Finance

Don't Go There

8 common mistakes entrepreneurs make with their money
2 min read
Opinions expressed by Entrepreneur contributors are their own.

Business Start-Ups magazine, July 1999

How important is money to the success of your business? Very. "Often it's not the lack of a business plan, lack of foresight or lack of competent management that leads to failure. Rather, it's a lack of capital--even in businesses that are thriving," says Larry London, managing director of Entrepreneurs Re$ource Group in Dunedin, Florida. "In fact, a survey of successful business owners [conducted last November by Geneva Business Bank] concluded that the largest potential trouble spot is when a company is experiencing rapid growth."

London says the eight most common mistakes made by entrepreneurs are:

  • Failing to borrow funds
  • Overlooking available financial resources
  • Underestimating financial risks
  • Ignoring the downside of having investors
  • Making unrealistic estimates of your borrowing potential
  • Neglecting to manage lender relationships
  • Preparing a loan application under pressure
  • Failing to forecast cash needs

There are a number of other common errors, of course, London adds. "Most notably, too many small businesses borrow relative to their cash flow and don't leave enough money to run the business. That is, the business owner borrows as much money as he knows he can repay based on cash flow. But with payments going to service that debt, the business doesn't have enough money left for growth."

More details are spelled out in a brochure London wrote, The 8 Biggest Financial Mistakes Business Owners Make--and How to Avoid Them. For a copy, call (888) 541-5417.

Paul DeCeglie (MrWritePDC@aol.com)is a former staff reporter for Journal of Commerce and American Banker.

More from Entrepreneur

Are paying too much for business insurance? Do you have critical gaps in your coverage? Trust Entrepreneur to help you find out.
Get Your Quote Now

One-on-one online sessions with our experts can help you start a business, grow your business, build your brand, fundraise and more.
Book Your Session

Whether you are launching or growing a business, we have all the business tools you need to take your business to the next level, in one place.
Enroll Now

Latest on Entrepreneur

My Queue

There are no Videos in your queue.

Click on the Add to next to any video to save to your queue.

There are no Articles in your queue.

Click on the Add to next to any article to save to your queue.

There are no Podcasts in your queue.

Click on the Add to next to any podcast episode to save to your queue.

You're not following any authors.

Click the Follow button on any author page to keep up with the latest content from your favorite authors.

4 Pieces of Financial Advice Every Budding Entrepreneur Needs to Hear