Running a small business is no easy task. There are so many things to think about, and it can be easy to make mistakes when it comes to your finances says Fred Auzenne.
In this article, we’ll take a look at some of the most common financial mistakes made by small businesses, and how you can avoid them.
1. Not having a budget
One of the biggest mistakes small businesses make is not having a budget. Without a budget, it’s difficult to track your expenses and make sure you’re staying on track financially. Make sure you sit down and create a budget for your business, and stick to it as closely as possible.
2. Not tracking your expenses
Another big mistake small businesses make is not tracking their expenses. If you don’t track your expenses, it’s difficult to figure out where your money is going and where you can cut back. Make sure you keep track of every penny you spend, and create a monthly or quarterly report to track your progress.
3. Not paying yourself a salary
One mistake many small business owners make is not paying them a salary. When you’re the owner of your own business, it can be easy to forget that you need to pay yourself as well. Make sure you set aside money each month to pay yourself a salary and stick to it.
4. Not investing in their business
Many small businesses make the mistake of not investing in their business. Without proper investment, your business will likely not grow very much. Make sure you set aside money each month to invest in your business, whether it’s for marketing, new products, or expansion.
5. Not having enough cash on hand
Another mistake small businesses make is not having enough cash on hand. This can lead to difficult financial situations if you have an emergency or unexpected expense explains Fred Auzenne. Make sure you have a few months’ worth’s of living expenses saved up in case of an emergency.
6. Not saving for taxes
Many small businesses don’t save for their taxes, which can lead to a big financial strain come tax time. Make sure you set aside money each month to cover your taxes and talk to an accountant about what you need to do come tax season.
7. Not having proper insurance
Small businesses often don’t have the proper insurance, which can lead to financial problems if something goes wrong. Make sure you have the right insurance for your business and talk to an insurance broker about what you need.
8. Not having a retirement plan
Many small businesses don’t have a retirement plan, which can make it difficult to save for the future. Make sure you set aside money each month to contribute to a retirement account, and talk to a financial advisor about the best way to do this.
9. Taking on too much debt
One mistake small businesses make is taking on too much debt. This can be a dangerous thing to do, as it can put your business in a difficult financial situation if you can’t pay it back. Make sure you only take on debt if you can afford to pay it back and try to keep your debt levels as low as possible.
10. Not tracking their sales
Another mistake small businesses make is not tracking their sales. This can be difficult, as it’s hard to know where your business is going if you don’t track your sales says Fred Auzenne. Make sure you track your sales each month and use this information to make decisions about your business.
11. Not networking enough
Many small businesses don’t network enough, which can lead to a lack of new customers. Make sure you attend networking events regularly and connect with other business owners in your area.
12. Not having a marketing plan
Small businesses often don’t have a marketing plan, which can make it difficult to market your business effectively. Make sure you sit down and create a marketing plan for your business, and include a budget for marketing activities.
These are just a few of the many mistakes small businesses make. If you can avoid these, you’ll be well on your way to success. Remember to track your expenses, pay yourself a salary, invest in your business, save for taxes, and have a marketing plan. And don’t forget to network!