Bad business habits

Bad business habits


When you run your own business, it can be hard to step back and look at the big picture. Failing to do so, however, not only harms your business; it can also make it even harder to sell.

Whether it is failing to track cash flow or not investing correctly in key staff, there are many bad habits that business owners commonly make. Here are the top three:

Using the business as your personal ATM
A common business tax-minimisation strategy is to spend business earnings on personal expenses that are not directly related to the business. The idea behind this strategy is that reducing the earnings will make the business liable for a smaller tax bill at the end of the year. However, the strategy can create complications that cost more in the long run.

For example, when selling the business, the owner will need to convince buyers that the number of expenses claimed should be added back to profits since they are not ‘real expenses’.

Not making cash flow king
Many small businesses fail as a result of cash flow issues. Problems with cash flow can be caused by a variety of factors, such as poor debt collection, unfavourable terms negotiated with customers, lazy record-keeping or a lack of regular costing analysis. Failing to manage cash flow hinders an employer’s ability to pay employees and meet suppliers’ invoices. The business’s capacity to meet unexpected debt obligations can also be significantly reduced, resulting in missed opportunities and potentially forcing the closure of business at worst.

Coasting along
Far too many business owners neglect to spend enough time developing formal business, financial and operational plans; instead, they spend each day focusing on their short-term to-do list. These plans, however, are vital in determining whether all the owner’s work results in business growth or if they are gaining little return.

Particular objectives need to be mapped out to monitor and measure performance. This allows business owners to identify areas of reduced productivity or activities that generate lower-than-required returns and take appropriate action to rectify this.

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If you believe the matters discussed above are relevant to your business, please contact Darren Smith of our office to discuss further.


Darren is a Chartered Accountant with extensive experience, including working in the big 4 and medium sized firms before becoming a partner of a city based firm in 2000.

He has gained much experience and has extensive knowledge in providing business and taxation advice, superannuation planning, negotiation of sales and acquisitions of businesses and property development. His client base covers a wide range of industry groups.

Darren works with business owners to grow their businesses and create personal wealth within and outside of their business.


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