Avoid THESE Financial Mistakes or Watch Your Business CRASH and BURN
When it comes to running a successful business, managing your finances is everything. Yet, so many entrepreneurs overlook key financial principles that can make or break their company.
I recently sat down with Kyle Smith, CFO and co-founder of Strata Cloud Accountants, to discuss the biggest financial mistakes businesses make—and how to avoid them.
If you’re a business owner, pay close attention because these insights could save your company from financial disaster.
Mistake #1: Ignoring Your Cash Flow
Cash is king. If you run out of it, your business dies—simple as that.
One of the biggest mistakes business owners make is focusing too much on revenue and not enough on cash flow. You might be bringing in millions, but if your expenses are too high or your cash flow is mismanaged, you could still struggle to pay your bills.
✅ How to fix it:
Track your cash flow monthly (or even weekly if needed).
Compare your net income to your net cash flow—if your profits are high but cash flow is low, something is off.
Use forecasting to plan for slow months and big expenses.
Mistake #2: Pricing Your Services Incorrectly
Underpricing is one of the most common (and deadly) mistakes business owners make.
Kyle shared a case study where a business owner wasn’t charging enough for their services and was actually losing money on every sale. The fix? A simple price adjustment and removal of unnecessary commissions turned losses into profit—practically overnight.
✅ How to fix it:
Calculate your true cost per service (including labor, materials, and overhead).
Adjust your pricing to ensure you’re profitable per sale.
Test new prices and communicate increases effectively to customers.
Mistake #3: Slow Implementation of Financial Fixes
Procrastination is a business killer.
Many business owners realize there’s a problem but hesitate to take action. Whether it’s raising prices, cutting costs, or renegotiating contracts, delays can cost you thousands (or more).
✅ How to fix it:
If you see a problem, act fast—don’t wait for a financial crisis.
Use data, not emotions, to make business decisions.
Measure and adjust—track KPIs and tweak strategies as needed.
Mistake #4: Relying Too Much on One Revenue Stream
One of the most dangerous financial risks a business can take is depending on a single client, contract, or income source.
Kyle shared a story about a business where 65% of revenue came from one government contract—a huge risk. If that contract ended, the business would collapse.
✅ How to fix it:
Diversify revenue streams—never let one client or deal control your business.
Plan for the worst-case scenario—what happens if you lose that key account?
Develop multiple sales channels (e.g., different customer segments, new products, or strategic partnerships).
Mistake #5: Not Setting and Measuring Financial Goals
Businesses that don’t set financial goals are just drifting aimlessly.
Kyle recommends using Key Performance Indicators (KPIs) to track progress, spot problems early, and ensure business growth.
✅ How to fix it:
Set annual financial goals and break them into quarterly action steps.
Track 5 key financial KPIs (e.g., profit margin, cash flow, customer acquisition cost).
Have weekly or monthly financial check-ins to ensure you’re on track.
Final Thoughts
If you’re a business owner, financial literacy isn’t optional—it’s essential.
By managing cash flow, setting the right prices, acting fast, diversifying revenue, and tracking financial goals, you can protect your business from financial disaster.
🚀 Ready to get your finances in order? Download Kyle Smith’s FREE guide to the top 5 KPIs for business success here: stratacloudaccountants.com/commonsense.
📢 Which of these mistakes have YOU seen in business? Let’s discuss in the comments!
For more insights and detailed discussions like this, don't forget to subscribe to The Common Cents Show on YouTube and catch each episode live for the opportunity to engage with the experts.