- Not keeping good records. Not only do good records protect you in case your business gets audited, but they also help monitor the progress of your business. Prepare financial statements and keep them up to date, document the source of receipts and keep track of deductible expenses. If you stay on top of your documentation, you won’t waste valuable time trying to reconstruct business purchases later on.
- Borrowing too much money. The biggest risk associated with borrowing money is not being able to repay the debt. If you take out a collateralized loan and can’t pay it back, you could lose your collateral and your business credit rating will plummet. Be sure any money you borrow is used only for revenue-generating projects.
- Not delegating as much as you should. Unless your business is finance or accounting, don’t try to be your own accountant. Concentrate on marketing and new ideas and leave the money to someone else.
- Buying/leasing cars you can’t afford. Do you really need an expensive car? If your business involves impressing clients, look for a sharp-looking car that’s also economical. These days, going green and being sensible—not flashy--says good things about you and your business.
- Not keeping control of inventory. Keeping accurate inventory records can mean the difference between business life and death. Too much overage and you’re sitting on money you could be making. Too little inventory and you have to tell customers you can’t deliver what they want. You don’t want to find yourself in either situation.
- Not watching accounts receivable carefully. It’s easy to send an invoice when a project is completed, but not always easy to remember to follow up when payment is late. Develop a system to make sure your receivables are paid on time, and don’t be afraid to give clients a call.
Even if you outsource accounting it’s a good idea to brush up on bookkeeping basics. Contact your local SCORE office to learn about workshops and make an appointment for one-on-one business coaching.