Starting a business can be a very exciting journey, but it also comes with its fair share of headaches and plenty of opportunities to make mistakes. However, by being proactive and avoiding certain common pitfalls, you can increase the chances of success for your entrepreneurial venture to grow into something that will make you shed a tear or two because of how much it has grown.

I am by no means a financial guru but being the owner of my own digital media, marketing and design consultancy, I’ve made many mistakes throughout the years which have taught me some invaluable lessons. Even when it comes to money, I am learning new things every day.

So in order to help you out before you get started on your entrepreneurial journey or even just to encourage you if you’ve already started, here are the top 7 financial mistakes I learnt that you need to avoid when starting a business:

Waiting Too Long to Secure Funding

Waiting until the last minute to seek out a loan or investment can cause missed opportunities. It’s essential to start researching funding options well in advance as well as learning about the finance options you have available to you. If possible, unless necessary try to steer away from debt but if you can afford the debt be wise about how you go about it. Have a solid strategy to pay it back.

I had to fund every business venture I had alone. This will be the case for most of us. I am not a fan of debt, so I funded my business with whatever paycheck I got from the 9-5’s I was working in as well as any side gigs I got. 2022 was a good year for me financially, and even though I did take care of myself a little, you know, to pat myself on the back for the hard work I’d been doing, most of my money went to my business. As of this writing, my business is yet to pay me back! However, with the investment I have put into it, I have managed to acquire new equipment and skills and I have put systems in place to support my business.

Not Saving Enough Money for Tough Times

No one knows what the future holds, so it’s crucial to prepare for the unexpected by saving enough money to cover those often frequent tough times. Financial experts often recommend having at least three months’ worth of trading expenses saved for contingency purposes. As I said earlier, I managed to invest quite a lot of money into my business. Most of that money was used to purchase assets and set key systems in place and then the rest is saved up.

I have a loan system in my business where either I or other people can receive loans from my business, but in essence, what I am creating is a savings strategy where I loan out money to trusty businesses or individuals including myself and claim it later. I see it as my business having savings accounts in many places that I can tap into during tricky times.

I then save the money I have in different forms to spread risk. A lot of my business’s wealth is also tied to assets.

Neglecting Cash Flow Management

It’s easy to get caught up in the daily operations of your business, but neglecting to manage properly the disposal income you have can lead to major issues.

Keep track of your business’s profit levels and cash flow by closely monitoring financial reports. This is something I am learning every day. You do not want to spend too much in one go. You want to try and space out your expenses and purchases as much as possible. You want the money to come out slower than the money coming in.

This isn’t easy all the time but it’s a lesson you can learn with practice. What I do is just ask myself a billion times “Do I really need to do this now?” and oftentimes answering that question soberly helps me make the right choice.

Work on getting more money in than you let out. At the end of the day, your business really is the actual money it has available.

Underpricing Your Products or Services

It’s important to ensure that you’re earning as much as possible from your business. One way to do this is by raising prices if they’ve been set too low. Take the time to understand your costs and market demand before setting your prices.

Charge what you’re worth and don’t back down. You also want to charge based on your expenditure as well as the salary you want to pay yourself.

When I started off, I used to charge very low. I would always wonder where the money I worked so hard for would disappear after I received it. I quickly realised that I was either charging for a loss or just to get by. This was not the right way to do things.

I had to learn about the power of positioning. There is always a client willing to pay your full price, you just have to position yourself in that space.

I went from earning peanuts to earning six figures. But of course, there was a lot of damage to be undone, so those six figures were basically what was used to undo the damage I had done earlier with underpricing.

At least now I can start building on a better foundation.

Not Submitting Paperwork on Time

Staying on top of paperwork is key to avoiding financial problems. Be sure to submit tax returns, employee paperwork, and any other required documents in a timely manner to avoid penalties and fines. If you’re a boutique business like mine you want to ensure you’re keeping a tight account of money coming in and out. Fortunately, I run on a different model so I do not necessarily have employees etc, which keeps me safe from a lot of expenses and paperwork.

Targeting Too Narrow a Customer Niche

Having a well-defined target market is essential, but targeting too small a niche can limit growth potential. Consider expanding your target market to reach a larger customer base and increase revenue. Try and diversify your market segmentation in a way that makes sense to your business. Have clients in the high and mid-income ranges. I wouldn’t recommend you focus on the low. Not only will it kill your profit margins or overwork you but there is plenty of competition down there.

You have better chances working your way to the top from the middle, believe me. This is because not many people have the courage to target that market. Some don’t have the skills. Others don’t have the network. The saying really is true, “It is lonely at the top” but in this case, it’s a good thing.

You only need 3 mid-level clients and like two top-level clients and you’re good to go. Or a healthy amount of mid-level clients and a few at the top. You work out what works for you.

Poor Employee Management

Hiring the right people and leading them effectively is crucial to the success of your business. Avoid financial problems by taking the time to find the right fit for your team and providing them with the support and guidance they need to succeed. I do not have employees per se but I work with a network of skilled professionals. Often for gigs, I have to hire them or do some sort of recruitment for a project. Getting this right is key and will determine whether the execution of a project succeeds or not.

I try to keep the number of people I work with lean and versatile, focusing on quality rather than quantity. Also, you want to keep payment issues simple and to a minimum.


By avoiding these common financial mistakes, you can set your business up for success and minimise headaches in the long run. Remember to stay proactive in learning more about financial, business and project management, and your business will surely thrive. Running a small business is rewarding but it isn’t child’s play. If you do not have kids, you basically get to have one before time, if you do not have a girlfriend then it is like having a demanding one before you actually have one and if you have both, you already know what I mean.

Remember, if you have any questions, reach out in the comments below or hit me up on my socials.

All the best!