Avoid These Common Money Mistakes: Insights from Your Friendly Neighborhood Numbers Nerd
Money.
Did you feel that? That flip in your gut that told your brain: NOOOOOOOOO!!!
While I’m a true believer in trusting your gut, in this case, you should kick it to the curb. That’s not your gut. That’s fear rearing its ugly head. Don’t let it keep you down.
Money is a topic that can be as overwhelming as it is essential. As your friendly neighborhood super-nerd, my mission is to help you navigate the business maze and achieve financial confidence. With a bird's eye view of your finances, I've spotted some patterns that can help you make your money work smarter and harder for your business.
Not Budgeting:
One of the most frequent missteps I see is a lack of budgeting. We’re not talking about 5-year pro-forma financial forecasts…that’s a lot of “F’s” that you likely don’t care about. Budgeting doesn't have to be complicated. Start by jotting down your monthly income and expenses. This simple step can reveal where your money is going and highlight areas where you can cut back or invest more strategically.
Mixing Personal and Business Finances:
I get it — your business is your passion. But mixing personal and business finances is a recipe for chaos. It makes bookkeeping a headache and can lead to tax complications. Open a separate business bank account and USE it. This separation not only simplifies your financial record-keeping but also helps you make informed business decisions. When you need money, simply transfer it from your business to your personal account.
Ignoring Tax Planning:
Taxes can be daunting but ignoring them is a surefire way to encounter trouble down the road. Many entrepreneurs fail to plan for taxes, leading to unexpected bills….and we’re not talking about $50-$100 bills. We’re talking about thousands and TENS of thousands of dollars in bills. Don't wait until tax season to think about it. Set aside a portion of your income for taxes and get advice from a tax nerd (aka yours truly) who can help you maximize deductions.
Underpricing Your Products or Services:
Your creative talents are worth their weight in gold, and so are your products or services. Underpricing not only undervalues your hard work but can also lead to financial struggles. Research your market, factor in all costs, and price your offerings competitively. Remember, charging what you're worth is essential for sustainable growth.
Neglecting Emergency Funds:
Life is unpredictable, and so is business. As entrepreneurs it can very much seem like a feast or famine rollercoaster, and we often forget to build emergency funds for unexpected expenses or downturns in income. Having a financial cushion can relieve stress and keep your business afloat during tough times. Aim to set aside a portion of your earnings regularly.
Not Investing in Growth:
Your business is like a garden; it needs nurturing to thrive. Some entrepreneurs hesitate to invest in tools, education, or professional services to grow their business. But remember, smart investments can lead to more significant returns. Why struggle on your own when you can use technology or learn from others that have done the “struggle” before you? It’s not cheating, it’s accelerating your growth and success. Don't be afraid to allocate a portion of your budget to initiatives that can help your business blossom.
There you have it. In the world of creative entrepreneurship, managing your money is one of the things you’ll want to learn to thrive. By avoiding these common money mistakes, you can eliminate a ton of stress and fear in your world. So do yourself a favour: Budget diligently, separate your personal and business finances, plan for taxes, price your offerings strategically, build an emergency fund, and invest wisely. You’ve got this.