringing in, and what you're business is worth.

3. Neglecting Financial Planning:

   1. Not having a long-term financial plan can hinder growth and lead to missed opportunities.

   2. Sales are unpredictable and planning for the highs and lows will keep the business healthy during these periods.

4. Overlooking Taxes:

   1. Failing to plan for taxes can result in unexpected liabilities and penalties.

   2. A separate bank account should be/can be set up for tax liabilities.

5. Mixing Personal and Business Finances:

   1. Not separating personal and business finances can complicate accounting and lead to legal issues.

   2. Setting up payroll or owner withdrawals will allow the split of your business and personal finances.

6. Underestimating Expenses:

   1. Misjudging costs can lead to budget shortfalls and financial strain.

   2. It is vital that a business knows what the expenses are in order to properly cost items/services.

7. Ignoring Financial Statements:

   1. Not regularly reviewing financial statements can prevent business owners from understanding their financial health.

   2. Financial Statements should be prepared: Monthly (recommended) or Quarterly.

8. Inadequate Record Keeping:

   1. Poor record keeping can lead to lost income opportunities and tax complications.

   2. This can cause more money when it comes time to file taxes as well. CPA's are going to charge you a lot more than a monthly bookkeeper to go through your records before you file.

9. Not Seeking Professional Advice:

   1. Avoiding professional financial advice can result in costly mistakes and missed strategies for growth.

   2. CPA's, Lawyers, Bookkeepers, are all a great source of professional advice for your specific needs.

10. Failing to Invest in Growth:

    1. Not reinvesting profits back into the business can stifle growth and innovation.

    2. What are your goals? Sell your business, pass it down to children, open new locations, expand products or services, etc.

To prevent the occurrence of these common pitfalls in your financial management, I encourage you to reach out to me at MLD Bookkeeping Solutions. Our team is dedicated to providing expert guidance and tailored solutions to meet your unique bookkeeping needs. Let us help you achieve greater financial clarity and success.