However, sometimes, these pitfalls can be hard to avoid no matter how much you try.
Plus chances are if you don’t know you are making mistakes, you will be oblivious until it is too late.
#1 Too Small A Cash Reserve
Not having a big enough cash reserve can be fatal for small businesses.
Having enough in your fund reserve to account for things you have planned for is all good and well, but if you don’t have enough to cover unforeseen issues can leave you scrambling to find enough money to cover it.
Always put aside more than you think you will need.
#2 Unsuitable Payment Software
If you aren’t keeping track of your payments and incoming and outgoings, how do you know where your many are going and where you can make cutbacks, turn a profit, or even where you are losing money?
Make things easier for your clients to pay invoices, check estimates, and for you to keep on top of all your finances in one place.
A financial advisor portal or software to allow all transactions to be tracked efficiently in the house can boost your small business and avoid you scrambling down a black hole of missing payments or worse, missing funds.
#3 Not Hiring An Accountant
Waiting too long or even avoiding getting an accountant can be a bad decision financially for your business.
You want professional advice and guidance. Never underestimate the benefits of hiring an accountant as soon as you start your company.
If nothing else, a good accountant will help to avoid some coming financial mistakes when starting a new business.
#4 Not Paying yourself A Wage
It can be tempting not to pay yourself a wage and just dip into money as and when you need it. Doing this will mean that your profits take a hit and money is less readily available when you need it.
Also, if you have financial commitments, your menders will need to see proof you can afford to repay your borrowing, and paying yourself a wage from the beginning will put you in a good position to do this.
#5 Hiring the Wrong Staff or No Staff
As much as you might want to, you can’t do everything yourself, so hiring staff in many cases will prove to be the best option financially to help your business grow.
However, taking the time to hire the right people is vital to avoid the mistake of hiring the wrong people for the job and potentially losing money not only via paying their wages but also in a loss of sales or business relationships too.
Being sensible about your finances from before you even set up your business can help set your company up for financial success and avoid the common pitfalls and financial mistakes that can harm your company at a time when you need to succeed.