We’re passionate about helping businesses of all kinds, but we know how tough it can be for those who run small businesses. We’ve teamed up and created a post full of financial mistakes to avoid that we believe will help small business owners with their finances.
Not planning larger cash reserves
A fatal mistake for small businesses is to underestimate the volume of your cash reserves when planning. There’ll be things that you’ve planned for and inevitably things that you haven’t. It’s always best to have a larger cash reserve. This allows for those unexpected costs and reduces your stress levels when these crop up. They may seem like wasted money in your budget, but they always pay off.
Having the wrong insurance
This one should speak for itself. Not having the right insurance can land you in all sorts of trouble. Not only that it can cost you a huge amount, too. If you’re unsure of the insurance that you need to make your business legitimate, speak to a professional.
Not tracking payments
If you aren’t tracking payments from customers, start NOW. There is no worse loss of money than when it’s from work that you’ve carried out and not been paid for. Set up reminder emails to clients if they’ve not paid by a certain time after their invoice. There’s no need to lose payment from clients – when you take clients on make sure you set payment expectations clearly. Carefully record and track customer payments so you’re always aware of anything that’s outstanding.
Not planning for tax
You know when tax bills are coming, every small business must plan for them. Whatever you think your bill will be put that aside, and then some. There’s no saying your bill won’t be slightly more than you were anticipating. For any assistance with tax don’t hesitate to contact us!
Thinking income and profit are the same thing
Your income is not your profit. The money you bring in needs to go towards growth, resources, financial planning and your safety net. If you treat your income solely as your profit, it’ll be hard to increase your overall business wealth.
Waiting too long to get an accountant
We can’t emphasise this enough. Not just because we’re accountants but because we’ve seen some businesses in serious financial difficulties due to lack of professional intervention. People can be naïve to how much accountants can do for a business. It’s an investment worth making for both your finances and your time. Time not spent faffing with your accounts can be effectively invested in developing and growing your business.
It’s very easy to impulse buy when you’re first setting up your business and when you make big achievements. We’ve all done it and we’ve probably all regretted that impulse spend. Plan for your spending, plan for your expansions and plan for extra resources. It’s hard to stick to but it’s always worth it.
Not paying yourself a wage
It can sound silly to pay yourself a wage when you’re your own boss. It can also be very tempted to just take from your business account as and when you need it. Paying yourself a wage means that you know exactly how much will be taken from the business and allows you to plan around your wage.
Hiring the wrong people too quickly
Your business needs to be well established for you to hire somebody. It can be exciting and of course will take a lot of work from you. Our biggest piece of advice when it comes to hiring is to wait until you can afford to hire somebody that’s an expert in the industry that you’re in and will bring something extra to your company that you didn’t have before them.
Ignoring gross margins
Top line revenue doesn’t count when you’re spending more than that figure to achieve it. If you need help with margins and revenue then don’t hesitate to get in touch today.
If you’re self-employed and want to learn more about how to effectively manage your finances to grow and expand your business, give ABC Accounting Services a call or email today!
Call us on 01427 613613
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