Running a small business comes with plenty of advice, tips, and – unfortunately – a fair amount of... The post The Biggest Financial Myths in Small Business appeared first on Clic.
Running a small business comes with plenty of advice, tips, and – unfortunately – a fair amount of misinformation. Some of the worst offenders? Financial myths. These misconceptions can hold you back, cause unnecessary stress, and prevent your business from reaching its full potential.
Let’s set the record straight and debunk some of the biggest financial myths that stubbornly stick to small businesses and hold them back.
Myth #1: You have to control everything
Small business owners tend to believe they need to have their hands in everything. There’s a half truth to that: in the early days, when you don’t trust anyone 100%, it’s hard to hand over payroll, expenses, taxes or budgeting; if it has a pound sign attached, they feel it’s their responsibility.
But the reality is, you don’t have to do it all. In fact, it’s only when you stop doing it all will you see the growth the ‘big guys’ have.
Delegating financial tasks doesn’t mean you’re giving up control; it means you’re optimising your business operations. You hired capable people—so let them do their jobs.
By delegating, you free up your time to focus on more important things, like strategic planning and growing your business. So, no, you don’t need to control everything. You just need to oversee the big picture.
Myth #2: Borrowing is always bad news
“Never borrow money” or “Debt is always dangerous” are sound tidbits of advice, but it’s not always the best advice for all circumstances. The truth is, not all debt is bad.
Borrowing can be a strategic tool for growth. Need a new piece of equipment to scale operations? Want to expand to a second location? If you’re smart about how you borrow, have sought advice and know all the details, it can be a game-changer for your business.
Of course, borrowing recklessly is a different story. If you’re going into debt without a solid plan for repayment, you’re asking for trouble. But taking out a loan with clear repayment terms, manageable interest, and a growth strategy in place? That’s simply using financial tools to your advantage. Remember, many of the world’s biggest companies grew by borrowing wisely.
Myth #3: Profit = Cashflow
It’s pretty common to think that if your business is profitable, you must have plenty of cash. While profits are great, they don’t automatically translate to healthy cashflow. Actually, many profitable businesses fail due to poor cashflow management.
Profit looks great on paper, but cashflow is the actual money coming in and going out of your business—possibly the most important thing.
The key to long-term survival is managing cashflow just as carefully – or even more carefully – as profit. This means keeping an eye on outstanding payments, setting realistic payment terms, and making sure you have enough liquid cash to cover day-to-day expenses.
Myth #4: Doing your own accounting saves you money
There’s a belief that by handling your own books, and even things like board packs and financial strategy, you’ll save on the cost of hiring an accountant or bookkeeper. While this might seem true at first glance, doing your own accounting can end up costing you more in the long run.
Unless you’re a trained accountant, you’re likely missing out on tax deductions, making small mistakes, or simply not keeping your books as organised like they should be. And what about all those hours you’re pumping into your finances that you could be spending getting new paying customers?
Hiring an accountant might seem like a big expense, but think of it as an investment in your business. They’ll ensure everything is accurate, help you take advantage of tax-saving opportunities, and free up your time to focus on growing your business, not reconciling receipts.
Myth #5: You should always reinvest everything into the business
Let’s talk about why most entrepreneurs go into business for themselves: the money. Of course there are other reasons like freedom, a passion, not wanting a boss; but for most, money has a lot to do with it.
If you’ve ever heard, “Reinvest all your profits back into the business,” you could be gearing yourself up for burnout.
A balanced approach is best: you need a financial buffer (stick some into savings), growth (capital for hiring, equipment, marketing, etc), and last but certainly not least, paying yourself. You chose the tough road of business ownerships for the rewards, not to work endlessly without any perks.
Myth #6: You can ‘set and forget’ your budget
Creating a budget is a huge step in the right direction, but here’s where many business owners go wrong—they create the budget and then ignore it for the rest of the year.
Your budget should be a living, breathing document that adapts to changes in your business. Are your costs fluctuating? Are you bringing in more (or less) revenue than expected? Your budget needs to reflect that. Review it regularly, make adjustments as needed, and keep it aligned with your business goals.
Myth #7: Financial success is all about revenue growth
Many small business owners focus on revenue growth as the be-all-end-all measure of success. It’s exciting to see those numbers climb, but revenue alone isn’t a guarantee of financial health. It’s possible to increase your revenue while still struggling to break even, because although your income is amazing, your expenses are growing even faster.
Profitability is the real measure of financial success, not revenue. Sure, you want to grow your revenue, but if your expenses are increasing or your margins are shrinking, that revenue boost won’t help. Instead, focus on smart, sustainable growth. Keep an eye on your expenses, maximise efficiency, and work toward improving your margins alongside revenue.
Myth #8: You only need a financial strategy when you’re in trouble
This one is dangerous: lots of business owners only think about a financial plan when things go wrong. They scramble to create one when cash is tight, when they need a loan, or when they’re facing a crisis.
But, financial planning is critical long before things go wrong. A solid financial plan gives you the road map to guide your business through the good times and the bad. It helps you prepare for growth, anticipate challenges, and make informed decisions.
Start planning now, stay ahead of the game, and your business will be far more ready to handle whatever comes its way.
Small business finances can be tricky to navigate, and these myths don’t help. It’s time to focus on what really matters: delegating wisely, planning ahead, and making smart, informed financial decisions.
The post The Biggest Financial Myths in Small Business appeared first on Clic.
