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5 Cheap Money Mistakes That Kill Small Businesses

Abdultawab Ibrahim
Ever wondered why small businesses fail? In these stories ahead, I have outlined 5 cheap money mistakes that kill small businesses and ways to avoid them.

Ever Wondered Why Businesses Fail?

20% of small businesses fail in their first year, 30% of small businesses fail in their second year, and 50% of small businesses fail after five years in business. Finally, 70% of small business owners fail in their 10th year in business.

1. Not Knowing the Difference Between You (as the Owner) and Your Business

Businesses are treated as being separate from the owners and this is what we call, entity concept (i.e business related activities and owners related activities should be accounted for separately).

2. Withdrawing From the Business

There’s a concept called ‘owners drawings’ in the accounting field which is one of the basic most important concepts needed for any business to grow and survive.

3. Not Re-investing in the Business

Profit acquired should be re-invested in the business until the business stands and grow eventually without relying on additional funds thrown into the business.

4. Not Keeping Proper Business Records

Business record keeping is the process of recording all the financial transactions and events that occur in your business. It could be purchases, sales, earnings, receipts or payments made.

5. Not understanding what profit really means

Simply, profit is the difference between selling price and cost price but many small business owners forget to scrutinise the cost they incur before arriving at profit.


Owning a small business could be overwhelming and very exhausting due to the fact that you have to micro-manage almost every single task. However, managing your finances effectively is one of the key ways to sustain your startup. Be sure to avoid each of the 5 cheap money mistakes I've outlined and get ready for success.

Thank You

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