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Owning a small business is hard work. Many small business owners make little mistakes that wind up costing them lots of money in the long run. Keeping an eye on the money is of the utmost importance – it’s what fuels the engine that keeps your small business running.

Sometimes, common sense financial practices can be made even better by setting a few ground rules and rethinking the way you approach routine financial responsibilities.

financial tips for small business owners

1. You Always Need More Money Than You Think

One of the worst possible scenarios that small business owners encounter is that they’ve run out of the money they need to complete a goal, whether that goal is running an advertisement campaign, reordering a product, or paying their employees.

Always assume you need more money than you actually do. Rounding up estimates by as high as 20% can prevent financial mishaps. If you don’t dip into that extra 20%, you can save it for an emergency.

2. You’re Probably Forgetting Some Things in Your Budget

The cost of small things adds up quickly.

Did you remember to include pens, printer paper, hand soap, staples, and bathroom tissue in your expenses? It’s a silly mistake that small business owners make quite often. You might have been so concerned with the big stuff that you’ve let the small stuff slip your mind.

Take note of all the tiny things – over time, they add up to a substantial amount of money.

3. Extra Space is Extra Cash

Small business owners often buy, rent, or lease offices or locations that are slightly bigger than what they currently need. That’s a smart plan. It offers room for growth, which accommodates a longer lease. Since longer leases are least expensive, there’s also the benefit of saving a little money from month to month.

If you aren’t using that extra space right now, you can rent it out on a community sharing website. Freelancers or other startups who don’t have the capital for their own building would love to get a sweet deal on your spare rooms.

4. Don’t Be Kind and Gentle with Invoices

Small business owners have a tendency to let invoices slip away from them. They send them out and people don’t pay their invoices on time. They have to follow up multiple times to chase their money.

If you can implement autopay or electronic payment methods for your customers, paying will be easier. Be clear about when the invoice will be due, even before the product or service reaches the customer. Send automated reminder emails the moment the customer has been served. It will be harder for them to outrun their invoices.

5. Don’t Overspend on Advertisements

Small business owners often overspend on advertisements. They believe that more visibility means more customers. While that’s true, it’s the quality rather than the quantity that matters most.

Smaller, highly targeted ad campaigns are likely to drive more paying customers to your business. If you know your average customer or client is a specific type of person, set your social media ad parameters to target those specific people. You’ll see a better return on your investment.

Worry about broad and sweeping campaigns when you have enough cash not to sweat them.

In the beginning, stick to what you know.

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6. Keeping Too Many Things In-House

You can outsource a lot more than you might realize. Everything from search engine optimization to social media management to email list marketing to customer service can be outsourced to an expert provider.

Before you overstretch yourself and your limited staff, see if an out of house solution would be a better fit for your small business.

7. Leave Yourself Room to Grow

If you want to make more money and hire more people, you’ll need to figure your growth into your plan. Make sure you’re setting enough money aside to facilitate that growth.

Slow growth is better than no growth. Even if you’re taking things in tiny steps, it’s better than keeping things the way they are and missing an amazing opportunity to live up to your full potential.


Many entrepreneurs find that effective money management is something that can only be learned with experience and time.

Be aware of every aspect of your budget and your bookkeeping and always look for ways to keep costs down without sacrificing quality.

Sarah Kearns is a hard-working mother of three daughters. She is a part of the team behind Parkhound – a place where you can find cheap parking spots. She loves cooking, reading history books and writing about green living.

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