Are you making any of the 5 big money mistakes on the road to small business / entrepreneurial success?
1. You’re not a good boss to yourself. Do you pay yourself regularly? Allow for sick days? Encourage yourself to continue growing in your skills and education? When is the last time you took a vacation? Listen, I get it. Sometimes you are so excited about your work you forget to take good care of yourself. Sometimes you feel responsible, heck you are responsible for all the results. Consider this though: how you treat yourself is ultimately how you treat your customers, employees, vendors, new opportunities etc.
REMEDY: Treat yourself like the best boss you ever had.
2. You’re living off your tax money. I see business owners do this in 2 primary ways. First they don’t understand the different taxes that affect their business: example Payroll taxes have 5 different components, property tax, sales tax & franchise tax are all in addition to federal income tax. Second, they spend money on a tax deduction that they don’t have or can’t afford. Spending for a deduction is a focus on the wrong end of the cash flow stream.
REMEDY: Have a tax escrow account where you park the governments portions until they are due. Don’t kid yourself, those funds are not yours. Get them out of your operations accounts so you can see what funds you truly have to make your decisions and allocations with.
3. You think you’re saving money if you do it yourself. Trying to do too much of the operations or small details diverts your energy from things that no one else can do; leadership, making decisions that can generate revenue and increase growth.
REMEDY: Hire out any task that is not in your core strengths or you don’t enjoy doing. For admin or tasks you need that cost $50 an hour or less definitely consider finding someone you can rely on to execute with your supervision.
4. You’re under capitalized to begin with and believe you can earn your way into growth.
REMEDY: Pay yourself regularly yes, but less initially until you have a good reserve available to hire that next key person or purchase the software that integrates functions. Consider an equity investor, consider debt instruments that directly impact revenue generating activities
5. You don’t regularly review your financials. This includes your P&L and Balance sheet.
REMEDY: Meet with someone else — a partner, consultant, CPA, coach, best friend, somebody that you trust — to look at income & expense by category then make decisions about how to apply that result to your balance sheet. This is how you increase the value of your product/services AND your company. Monthly is best, Quarterly is a must.