6 Financial Mistakes Entrepreneurs Make

Dear entrepreneurs, you have to know this: Spending too much isn't the problem, the problem is spending on the wrong things at the wrong time. It is okay for you to purchase things but purchasing things you don’t need doesn’t make any sense.

So here are Common Financial Mistakes Entrepreneurs make.

You Haven’t Made Savings a Priority

Businesses are so unpredictable. It is not the same as having a 9-5 job where you have a salary structure. That’s why it’s important that as an entrepreneur, you SAVE MONEY. There are ups and downs in business, so you have to have a backup plan when things go down. You need to make saving money an automatic habit so that your savings will be there to save you when you need it!

So to guide on how to save, I’ll recommend Nicolas Gremion’s "Solving the Money Puzzle: Personal Finance Made Simple" because it's crucial for entrepreneurs to properly manage their personal finances before being endowed with startup capital. You can listen to the audio version here http://tidd.ly/248f835b

You are Undercharging.

Many a time, entrepreneurs fail to cover even the actual costs of doing business when they price their products and services. The more they sell, the more they keep depreciating! Many entrepreneurs feel they are profitable if they are “making money.”

It is okay to keep making sales, but when the sales are not yielding profits, your business is going down the drain because it’s never enough to pay taxes, insurance, or actually SAVE some of it! Ultimately, if your business doesn’t support your whole life, you’re going backwards. Get honest with yourself about the money that flows in and out of your life and business.

Living Above Your Means
The life of a successful entrepreneur is glorious, and many of us envy them and wish to live large as them. It’s easy to get caught up in the lifestyle before you’ve actually “made it”. What most people forget is the journey each of those successful entrepreneurs had to endure. At some point, you have to forget the team dinners, happy hours, and big salaries. The more comfortable you get, the more likely you’ll get overtaken by your competition. It’s important to stay grounded at all times and delay gratification. Sure you can celebrate the small victories but don’t be excessive.

Hiring a Sales Team Too Early
Instead of hiring a sales team at first, invest your resources in developing a useful product. Useful products sales easily when you put in the effort with your team of employees. You can pitch the product wherever you go-including while waiting in line at the supermarket.

Falling for Office Space Another mistake entrepreneurs make at the beginning is falling for luxurious office space when they are still trying to find their feet. The truth is, a well-located office space can be tempting, and it will also attract employees, impress clients, and press. 

But most times, the cost isn't worth it because you want to prove to people you’ve made it when you haven’t, drawing a false sense of accomplishment.

Under-utilizing all Available Resources
If you need help, ask for it from your advisers and board. Don't think of your board members as just folks who tell you what to do; put them to work. The best entrepreneurs know how to leverage their network and are not shy about asking for advice and introductions.

Finally, effectively managing money for a company is a never-ending process. Even public companies have trouble doing this well, as evidenced by layoffs.

So, good financial decision-making is fundamental to you scaling from six to seven figures, so take charge now before it takes charge of you.

In addition to the book we recommend above, we also recommend you to read Money: Master The Game by Tony Robbins. You can also get the audio version for FREE here: http://tidd.ly/248f835b