Common causes of entrepreneurs financial problems

Posted: 18 May 2016 Categories: Business , Financial , Administration
Common causes of entrepreneurs financial problems

Unfortunately, I see in my work many (first-time) entrepreneurs who are struggling with their finances. This can have various reasons, such as: 

  • Unorganized paperwork - A research made by the Institute for Small and Medium Enterprises (IMK) showed that especially freelancers, self-employed and small business owners often have no clear understanding of their financial situation. This is because many entrepreneurs, especially in the first phase of the company's attempt to regulate the administration themselfs without the help and guidance of a bookkeeper or an accountant. Many (first-time) entrepreneurs are choosing to do the bookkeeping alone thinking this save money but they do not realize that this "savings" are much more expensive at the end. Think of the time you spend by keeping your own records and multiply it with your hourly cost. For example, if you charge € 30,00.- per hour and you spend 84 hours on a yearly base doing your own administration, this is € is 2520,00.- you could have earned by working for your clients and charging them for. Add to all this the knowledge a bookkeeper have regarding all tax benefits an rulings that you may not even be aware of. 
  • Prioritize sepdnings - Too often I have seen people spending their company money for things they "may need in the future". By creating a budget plan and prioritze your steps you can have a clear view of what you must buy right now and what can be baught later as your company grow. 
  • Not saving for the annual tax return - Many people don't think about the annual tax return and just keep using all the company's money for various purposes. You must learn to save, not just for that annual tax return but also to make sure your company have eanogh resorces as it grows. 

I would love to hear from you now, do you recognize any of these points? Or would you like to add some points to this list? Feel free to leave a comment below.