1) Not having a solid forward looking financial strategy that it supported by your business plan.
Do not create an amazing business plan but fall short when creating your forward-looking financial strategy. A solid financial strategy will make it easier to manage the challenges that lie ahead, and help you make more informed decisions along the way. Giving you time to focus on product development, marketing, sales, resource optimization, client diversity and retention, and most importantly, growth.
2) Putting the cart before the horse - and Overspending
Cash flow, cash flow, cash flow. Investors want to see cash flow! Product development, retaining top-notch talent, advertising, all need cash flow. Prioritize your spending and prepare a weekly cash flow. Utilize your budgets and cash flows to help you avoid overspending and depleting cash reserves that you will most certainly need.
3) Not tracking your finances
With so many apps and automation today there's no excuse for not tracking your finances. When you do not track your finances, you do not have the crucial information needed for your financial strategy, tax strategy, or potential future investors or m&a opportunities. Tracking is a must.
4) Underestimating your cash flow forecasts
A strong cash flow forecast can help you better understand your financial position and anticipate potential cash flow shortages or surpluses. By understanding the business cash flow position, you can make more informed decisions about investments, expansion, and other strategic initiatives. You can identify potential financial problems early and take steps to address them before they become critical. A strong cash flow gives you more flexibility to take advantage of opportunities as they arise.
5) Ignoring tax obligations
This mistake has a compounding effect that will at the very least cause you unbelievable stress, or worse, has the potential to sink your entire ship. Understanding and complying with tax laws is crucial.
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