Making mistakes is a significant part of being human. However, you can only make so many mistakes until you fall into serious trouble. This is especially true when you are a small business owner. As a small business owner, you cannot afford to make too many financial mistakes. The good news is that most of these mistakes are preventable.
One way to avoid making financial mistakes in your business is to be aware of the most common ones. This added awareness will lead you to make smarter decisions, which will grow and expand your business in the long run. Meanwhile, consult with a CPA in Southwest Florida to keep your finances in check and avoid money problems.
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Financial mistakes small business owners make
- Hiring in advance of the revenue.
One phrase to keep in mind at all times while running a small business is, “Do not count your money until it is in the bank.” If you abide by this, you can avoid many money problems during your journey as an entrepreneur. This means that some people start hiring too many employees even before they receive revenue. They do this when they sign contracts or with the promise of revenue.
- Not having a foundational business plan.
No matter what industry you are in, not having a solid foundational business plan will be the end of your hard work. Your business plan is the blueprint you will use for the various operations within the organization. When the time comes, your business plan will also help motivate others to invest in or work with your business.
Many people are of the misconception that those who do not need investments or capital do not need a business plan either. This is a huge mistake because your business plan should outline your goals, monthly projects, your vision, etc. Be prepared with a plan and continue to build on it.
- Not separating your business and personal finances.
Not separating your business and personal finances is also a classic mistake. Most entrepreneurs tend to forget this and regret it later. There should be two bank accounts: one that you use for personal expenses and one for business transactions. Keeping all your finances in one place will lead to money flow issues and make tax computation difficult.
- Counting on one major source of revenue.
When you are just beginning your business, it might not be possible to start another one or build other accounts. However, as your business in Southwest Florida starts growing, you should look for alternative sources of income instead of relying on a single one. When the major stream dies off, you will still have revenue coming in.