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The 6 Biggest Financial Mistakes That Keep Small Business Owners From Higher Profits
- Hillary
- Apr 4
- 4 min read
Navigating the business world is a lot like playing a strategic board game.
Every move counts, and one wrong step can set you back.
Just like in a game, there are rules to follow, risks to consider, and decisions that can make or break your progress. And when it comes to your business’s finances, a few costly missteps can keep you from hitting those higher profits you’ve been striving for.
Unfortunately, many small business owners unknowingly make financial mistakes that could easily drain your resources, limit growth, and make it harder to achieve your long-term goals.
The good news? These financial pitfalls are fixable…with the right strategy, support, and planning.
Here are six common financial mistakes that could be costing your small business money (and how to avoid them).
1. Lack of Financial Clarity
The #1 reason most small business owners aren’t hitting profits is because they just don’t know how to!
And that’s okay. You shouldn’t be expected to know how to do financial strategy on top of making sales, serving your clients and wearing the other hundreds of hats as a business owner.
But, without a solid grasp of your finances, it’s easy to miss opportunities for growth. When your numbers are unclear (or you don’t understand them), you can't make confident, data-driven decisions.
You might end up:
Spending in the wrong areas
Mismanage budgeting
Miss investment opportunities
Losing out on tax savings
Staying in short-term survival mode instead of focusing on growth and long-term success
This lack of clarity creates a shaky foundation, and eventually, it’ll catch up with you. So, first things first, let’s get you understanding the numbers!
2. Neglecting Cash Flow Management
Let’s talk about your business’s most important “health bar” — cash flow. You can have all the sales in the world, but if your cash flow is low, you’re playing a dangerous game.
Typically, this isn’t done on purpose, especially if you’re also dealing with number 1 above.
A lot of business owners put their focus on sales, thinking that the higher the revenue, the higher the profits.
But here’s the twist: cash flow is what keeps you leveling up in the game, not just sales.
In fact, 82% of small businesses fail due to poor cash flow management or a lack of understanding of cash flow dynamics.
Managing your cash flow will keep the gears moving you towards bigger goals.
3. Overlooking Tax Planning
If you've been "winging it" when it comes to taxes or your previous bookkeeper didn’t properly prep you for what’s ahead, tax time probably feels like a jump scare every year goosebumps commence.
Tax planning, while yes, is tedious, is not something you can afford to ignore until the end of the year.
Using the "hope for the best" approach or just getting by without a clear tax strategy sets yourself up for unnecessary headaches.
Plus, you could end up overpaying your taxes, leaving money on the table that could have been reinvested into your business. Or worse, if your books aren’t up to date, you could be hit with penalties, audits or interest for missed or late payments—oh my!
By getting proactive with tax planning, you can stay on top of deductions, credits, and compliance, reducing your liabilities and keeping more money in your pocket.
4. Not Preparing for Financial Surprises
You know business - and life - is full of surprises.
Much like landing on Boardwalk in Monopoly and getting hit with a hefty rent payment when you least expect it, financial surprises can really knock you off course for growth. Whether it’s a sudden dip in sales, expenses piling on, or an economic downturn, you could have to make decisions that take you backwards (having to sell off property, cut costs, fire people).
Think of it like having a "get out of jail free" card – having a financial plan and forecasting for the future will give you a buffer in case other things come up along the way. Regularly review your financials, anticipate potential pitfalls, and set aside funds to handle the unexpected.
5. Making the Wrong Investments (and at the Wrong Time)
Timing is everything in business, just like in poker.
You COULD go all in with a weak hand and get lucky, but the odds are stacked against you, and the risk could wipe you out completely.
Maybe you splurge on expensive technology that your business doesn’t yet need, or launch a big marketing campaign before you’ve properly fine-tuned your messaging.
Many business owners get swept up in the excitement of expansion and end up making investments that seem like a good idea at the time, only to watch those resources disappear without any real return.
To avoid this costly mistake, you need to know when to fold and when to invest. Make sure you’re investing in areas that directly support your business strategy. Focus on the investments that will help you build a solid foundation and return value over time.
At Book Werkz, we make sure your business chips are placed wisely with a well-thought-out strategy, so you can calculate and execute financial investments timely.
6. Not Having a Strategic Financial Plan
Maybe you wrote down your financial goals when you first started out, worked your way through a few steps, and then... paused. The business got busy and your focus was on solving problems, not looking at financial planning.
But, now you’re feeling a bit behind.
The reality is, financial planning isn’t something you do once and forget about. It’s a long-term game.
It requires ongoing strategy, adjustments, and—most importantly—the right bookkeeping team to help you stay on track. A strong financial partner gives you the clarity to make smart, profitable decisions at every stage of your business so you can focus on growth without constantly second-guessing your finances.
Grow A Profitable Business With The Right Financial Moves
At Book Werkz, we help you stay ahead of the game by setting up a financial plan that moves your business to higher profitability.
We provide you with continuous bookkeeping and financial guidance, ensuring that you’re not only prepared for the future but know exactly when and where to make your best business decisions.
Ready to make the right moves that profit your business for long-term success? Let’s get to werk and make sure your business is set up to win by booking a call with us today.