Three Financial Mistakes to Avoid

According to Entrepreneur Magazine's Fall 2011 "Startups" edition, there are three main mistakes a business should avoid to save money and insure success:


1) Failing to Establish a Marketing Budget: Social media, e-maill marketing and publicity may be touted as low-cost ways to promote your business, but when business owners think they can advertise on a shoestring, they often run into trouble. The only way to turn on the light and let people know you're there is by marketing and advertising, or you're going to have no customers. While some say the rule of thumb for establishing a marketing budget is 5% of projected annual revenue, each business has to tailor its marketing budget to its own needs.

2) Not organizing for tax savings: It's important to seek the counsel of a knowledgeable financial advisor to determine how to organize your business for the best possible tax advantage. Some businesses are run as sole proprietorships instead of LLC's or S Corps and give up real savings on taxes.

3) Spending too much: When you land a big loan or when the business starts to generate better cash flow and therefore more excess cash, it can be tempting to splurge on items that don't necessarily help grow your business or improve profitability. Keeping overhead low is one of the easiest ways businesses can better manage their money and ensure their survival. Think how to better save or invest your money for the long-term growth of your business.