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Four Common Startup Money Mistakes Good financial management is key to startup success. You can get your business off to a sound start if you can avoid these money traps.

By Gwen Moran

Opinions expressed by Entrepreneur contributors are their own.

Money SmartsStartup businesses come in myriad different forms, but each have one thing in common: They need proper financial management in order to survive. Small-business finance expert Steve Strauss, author of Get Your Business Funded: Creative Methods for Getting the Money You Need, outlines four common money mistakes everyone should avoid:

1. Underestimating startup costs. Strauss says the most common mistake he sees entrepreneurs make when launching a business is underestimating the amount of money they will need. Startup costs, repaying investors and even the founder's salary are all areas where entrepreneurs are too frugal in their estimates, he says. When the reality of the true cost of running the business hits, many find their budgets stretched--sometimes beyond what is sustainable.

2. Failing to establish a marketing budget. Social media, e-mail marketing and publicity may be touted as low-cost ways to promote your business, but when business owners think they can launch on a shoestring, they often run into trouble, Strauss says. "The only way you can turn on the light and let people know you're there is by marketing and advertising, or you're going to have no customers," he says. While some say the rule of thumb for establishing a marketing budget is 5 percent of projected annual revenue, Strauss says each business has to tailor its marketing budget to its own needs. A regional business may have more limited marketing venues than a business that is launching nationally or internationally, for example.

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