5 Financial Mistakes Entrepreneurs Should Avoid
Hello! I’m Kyle Bennett, Financial Coach and Founder of Prosperity Launch. Welcome to my first blog post! For more about me, check out the “About” section of the website.
As a financial coach for entrepreneurs, I've seen some of these mistakes time and time again, and I’ve even made most of these myself starting my Financial Coaching business. My goal here is to help you avoid them so that you can reach your business and financial goals.
Financial Mistake #1: Not Separating Personal and Business Finances
One of the biggest mistakes entrepreneurs make is not separating their personal and business finances. This can lead to confusion, missed tax deductions, and potential legal issues. As one of the first steps in starting your business, you should open a business bank account. Run all your business expenses through this account and keep your personal expenses separate. Your accountant will thank you!
Financial Mistake #2: Failing to Budget
Another common mistake is not having a budget in place. Without a budget, it's difficult to track your expenses, plan for the future, and make informed financial decisions. Budget for your business the same way you budget for your family. Revenue should cover your expenses. In the initial phase of your business, you may have to cover your expenses through personal contributions to the business, loans, or other various funding options that you can discuss with your financial coach.
Financial Mistake #3: Not Saving for Taxes
Taxes can be a major expense for entrepreneurs, but many fail to save for them throughout the year. This can lead to a cash flow crunch when tax season arrives. Talk to an accountant about how much you will need for taxes based on your estimated revenue and devise a plan accordingly. It is always best to overestimate taxes so that you don’t have a surprise when taxes are due.
Financial Mistake #4: Overlooking Retirement Planning
Entrepreneurs often focus so much on growing their businesses that they neglect their own retirement planning. This can have serious consequences down the line. With a traditional W-2 job, your retirement plan is oftentimes set up for you. When it’s your own business, you will need to do this on your own.
Financial Mistake #5: Taking on Too Much Debt
Finally, many entrepreneurs take on too much debt in the early stages of their businesses, which can lead to financial stress and hinder growth. Have a plan and stick to it. If you can build your growth through income it is often much better than borrowing in the early stages of a business.
By avoiding these common financial mistakes, entrepreneurs can set themselves up for success and achieve their business and financial goals. As a financial coach, I'm here to help you navigate these challenges and achieve prosperity. If you have any questions or would like to learn more about my how I can help, book a free Q&A call by using the “Book Now” link below.