By Courtney Rosenfeld, Writer & Entrepreneur
We are not all born accountants. But, even when numbers are not our strongest suit, there are some instances where making money missteps can hurt your business. These include poor invoicing procedures, commingling, taking on too much debt, trying to grow too quickly, creating the wrong promotions, and not looking at your books.
How do you invoice your customers? If you’re still using a spreadsheet or, worse, handwritten/snail mail bills, then you’re probably not getting paid on time. You may not be getting paid at all. To get around this problem, implement new invoicing software that works on a digital platform. Your customer should have the opportunity to pay online, and the right software will offer expanded capabilities, such as scheduled billing and alerts when customers open your invoice.
As a small business owner, the money your business makes is your family’s livelihood. But, your money should be traceable, and anything you pay yourself should be separate from your business accounts. A few tips here are to open a separate business bank account and form an LLC. Your LLC will keep your money fully separate, and your personal accounts will not be as easy to target if your company winds up heavily in debt (more on that later) or on the wrong end of a lawsuit. The only real exception here is when it’s time to start your own business, you may have to use your personal savings to get up and going.
Debt is not necessarily bad. According to entrepreneur, TV personality, and philanthropist Marcus Lemonis it’s best to steer clear of debt that does not add to your company’s net worth or results in the purchase of an item that only depreciates. Spend some time evaluating your current debt load, and pay off those debts that cost interest but do not provide a return.
Growth is a positive outcome of hard work, clever marketing, and great customer service. However, growing too quickly and not being prepared to meet customer demands is a major financial mistake. Growth Institute asserts that not having money in place to handle growth and failure to prioritize scalability can leave your business struggling to stay afloat.
Discounts, promotions, and special offers are the most tried-and-true marketing tactics out there. Coca-Cola was the first company to ever offer a coupon, and it is easy to see how popular and profitable the company is today. While your goals might not include reaching this scale, you should be smart about your promotional strategies. This is especially true as we emerge from the pandemic, as post-pandemic consumers report that discounts heavily influence where they shop.
Your financial situation is one instance where ignorance is not bliss. Make a point to pay attention to your incoming and outgoing funds. This might require you to schedule a time each week to organize receipts and balance your books. Not doing so can leave you in a cash crunch if an opportunity arises to invest in your business and you don’t have the capital to move forward. This does not mean that you have to sit on top of your cash register all day, but be aware of where you are so that you can better plan for where you’re going.
Financial mistakes happen every day. But, when it comes to your business, there are many that you can avoid. By paying closer attention to your money, keeping your accounts separate, and having the right invoicing software in place, you put yourself in a better position for growth and long-term stability.
About the author
Courtney started Gig Spark to be a resource and the first step for people who are looking to join the gig economy, either to supplement their azor as a way to fulfill their dreams of becoming an entrepreneur.”
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