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5 Huge Financial Blunders That Sink Businesses Both Big & Small

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Every business owner wants to know how to make more money, but what about protecting the wealth that you already have?

In fact, sometimes it’s more important to understand what not to do with your money in order to protect your business’ financial future.

We’ve outlined five big-time financial blunders that businesses of all shapes and sizes unfortunately make. By having a keen understanding of these mistakes now, you can save yourself some major headaches down the road.

Failure to Follow Financial Regulations

Whether it’s something as simple as filing your business’ taxes or more complicated issues such as understanding the financial implications of an SOC audit, failing to follow regulations is a potential money nightmare. When in doubt, having a lawyer on deck or specific software to help you deal with regulatory red tape is always a plus.

Subscription Services That Suck Your Budget Dry

Speaking of software, over-reliance on subscription-based solutions can certainly take a toll on your spending. You may be surprised at what your business is still paying for that you thought you ditched months ago. All it takes is one oversight to cost you thousands of dollars annually as such services add up.

This rings true for both your personal and professional life, by the way. Take a good look at your monthly payments in terms of your SaaS commitments, smartphone and any other physical services you pay for on a monthly basis. Ask yourself: where could you possibly trim the fat?

Short-Term Budgeting

If your business is living paycheck to paycheck, so to speak, there’s a problem. Not only do you put yourself in a position of crushing stress in the face of a “what-if” emergency, but you also halt your business’ ability to grow.

As a result, rethink your personal salary and strive to be as frugal as possible until you get to the point where you have at least a few months of savings stashed away for both yourself and your business.

Too Much Borrowing

Finding funding for your business is great, but not when your company is essentially living on borrowed time.

Any and all injections of cash, whether they be from loans or investors, need to be handled with extreme care. That is, you don’t want to be put in a situation where you can’t live up to your financial commitments. Failure to do so might mean the end of your business in addition to a potential mountain of personal debt.

Lack of Revenue Streams

Ask yourself: what would happen if your most dedicated clients or customers disappeared?

What if your biggest contract ended tomorrow?

While such questions might be uncomfortable, they represent realities in today’s business world where consumers are incredibly fickle and nothing stays the same for long.

As such, it’s crucial to have as many revenue streams flowing as you can. For example, a service business should also consider selling some sort of physical or digital product as means of earning long-term, passive income. Any sort of commission, referral bonus or percentage share you can score from external sales is also a huge plus.

No matter what size your business might be, each of these blunders is looming unless you take specific steps to avoid them. By knowing about such snafus before they strike, you instantly set yourself up for long-term success rather than a pesky “what-if” scenario.

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