When you think about your daily life as a small business owner, what part of your job makes you the happiest?
Odds are; your answer doesn’t involve your finances or taxes. Managing your books isn’t often what made you become a business owner in the first place – and is rarely discussed when you set out on your journey.
Here are the four biggest pitfalls small business owners are often unaware of in the early days:
1. Estimating cash flow needs is difficult
Many entrepreneurs have difficulty estimating the amount of cash flow they’ll need on hand in the beginning stages of their business. Until you have a strong grasp on the number of customers you’ll be serving, your margins and cash flow conversation cycles, finding out how much you need can be a challenge.
2. Same goes for financial planning
Many business owners forgo forecasting financial needs ahead of time – or do so with inaccurate and overly optimistic predictions for the health of their firms. Even if you don’t have all of the information, its imperative that you use the best estimate you can start laying out your pricing strategies, expenses, etc.
It is always best to aim low and be pleased when you surpass your estimates, rather than assume too much and get in trouble down the line.
3. No man is an island
Successful small business owners are confident, committed and skilled at their jobs. However, many decide early on that they can use these traits to do everything on their own, but trying to do too much can be a serious negative. For example, if financial planning and forecasting truly bores you, consider hiring a business manager or accountant to handle that side of the business. It will allow you to focus on what you do best and enjoy.
4. Tax time is all the time
Sure, mid-April is the tax deadline we all know, but companies have many other tax obligations that don’t always fall on this due date. As a small business owner, you have a responsibility to deal with the IRS throughout the year. Forgetting that could end with you backed into a corner, especially when it comes to cash flow (all the more reason to hire an accountant).
What do you wish someone had told you about running a business? Tell us in the comments below.
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