Be wise when seeking financial guidance. There’s a massive amount of advice out there, and some of it may lead unwary business owners off track instead of setting them on the road to success. Here’s some advice to avoid:
Raising money without a goal: One suggestion deserving of the dustbin is money-raising with no goal in sight. Money is a means to an end; save your money-raising efforts for specific expenditures.
Spend to make: Likewise, disregard the suggestion that you must spend money to make money. This may be true in the short term, but habitually spending big is likely to land you in trouble in the long run. Operating on a tight, well-designed budget forces you to make efficient choices and innovate rather than throw money at your difficulties.
Multiyear projections: Then there’s the advice on preparing multiyear financial projections. Because small business operations tend to be unpredictable beyond next year, projecting too far into the future wastes time.
Bigger is better: Perhaps the most important advice to ignore is that by charging lower prices than competitors, you can build a large organization and make more money. But a low-price strategy results in low profit margins, and only very high-volume enterprises can function successfully on low margins.
Small businesses are generally successful at serving niche markets rather than tackling larger markets (and more competition). There’s no rule that says you must be big to be highly profitable.
Your best way to avoid bad advice? Trust your accounting pro to steer you in the right direction.