In my 20 years of experience working with small businesses I have come across many mistakes that clients are making with regards to their financials.
Here are the Top 5:
- 1. Mixing personal and business cash. I found that business owners who do not have a separate business banking account and business credit card accounts struggle financially. They do not have a concept amount of money they are spending in their business. This lends itself to careless management.
- 2. Not performing bank account reconciliations. Did you know that about 50% of all business owners experience some type of theft in their business? Reconciling your checking and credit card accounts is important, you might miss mistakes and theft if you do not.
- 3. Do it yourself accounting. Some business owners are great at managing their own business bookkeeping, however, be the first to know your own skill set and outsource the bookkeeping if it is not your strong suit. Another good reason to outsource your accounting is when you don’t have time! Especially if your time more valuable being spent selling your service or servicing your customers.
- 4. Not understanding the difference between profit and cash flow. So you have money in the bank? That does not necessarily mean that you are making money. Cash can be deceiving. Understanding a profit margin and if your serfice or product is at the right profit margin is critical.
- 5. Not asking for help. Most business owners are good at their specific business but they have a problem recognizing when to ask for help. I have a client that is amazing graphic designer but when it comes to sales, she doesn’t feel confident to get in front of people to sell her services and because of that her business is hurting. She just recently hired a sales person and the business has doubled in three months! You can’t afford NOT to get the help you need.
Written by: Tricia Reynolds
Chief Duck at Ducks In A Row