Financial Mistakes New Business Owners Make—and How to Avoid Them
Starting a business is exciting. You’ve got your logo, your website, and a business plan scribbled on the back of a napkin. You’re ready to take on the world - until, a few months in, you realize your bank account looks like a sad meme and you’re asking yourself where did the money go?
Fear not, fellow entrepreneur. We’re diving into the financial mistakes new entrepreneurs make - so you can dodge them like a pro and keep your business (and your sanity) intact.
Let’s get into it.
💸 Mistake #1: Mixing Personal and Business Finances
Ah yes, the classic “I’ll just pay for this business thing on my personal credit card and figure it out later” move. Spoiler: later never comes, and tax season becomes a full-blown horror movie.
How to Avoid It:
Open a separate business bank account now. Use it for everything - expenses, income, that one slightly questionable Canva subscription. Keep it clean, keep it separate.
🏦 Mistake #2: Underestimating Start-Up Costs
Sure, you can start a business on a shoestring budget… but “shoestring” doesn’t mean zero dollars. Many new business owners forget to budget for essentials like software, legal fees, insurance, and (oh yes) taxes.
How to Avoid It:
Write down all your expected costs, and then add 20%. Because surprise expenses will happen.
📊 Mistake #3: Not Tracking Cash Flow
Here’s a fun fact: cash flow is the lifeblood of your business. No cash flow, no business. Yet so many new entrepreneurs ignore it until their account is emptier than their fridge the day before payday.
How to Avoid It:
Track what’s coming in and going out. Use accounting software (QuickBooks, Wave, even a spreadsheet if you’re old school). Check it weekly - yes, every single week.
🧾 Mistake #4: Forgetting About Taxes
You know what’s worse than paying taxes? Paying taxes with penalties and interest because you didn’t plan ahead.
How to Avoid It:
Set aside 25%–30% of your income for taxes as it comes in. Better to have too much than not enough.
💰 Mistake #5: Underpricing Your Services
Here’s a tough pill to swallow: if you’re not charging enough, you’re not running a business - you’re running a charity. Many new entrepreneurs lowball their prices out of fear, only to realize they’re working for peanuts.
How to Avoid It:
Price based on your costs, desired profit, and the value you bring. Not sure how? Check out our blog on pricing services based on business finances (shameless plug, but hey, it’s helpful).
🚀 Mistake #6: Trying to Do It All Yourself
Just because you can do your own bookkeeping, marketing, website design, and social media doesn’t mean you should. Burnout is real, and doing everything can slow your business growth.
How to Avoid It:
Outsource where it makes sense - hire a bookkeeper (hello!), get a designer, or use that AI assistant you’ve been eyeing. Focus on what you do best.
😂 Mistake #7: Ignoring Your Financial Reports
If the words “profit and loss statement” make you want to take a nap, I get it. But ignoring your numbers is like driving blindfolded. You need to know what’s going on to make smart decisions.
How to Avoid It:
Review your reports monthly. Look at your profit, expenses, cash flow, and make a plan. You’ll feel like a boss, I promise.
🏁 Final Thoughts
Starting a business is a wild ride, but you don’t have to learn everything the hard way. By avoiding these common financial mistakes, you’ll set yourself up for smoother sailing and stronger profits.
So here’s your action plan:
✅ Keep personal and business finances separate
✅ Budget everything
✅ Track cash flow like your business depends on it (because it does)
✅ Plan for taxes
✅ Price for profit
✅ Get help when you need it
✅ Check your reports (and maybe pour a cup of tea while you’re at it)
👉 Want more tips, laughs, and real-talk finance advice for your small business? Subscribe to Tea on the Ledger - your go-to source for practical strategies, small business wisdom, and a healthy dose of humor.
Let’s make smart money moves, together. 🌿
