INTERNATIONAL POLICY DIGEST

Here are some helpful tips every small business owner should be aware of.

Running a small business requires drive and discipline, especially when it comes to money. Many new business owners focus on their product or service and put off dealing with their finances, which is where things start to go wrong.

In the early days, the numbers might not have felt urgent. But poor money habits grow into bigger problems. Some people spend too much, some forget to save, and others don’t track what’s coming in or going out. These slip-ups can lead to missed payments, tax headaches, and stress.

The good news? Most financial mistakes are easy to fix once you know what to look for. Learning about common missteps now can save you from larger issues later. If you’re a small business owner looking to stay on track, keep reading.

Not Setting Clear Financial Goals

Many small business owners jump in without a plan. They have a good idea, a strong work ethic, and maybe even a few early wins, but they don’t stop to ask: What are we trying to achieve financially?

Without clear goals, it’s hard to track progress. You might be earning money, but is it enough to cover growth, staff, or new tools? Are you working toward opening another location or just trying to stay afloat each month?

Setting goals helps you stay focused. It gives you something tangible to measure. This isn’t about writing a long business plan. It’s about simple, realistic targets. For example, maybe your goal is to bring in $5,000 more monthly within six months. Or maybe it’s about cutting your overhead by 15%.

If you’re unsure where to begin, visit https://www.sofi.com/learn/content/how-to-set-financial-goals/. This guide covers the basics of goal setting, and it’s useful even if you’re early in your business journey. Simple steps like these can lead to smarter decisions and better results.

Mixing Personal and Business Finances

Another mistake many owners make is using one account for everything. Things get messy if you’re buying groceries and paying vendors with the same card. It might initially seem harmless, but it creates a headache come tax time.

When business and personal expenses are all in one place, it’s hard to see what your company is spending. This makes budgeting harder and tracking profits nearly impossible.

Opening a separate business checking account is an easy fix. It doesn’t have to be complicated or expensive. Just having two different accounts can help you stay organized. You’ll know where your money is going and avoid confusion later.

If you’re already doing this, you’re ahead of the game. If not, it’s a quick win that will help you stay in control.

Underestimating Expenses

Many new business owners get caught off guard by how quickly costs add up. It’s easy to think you’ve planned for everything—rent, supplies, maybe payroll. But then you realize other costs you didn’t expect: software subscriptions, delivery fees, website maintenance, marketing, and more.

Underestimating expenses can hurt cash flow. It can leave you scrambling when bills are due or force you to dip into personal savings. Some business owners rely too heavily on credit to cover these gaps. That leads to a cycle of debt that’s hard to break.

To avoid this, keep a close eye on your spending and make a habit of reviewing monthly costs. Over time, you’ll start spotting patterns and catching areas where you’re overspending. Always leave some room in your budget for surprises.

Ignoring Cash Flow

Even if a business looks profitable, that doesn’t mean the cash is there when needed. This is where many small businesses hit a wall. They’re earning money, but they can’t pay their bills on time, which is a cash flow problem.

Cash flow is about timing. You might make a sale today, but if the payment doesn’t come in for 30 days, you still need to pay rent, staff, or utilities. You might run into trouble even with strong sales numbers if you’re not watching this closely.

To stay ahead, track cash flow weekly. Compare how much is coming in and when compared to how much is going out. If your business has slow months, plan ahead for them. You can delay non-urgent purchases or talk to vendors about more flexible payment terms.

Good cash flow habits help keep your business steady. You won’t be stuck trying to catch up—you’ll already know where you stand.

Not Planning for Taxes

Taxes often get pushed aside until it’s too late. Business owners focus on making sales and paying bills, and then tax season hits like a surprise. Without good records or a plan, it becomes a mess.

Some people forget about quarterly tax payments, while others miss out on deductions because they didn’t track their expenses well. Late filings and penalties can pile up fast.

Instead of waiting until the end of the year, make tax prep part of your monthly routine. Set aside a small amount from every sale, so you’re not caught off guard. Use software or a basic spreadsheet to track income and spending.

If possible, work with a tax advisor—even if it’s just once a year. They can help you stay ahead and avoid mistakes that cost more later.

Avoiding Professional Help

It’s common to try to handle every part of the business alone, but it comes at a cost. When it comes to money, small mistakes can lead to big problems. It’s okay to ask for help.

Hiring a full-time accountant might not be in the budget, but even a few hours with a bookkeeper or financial advisor can make a big difference. They can help clean up your books, advise on tax planning, and show you where to cut costs.

You don’t have to figure everything out by yourself. Asking for support is a smart move, not a sign of weakness.

Every business owner makes mistakes. What matters is how you respond. Paying attention to your finances, making small changes, and getting help when needed can keep your business moving forward. You don’t need to be an expert—you need to stay aware and take action when something isn’t working.