03 Feb, 2017

The Most Common Financial Mistakes Small Businesses Make, and How a Covina Accountant Can Help

Any accountant in Covina can tell you that they often spend a lot of their time trying to fix mistakes made by well-meaning small businesses that didn’t understand good financial planning. Many startups and smaller organizations don’t understand the need for proper accountancy from the beginning, and it generally comes back to haunt them later. Hiring an experienced Covina account is far more of an investment than an expense, precisely because they can spare small businesses a lot of trouble.

Based on our own experiences here at HSRDS Accountancy Corporation these are the mistakes we most often see. Whether you already have an accountant or not, these are all major issues to avoid.

Major Financial Mistakes Small Businesses Often Make

Too-Rapid Expansion

Few things can ruin a potentially good operation faster than over-expansion. We understand, it’s so easy to get excited when a business starts to succeed – but expansion must be based on solid foundations. When a small business begins hiring too many new employees, too quickly, it creates a major budget drain that their revenues simply cannot make up. If a company must lay off employees within their first couple years, it rarely bodes well and is usually a big hit to their reputation too.

Slow and steady is the best approach to hiring.

Underestimating Operating Expenses

Few variables are more important when getting a handle on a business’s finances than its day-to-day and month-to-month operating expenses.  Unfortunately, small business owners frequently underestimate these costs -sometimes drastically- and it leads to financial disasters. Elements such as license\permit fees, utility bills, insurance, and shrinkage are overlooked, which leads to cashflow shortfalls and shattered dreams.

One of the most important services an accountant in Covina can provide is helping businesses understand and properly predict all their expenses, to ensure their revenues are sufficient. 

Miss Pricing Their Products

Whether a business is providing physical products or non-tangible services, pricing is one of the most critical aspects of ensuring financial stability. Too many companies price according to what they’d like to make, rather than looking realistically at their offerings from the consumer’s point of view.

Good pricing strategy means taking a long, hard look at the market and the other options a potential customer has available to them. This often includes both local and online\long-distances offerings. Pricing that doesn’t take these into account will rarely be attractive to buyers.

Of course, many say the biggest financial mistake a small business can make is not hiring professional services early on. To avoid these problems, get an accountant in Covina you can trust: HSRDS Accountancy Corporation .Contact us today at http://www.hsrdscpas.com/contact-us/ for a full consultation.

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