The 5 Biggest Financial Mistakes That Can Make or Break Your Business

August 24 - Sheena Sharma

When you start your own business, you're in complete control. While that can be viewed as a positive thing (and it is!), it also means every mistake is on you. Yes, every misstep can be traced back to you, and it could either be a reversible mistake, or one that could break your business. The good news, though, is that there are financial gurus out there to help you manage your money so that the latter doesn't happen.

Here are five mistakes people make when they open their own businesses and manage their own money.

  1. Putting All the Money Back into the Business as Spending Instead of Adding Assets.

    Business owners tend to think that their business IS their retirement or IS their asset. The only way the business has more value is to make it valuable…for example, your marketing budget increasing every year does not make the business more valuable if I am to evaluate it today. You MUST have other assets, other than large spending bills that bring value to the table, so add in more real estate, securities, etc. and NOT just spending. This is the difference between making your money temporary or making it long lasting in the value of the business.

2. Not Managing Cash Appropriately.

Business owners seem to do one of two extremes: keep too much in cash because they “never know what you might need it for,” or don’t keep enough in cash, which leads to having to get debt if and when something comes up. I share some simple financial planning tips on how to know what the sweet spot is for how much you should keep in cash.

3. Using Marketing to try and spend your way to having a brand.

Having your name out there in a bunch of different formats of marketing is going to end up being money spent, and that is it. Define what your brand is and what you represent, and THEN determine both the most focused way to market and which formats will benefit you most.

4. Adding to the Business Without First Assessing Value.

This might get you in trouble because you could be getting expenses that you cannot afford. Examples are hiring employees, buying new equipment and expansion. If you don’t know what value that asset you are bringing on should generate, then you are blindly spending money and hoping it works out. This could also get you into debt, which then can be a downward spiral to being out of business. I talk about how to assess this value on anything you do in business.

5. Don’t ever get “comfortable.”

You have to grow and evolve, or your competition will. Plain and simple.

Get On The Dot in your inbox each day.
Copyright 2018 © On The Dot Woman - All Rights Reserved Privacy Policy