Small Business Owner Financial Planning: Common Mistakes to Avoid

Without proper small business owner financial planning, your dreams of running a business could become a nightmare.


Small business owner financial planning is an important step in maintaining the financial health of your business now and into the future.

How to Help Maintain the Financial Health of Your Business Today and Into the Future

Starting and operating a small business can be an exciting and fulfilling journey. However, without proper financial planning, it can quickly become a nightmare. Many small businesses fail within their first year of operation due to poor financial management. This is why financial planning is essential as you work to build and maintain a successful small business.

Financial planning involves creating a roadmap for the financial future of your business. It can help ensure that you have enough money to cover expenses, pay debts, and save for future investments. The following are some financial planning mistakes to avoid when starting and running a small business.

1.     Failure to Create a Budget

The first step in financial planning for a small business is to create a budget which helps you to track your expenses and plan for the future. Without a budget, it can become easy to overspend, which can lead to cash flow problems. A budget should include all your expenses, including rent, utilities, salaries, and inventory. It should also include your projected income.

2.     Neglecting Cash Flow Management

Cash flow is the lifeblood of any small business. Small business owner financial planning means ensuring that you have enough cash to cover expenses and invest in growth opportunities. Many small businesses fail because they run out of cash. To avoid this, it is important to track your cash flow regularly, forecast your future cash needs, and plan for contingencies.

3.     Ignoring Taxes

Having a tax strategy in place is also an important part of small business owner financial planning. Many small business owners fail to plan for taxes, leading to unexpected tax bills and penalties. It is important to understand the tax requirements for your business and plan accordingly. This includes setting aside money for taxes, maintaining accurate records, and filing taxes on time. You may also want to work with a tax professional to ensure you’re taking advantages of any small business tax incentives for which you may qualify.

SEE ALSO: Small Business Owner Financial Planning: Benefits of Using a Financial Advisor


4.     Overestimating Revenue

Many small businesses make the mistake of overestimating their revenue. This can lead to overspending and cash flow problems. It is important to be realistic when forecasting your revenue and to plan for the worst-case scenario. This means having a contingency plan in place in case your revenue falls short of your projections.

5.     Underestimating Expenses

Just as overestimating revenue can be a problem, so can underestimating expenses. It is important to include all your expenses in your budget, including those that may be unexpected. This means small business owner financial planning must account for contingencies, such as equipment repairs, unexpected bills, and even legal fees.

6.     Failing to Separate Business and Personal Finances

Many small business owners make the mistake of mixing their personal and business finances. This can lead to confusion, inaccurate financial statements, and legal problems. It is important to maintain both separate bank accounts and separate credit cards for your business and personal finances. This will make it easier to track your business expenses and to file your taxes,  allowing for more streamlined small business owner financial planning, too.

7.     Putting Off Succession Planning

Small business financial planning should also include a strategy for your eventual exit from the business. Specifically, it can be important to consider whether you have all the financial resources you’ll need to cover your retirement costs. This will require a look at the hard numbers, starting with the value of your business. You should think through whether you plan to hire a consultant or broker to help you sell the company, and whether you want to sell to an outside party or someone you already know – such as an existing employee or a family member. As you consider your options and begin making decisions, get your business succession plan in writing.

SEE ALSO: Small Business Owner Retirement Planning


8.     Failure to Plan for Growth

Planning for growth is essential for the long-term success of your company, and it should also be a critical aspect of your small business owner financial planning. This means investing in your business, hiring new employees, and expanding your customer base. It is important to have a growth plan in place and to be realistic about the resources required to achieve your goals.

9.     Not Seeking Professional Advice

Many small business owners make the mistake of trying to handle everything themselves. After all, entrepreneurs are accustomed to boot-strapping to achieve their goals, and many pride themselves on being self-reliant. These are qualities that have likely contributed to your business success, but they can lead to poor financial decisions and missed opportunities when it comes to small business owner financial planning. It is important to seek professional advice from an accountant or financial planner to ensure that you are making the right decisions for the long-term financial health of your business.

Do You Need Small Business Owner Financial Planning Services?

For a multitude of reasons, small business owner financial planning is a critical step for your current and future financial health. By avoiding some of the common financial planning mistakes outlined above, you can help ensure that your business is on the path to success.

If you’d like an experienced partner to assist you with small business owner financial planning, we can help! At Aviance, we provide specialized financial planning services for small business owners, and we would be delighted to share more about how we can help you achieve your business and personal financial goals. If you need a financial advisor in Florida, schedule a call with us today.

Aviance Capital Partners, LLC (“ACP”) is an SEC registered investment adviser located in Naples, Florida. Registration as an investment adviser is not an endorsement by securities regulators and does not imply that ACP has attained a certain level of skill, training, or ability. While information presented is believed to be factual and up-to-date, ACP does not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. Not all services will be appropriate or necessary for all clients, and the potential value and benefit of the ACP’s services will vary based upon the client’s individual investment, financial, and tax circumstances. The effectiveness and potential success of a financial plan depends on a variety of factors, including but not limited to the manner and timing of implementation, coordination with the client and the client’s other engaged professionals, and market conditions. The tax and estate planning information provided is general in nature, which should not be construed as specific financial planning or tax advice tailored to an individual reader. ACP suggests that readers consult a financial professional, attorney or tax advisory professional about their specific financial, legal or tax situation. Customized financial planning indicates that financial planning will be informed by the material financial and investment circumstances of the client, as communicated by the client to the adviser, but may not consider literally all aspects of a client’s financial affairs. Past investment performance does not guarantee future results. All investment strategies have the potential for profit or loss, and different investments and types of investments involve varying degrees of risk. There can be no assurance that the future performance of any specific investment or investment strategy, including those undertaken or recommended by ACP, will be profitable or equal any historical performance level. Additional information about ACP, including its Form ADV Part 2A describing its services, fees, and applicable conflicts of interest and its Form CRS is available upon request and at

For current ACP clients, please advise us promptly in writing, if there are ever any changes in your financial situation or investment objectives, if you wish to impose any reasonable restrictions to our management of your account, or if you have not been receiving at least quarterly account statements from your account custodian. ​

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