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As a small business owner, it can be difficult to determine what’s making your business thrive and what’s holding you back. You’ve probably asked yourself:
- Why are my customers buying one product, and not another?
- Why aren’t we attracting more leads online?
- What could I be doing differently to make more money each month?
You can find the answers to these questions (and more) in these six common small business money mistakes that most entrepreneurs don’t even know they’re making:
1. Charging too little
Many small business owners make the mistake of charging too little for their products and services, thus missing out on hundreds, even thousand, of dollars each month. Unless your brand is known for being “dirt cheap” and your goal is to appeal to the largest common denominator of customers, raise your prices.
The psychology of sales states that people will automatically perceive your brand to be of a higher quality, simply because it costs more. You’ll then attract the type of customers who aren’t afraid to spend money to get what they want, and boost your revenues in the process.
2. Using archaic accounting methods
Keeping track of your books using hard copy spreadsheets and receipts wastes hours of your time — hours that could be spent increasing your cash flow!
Use a receipt scanning service to go paperless and get organized. With a service like Shoeboxed, you can digitize all of your data and store your information in a secure online account. From there, you can create expense reports, share financial information with your tax professional, and never waste another second scrounging for a lost receipt.
3. Not outsourcing
Many small business owners refuse to outsource because they believe they can’t afford it. However, wearing too many hats and working too hard is a surefire way to waste money through wasted time and poor productivity.
Instead of spending eight hours designing a graphic, hire a freelance designer to do it in one hour. The nominal cost paid to the freelancer is more than worth it because it gets you back to running your business (and making money!).
4. Failing to make quarterly tax payments
Be sure you’re setting aside 15 to 20 percent of everything you make for taxes. Many small business owners either don’t do this at all, or end up dipping into their tax savings to pay for business expenses.
By paying quarterly taxes, you’ll protect yourself from hefty IRS fines and interest rates come tax time.
5. Forgetting about your business credit
Your credit as a business is separate from your personal credit, and needs to be cultivated from the get-go. Open a small business credit card and checking account, and look into taking out a small business loan. Strong credit will save you money on future business purchases and give you perks like lower interest rates.
6. Skipping out on insurance
Like outsourcing, purchasing insurance can feel like spending money on something you don’t need. But insuring every aspect of your business — from your employees’ health to your office space — will protect you from enormous payouts in the event of an emergency.