5 Common Financial Mistakes New Business Owners Make
Small financial mistakes can add up quickly when you’re running a business; make sure your finances stay under control!
If you’re a new business owner or are just beginning to form a business, make sure you know what financial mistakes to avoid. It’s easy to get caught up in the excitement of your new startup, but looking at key financial details will help your business thrive.
In this article, we’ll break down the most common financial mistakes that new business owners make. Your startup journey will go smoothly with these financial tips!
The Most Common Financial Mistakes for Business Owners
Many first time business owners go into their venture confidently, while overlooking important details. When it comes to finances, you literally can’t afford to overlook the details!
Keep reading to find out which common business mistakes to avoid.
1. Skipping the Business Plan
If your startup is a passion project, or you’re running a home business, you may be tempted not to write a business plan.
Even if you’re a microenterprise, you should write out a business plan. In your business plan, you’ll write out how much money you plan to make in a year, how much you expect to spend, and how much you need from investors (if any).
Also, seeing your business idea written out in black-and-white can be a reality check. Some businesses just aren’t profitable; taking the time to sit down and write it all out can help you decide whether or not your idea is worth it.
2. Keeping Prices Too Low
Some markets are incredibly competitive. When you’re first entering your market or niche, you may try to underprice the competition to make a name for yourself. Though this can get you a lot of initial attention, underpricing your product or service is not a wise financial move.
In short, if your prices are too low, you don’t make enough money. You need to make a profit! Price your items or services fairly, and don’t be afraid to have higher prices than the competition.
Also, occasional sales and specials can be more effective than underpricing. You can market a sale, and bring in new customers.
3. Not Delegating
Small business owners are notorious for trying to do it all. You want to wear every hat and exert total control over your business. It’s understandable to want to have a role in every business decision!
Don’t be afraid to let go of some control. Hire another employee, or have a trusted manager take on more responsibility. Figure out the highest-priority tasks that you must do; delegate the rest.
This may seem obvious at first. But overspending can sneak up on you. Playing fast and loose with your budget adds up quickly, and puts you in a tight spot when your business needs money.
When planning your budget, err on the side of caution. Be conservative with your spending, even to the point of frugalness. And work on getting, and keeping, a financial cushion for you business.
5. Improper Marketing
Your social media strategy needs to be impeccable nowadays. Consumers want to see that your startup knows how to use the sites they frequent. If you’re not confident in your knowledge of social media strategy, don’t hesitate to hire a social media manager!
This goes back to not doing it all yourself. Though you may save a little bit of money by doing all the marketing yourself, investing in your strategy can bring back more profit.
Starting a Business Doesn’t Have to Be Scary!
We hope that you feel more confident in your financial strategy after reading this article. These financial mistakes are extremely common among startups, but it’s never too late to improve!
If you’re starting a business in Ontario, we can help ease the paperwork burden for business owners by handling name searches, registrations, and incorporations.