Running a business is a strange thing when you think about it – it’s exciting and unpredictable, and sometimes it’s a bit terrifying, especially if you often find yourself celebrating big sales one minute and wondering where your money went the next. The truth is, financial mistakes can just creep up on you and drain your profits faster than you realise. The worst part is many business owners don’t actually realise they’re making these mistakes until it’s too late. With that in mind, if you want to keep your business safe and your hard-earned money where it belongs, here are some common financial mistakes you’ll want to avoid – read on to find out more.
Ignoring Cash Flow Until It’s A Problem
Cash flow is literally the lifeblood of your business, and you can be making tons of sales, but if your cash flow is a mess, you’ll still find yourself struggling to pay bills and cover expenses. Many business owners assume that as long as money is coming in, it’s all fine, but what happens if (or, rather, when) they hit a dry spell and suddenly can’t afford to pay their team or suppliers anymore?
If you’re constantly playing catch up, you’ve got to start taking control of your finances. The first thing to do is create a cash flow forecast so you know what’s going where and when, and what you expect to come in. Then set up a buffer fund so that when things get a bit quieter, you’ll still have money to pay the bills, including yourself.
Mixing Business And Personal Finances
If your business and personal finances are tangled together, you’re basically just asking for trouble and not only does it make tax season an absolute nightmare, but it also means you’re not able to really see your business finances clearly (or your personal finances, come to that).
Having separate accounts for business transactions means you’ll be able to keep things organised, professional, and much easier to manage. On top of that, you’ll be able to see exactly how much your business is worth and how much it’s actually making, and you’ll know before it’s too late that the ‘extra money’ you thought you had was meant to be for your rent…
Not Using Accounting Software
If you’re still tracking your finances on a spreadsheet or worse, relying on scraps of paper and mental notes, you’re making life way harder than it needs to be – after all, keeping accurate financial records is crucial, and managing them manually is a disaster waiting to happen.
Investing in accounting software is the answer. It’s going to save you time, screws, and costly mistakes, and if you choose wisely and go for things like automated tracking, invoicing, and financial reports, you’ll always know exactly where your business stands – plus it’s going to make doing your taxes a lot easier, and anything that can do that is a wise investment (and it’ll save you money at the same time, so why not give it a go?).
