Your business may have a great cash flow, and still lose money. For example, the cash flow may come from selling down inventory. At the same time, you may be propping up cash flow by tapping into credit lines.
You can easily miss all the the damage you are causing if you don’t do a monthly Profit and Loss statement.
Especially when your business is running on revolving debt. You may actually have some employees who are more valuable, or just as valuable, as you are.
The long term health of your business will be effected.
Those who do it don’t even see the train wreck coming. This naturally ties in with the failure to have good bookkeeping practices.
That’s because the owner stays current on the revolving debt with minimum monthly payments. You have got to pay attention to Profit and Loss statements. Another problem with overcompensation of a business owner is that you may cause you to be under-compensating key employees.
Either way, the mortality rate for small business is a terrible fact of life. If you are making any of these mistakes, you are asking for trouble. During that time I have doctored hundreds of sick businesses. Most were too far gone for anyone to make a difference.
Bad bookkeeping is also the gateway that leads to a host of other Worst Small Business Mistakes. Locusts do their damage and move on to destroy the next farm.
Nonproductive family members on a payroll stay forever, because you let them.
Without good bookkeeping, you won’t know your real cost of doing business.
You won’t be able to make intelligent decisions on how to price your goods and services.