When you run a business, it is inevitable that you will make more than your fair share of mistakes. While some of these things are small learning curves which you can recover from, others could end up being terminal for your company. Financial mistakes can be business-threatening, which is why if you can avoid making the errors in the first place, you will put yourself on a much firmer footing. In this article, we are going to discuss in more detail the seven deadly sins of business financing, so you can read, learn, and not make them in your own company.

Spending Money Before You Have it

Don’t start counting your money before it hits your bank account. This is especially important advice when you are first getting started in business. Yes, you may have secured some big orders for yourself, but you never know how difficult it is going to be to prise the money from your clients. There is an enormous difference between having revenue and almost having it. If you start spending the money before you actually have it and a deal falls through, you could find yourself in financial straits which are difficult to recover from.

Borrowing Money Because People are Willing to Lend it

Just because a bank is offering you a loan to grow your business, it doesn’t mean that you always have to take it. After all, the bank is not doing it from the kindness of its own heart! Make sure that you have made a plan for where the money will be spent if you do take the loan. Ensure that it will go to a good cause – namely growing your business in some way. Borrowing money can also lead to stress which will distract you from the successful running of your business. If you are going to borrow money, you need to know the basics of credit management from the likes of Alex Kleyner.

Not Keeping a Close Enough Eye on Finances

Of course, there are a million things on your plate when you are an entrepreneur, but that doesn’t mean that your finances should take a backseat. You need to make sure that you sit down on a regular basis to analyse your incomings and outgoings, looking for ways that you can run your operation more efficiently. Financial modeling software can help to make that process much more simple. And if you want to sharpen your financial modeling skills even further, it’s worth taking a moment to take a look at their course — especially if you work in FP&A, investment banking, or SaaS and want models that CFOs will actually use.

Modern finance teams are also embracing automation tools like Numos AI — an AI teammate for finance organizations that streamlines workflows, automates repetitive tasks, and surfaces key insights, helping teams work smarter and avoid costly financial oversights.

Pricing Too Low

You are almost always better off selling fewer units at a higher price rather than trying to sell a lot at a low price. After all, you are not running a big business so you aren’t in a position where it is okay to take the loss. So, you need to make sure that you analyse your margins carefully. Of course, you want to give your customers a good deal but you also don’t want to risk your business going under. If you price too low at the start, you are going to frustrate customers if you suddenly have to make a big increase.