Financial Faux Pas – 5 Common Money Mistakes to Avoid as a Business Owner

Whether you’re launching a business in 2022 or trying to weather the storm that is the global economy at the moment, these five common money mistakes could spell disaster. 

• Letting Invoicing Become Chaotic

As a business owner, invoicing is central to your profitability because it literally charges clients for the hard work you’ve been doing. Of course, with all you have to do, it can be easy to forget to send invoices out or to lose the information you need to create them. 

Luckily, you have access to amazing software capable of making the invoicing process quick, easy, and accurate. Invest in AP automation, and you’ll find it much easier to keep on top of those all-important money requests. 

• Merging Business & Personal Finances

This is a common mistake made by business owners, especially those just starting out. Don’t fall for it. Instead, keep your business and personal finances separate, so you can easily track the profitability and financial health of your business. This tactic also makes it easy for you to claim business tax deductions and helps create clear financial records, which you will need in case of an audit. 

You will also need these records if you want to apply for a loan or other financial aid for your business. Most small businesses start with minimal capital, but at some point, the chances are that you’ll need some outside investment. So it’s worth being prepared, even if you don’t feel you need it now. 

• Not Creating A Budget

According to statistics, over the space of ten years, 70% of startups fail, with a massive 20% failing within that first year alone. One of the main reasons businesses fail is because of poor management, often related to money. If you don’t create a budget, you are not in control of your finances, and you are at risk of things going south very quickly. Even a basic budget for that first year is better than nothing. 

• Paying Over The Odds For A Premises 

It can be so tempting to pay for a warehouse or prime office space as a business because you think you need that official space and the professional image that comes with it. This mistake can leave you with high costs and a highly rigid setup that robs you of the ability to handle things like seasonal ups and downs. Instead, consider options like virtual offices, self-storage, and shared working spaces. 

• Trying To Do Everything Yourself

Lots of business owners think they are saving money by doing every job that needs to be done themselves. However, you’re actually doing your business a disservice if you slip into this mindset. There’s no way you’re an expert at marketing, article writing, proactive IT management, cleaning, and administration. You may be a genius, but no one is perfect at everything, nor do you have the time to try to be. 

Refusing to delegate may cause you to fall victim to burnout, and even if it doesn’t, you’re basically robbing your business of the expertise it could benefit from if you hired talented employees or outsourced. Delegating tasks and hiring people who are more efficient at certain jobs than you will come at a cost, but it’s an investment into a more functional and productive business overall. 

You Have What It Takes To Avoid Business Mistakes

With the tips above, you have a better chance of avoiding the common business mistakes that can lead to failure. With some smart decisions and handy tools, you’ll be more financially savvy and capable of leading your business to success.