Forming a business budget is something that few entrepreneurs tend to enjoy. Indeed, not only is developing an annual budget often quite arduous, but it’s also just plain boring. Reviewing your business’s income and losses and examining the minutiae of your financial standing is a draining task. That’s why many business owners employ an accountant (or team of accountants) to handle the financial aspect of their operation. Still, not every business owner can afford such support. Small business owners who are looking to make better use of their capital need to identify and avoid these five common budgeting mistakes:

Complacent Spending

There’s an argument to be made that business owners shouldn’t seek to fix what already works. However, adopting such a mentality isn’t to be recommended. It’s crucial to attribute value to every purchase you make. Rather than assuming you spent your money wisely last year, scrutinize your decisions closely. Odds are, you’ll find places where you can cut back and not lose anything of great value.

Assumptions vs Projections

A detailed business projection should be backed up with years of data and research. If you’re going to attempt to predict how a new product will fare on the market, then you need to do your homework before forming a budget or forecasting potential revenue. Simply assuming that a new campaign will cost “x” amount of dollars without doing the requisite legwork could very well leave you in an uncomfortable financial jam down the line.

Failure to Invest

Strange though it may sound, forming a sound budget isn’t all about cutting costs. Instead, it’s more about finding smart investment opportunities both within your company and outside of it. Forgoing necessary tech upgrades, like pharmacy point of sale software for example, could put your team behind the eight ball and end up costing you more in the long run.

Forgetting the Human Element

Many business decisions –– particularly those relating to funding and finances –– are made with cold, black-and-white logic. Nevertheless, it’s unwise to completely discount the wider effects of your budgetary decisions. Deciding to shift capital from one department to another, for instance, will have a psychological impact on your team. Forgetting the real-world repercussions from decisions made in a vacuum is one of the biggest mistakes you can make as a business owner.

Overconfidence

As in any walk of life, it’s important for professionals to understand their limits. There’s no shame in not knowing if a particular business loan makes sense, or if an interest rate isn’t feasible. It is, though, very risky to budget without proper knowledge of the task. Partnering with a dedicated accountant, then, could end up saving you a few massive headaches –– and a lot of money too!

Modern business owners have to possess a wide array of knowledge that spans a variety of diverse subjects in order to achieve sustained success. In other words, business owners wear a lot of hats these days. Indeed, dedicated professionals are constantly learning new skills and applying them in practical ways. From mastering a new SEO tactic to memorizing a new client’s sales process, a business owner is never truly “finished learning.” To that end, today we’re going to provide four tips that’ll help business owners stay focused and retain information more effectively: 

Teach Your Problems

Business dealings can quickly devolve into a complex hive of jargon and industry-speak. And even the most adept professionals can sometimes get lost when reading a long-winded report or sitting through a lengthy presentation. As such, it’s often beneficial to take a step back and break a problem down –– as if you were explaining it to an outsider with no prior knowledge. Simply talking through an issue will often help you gain perspective and identify meaningful insights.

Give the Acronyms a Break

Business leaders love to use acronyms and abbreviations whenever possible. The problem is, these terms are often more confusing and esoteric than the original phrase ever was. Insider lingo and industry acronyms may be beneficial for shorthand around the office, but it’s crucial to seek out their definitions when you first hear them. Sitting around and wondering “what does VoIP mean,” or “what does IoT stand for” won’t do you any good. In addition, you may also want to consider creating a document to catalogue acronyms and their meanings as you encounter them.

Seek Out Real-Life Examples

Abstract terms and complex subjects are just that –– abstract and complex. Whenever possible, look for real-life examples that illustrate a point and display the true effects of a principle or idea. Plus, if you can put a name/face to a concept, you’re much more likely to remember it later on.

Write Everything Down

Few individuals are blessed with an eidetic memory. As such, the rest of us need to use resources to stay on top of our responsibilities. Fortunately, few tools match the power of a simple pad and pen. It may sound tedious, but taking the time out to physically write down important appointment dates or details pertaining to recent meetings will help you manage the finer points of your operation. Considering that it’s often the little things that enable businesses to thrive and grow in the first place, it’s hard to overstate the value of an old-fashioned notebook-planner.

While some parts of the residential housing market are struggling to regain their pre-Great Recession levels — and a few are barely registering a pulse on the ECG — the commercial real estate market isn’t just humming along nicely, it’s flat-out booming. And according to forecasts from the Urban Land Institute, the uptick should continue at least through 2019.

As such, if you’re been thinking of launching a career as a commercial real estate professional, there has arguably never been a better time to get in the game and hit the ground running. To help you soar in the air vs. stumble on the ground, here are seven tips to keep in mind:

  1. One of the key abilities that will set you apart — and elevate your earnings — is the ability to understand what differentiates a hot commercial property from a lukewarm or cold one. And one of the best ways to develop this competency is by visiting in-demand properties. Photos and descriptions won’t tell you the full story.
  • Don’t underestimate the importance of outstanding signage. While commercial buyers obviously don’t look at real estate signs the way that residential home buyers do, they certainly notice them — and often make a snap, subconscious judgement of whether a commercial realtor is professional or amateur. For some examples of excellent commercial real estate signs check out the online gallery of Landmark Signs, a leading St Louis sign company.
  • Master the art of the cold call. Until you establish a referral network, you’ll need to populate your pipeline by picking up the phone and speaking to property managers and owners. If this is something you dread doing, then the world of being a commercial real estate professional might not be for you.
  • Roll up your (virtual) sleeves and dive deep into insightful analytics and data. For example, you want to stay on top of local market data published by the Chamber of Commerce, demographic data published by the Department of Labor, and so on.
  • Prepare to play the long game. Remember, this isn’t the residential real estate market. Even in a sizzling commercial real estate market like San Francisco and Austin it can take several months for a deal to close. And for large, complex deals it could take years to go from initial engagement to signed, sealed and delivered (and paid!). 
  • When you start out, you’ll typically need to have a few prospective deals going at the same time — or else you might not be earning enough income to make things viable.
  • Always carefully calculate your expected revenue from any deal. Don’t assume anything or make guestimates, because you may find yourself disappointed — or shocked — by your compensation.

The Bottom Line

Being a commercial real estate professional is interesting, challenging, and potentially very financially rewarding. The key to your success is doing your homework, strengthening your weaknesses (hey, we all have them!), building beneficial relationships, and keeping your eye on the prize.

Trouble is out there. When it comes to personal finance, all sorts of factors and unforeseeable events can spoil years of hard work and cost diligent individuals huge sums of money. Some issues are obvious, but others are more clandestine. After all, it’s the problem you never notice that will cause you the most agitation. And while it’s impossible to prepare for every possibility that could affect your finances, taking some time out now to study these four under-the-radar pitfalls will help you protect your financial standing under the worst of circumstances:

Impulse Buys

Unless you keep a detailed ledger of your spending habits and review them often, it’s easy to overlook impulsive purchase decisions. Indeed, impulse buys are done without much forethought (or reflection) and if you don’t build out and stick to a budget from month to month, you can easily forget how much you’ve spent on frivolous items. What’s more, impulse purchases will slowly eat away at your savings and other accounts. Though most people won’t miss $50 here or there, the accumulation of such spending over a long time will have a big impact.

Lack of Insurance

Far too many people go through life without any form of insurance whatsoever. However, even those with insurance coverage might not have the right plan for their situation. Accidents happen, and unless your insurance plan has your back when it matters most, you could end up paying huge medical bills out of pocket. Always remember to review insurance documents carefully and read the fine print!

Divorce

No one gets married thinking that one day they’ll have to worry about a divorce. Yet the numbers don’t lie; couples file for divorce all the time. Unfortunately, if you haven’t signed the proper prenuptial forms beforehand, you’ll struggle to safeguard the assets you’ve accumulated once divorce proceedings begin. Talking about a prenuptial agreement with a partner is an awkward conversation for sure, but it’s one that needs to happen all the same.

Overconfidence

Successful financial management requires a degree of caution. In the end, it’s impossible to predict how the stock market will fluctuate, if you’ll get that big promotion, or if your home will always retain its original value. Hubris, though, prevents people from considering the risks of their actions. Don’t let a few encouraging financial decisions go to your head. No investment is bulletproof, and it’s never a wise idea to leave yourself exposed without a backup plan. Hiring a professional to manage your money, speaking about your investments with trusted family members or friends, and setting aside a rainy-day fund will all help mitigate against a financial doomsday scenario.

Freelancing has never been more prevalent –– or profitable –– than it is right now. In addition, most prognosticators forecast that freelance work will only become more common in the coming years. Though thousands of new professionals are taking up the mantle of the “side hustle,” there are some major drawbacks to freelance work that few seem to consider. Indeed, while freelancing can certainly prove lucrative, it can also present financial pitfalls to inexperienced pros. With that in mind, today we’ll take an in-depth look at the fiscal side of freelancing and answer the question: is it really a good idea?

Advantages of Freelancing

Perhaps the most attractive element to freelance work is the autonomy it offers. Freelancers only work as much as they want to, they can turn down any job that doesn’t suit them, and they never have to answer to a boss breathing down their neck. What’s more, they can set their own schedule and complete tasks at their own pace. On the financial side, veteran freelancers can also charge a premium rate for their services. When taken on a piece-by-piece basis, freelancers can make more money per project than their counterparts in nine-to-five positions.

Drawbacks of Freelancing

Freelancers enjoy the freedom of working on their own, but they also have to reckon with the uncertainty that comes with that luxury. First-time freelancers may struggle to build up a reputation within their industry and could find opportunities sparse. Additionally, since freelancers operate independently they often lack the resources and support regular employees enjoy. Considering that one day freelancers may have to design a web page about monster trucks and the next write a detailed analysis on a new type of streptavidin plate, not having a team to fall back on can be a major hindrance.

In terms of dollars and cents, though freelancers can certainly carve out a living for themselves, they also incur a variety of expenses that nine-to-fivers don’t have to worry about. Most freelancers have to pay higher rates for insurance, since they can’t opt into a group-work plan. They also have to pay higher taxes (normally) since they function as independent contractors.

The Bottom Line

As you may have already surmised, whether or not freelancing is a good decision depends on your individual preferences and personal situation. If you can comfortably manage the trickier aspects of forging your own path in business, then freelancing can help you achieve a better financial status. However, professionals should think long and hard before ditching their “day job” in order to freelance full time, because it’s not as simple –– or as remunerative –– as it may appear at first blush.