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12 Signs Your Business Sucks at Money, and How to Fix it

Updated on June 11th, 2022

As you grow your business, the focus is often on how much money you bring in.

Clearly, you want to earn more this quarter than you did last quarter. But long-term business success isn’t just about how much money you make. What your business does with that money is important, too.

If your business sucks at money, it doesn’t matter how much you have coming in. Don’t become a failed business statistic. Here are 12 signs your business sucks at money — and how to fix it before it’s too late:

1. You don’t have a cash reserve.

The adage is true: In business, you need to spend money to make money. But you should also have some sort of cash reserve. This is an emergency fund for your business. You don’t need some huge amount, but you do need something that can help you out of a tight spot.

If you haven’t thought about setting some money aside, now is the time. Anytime you have a surplus, put some of it in reserve. Remember that you have to plan on this or your reserve may just be taking you out to lunch. Build your reserve until you have enough to meet business emergency needs.

2. Your cash reserve is TOO big.

Can you have too much in savings? It seems counterintuitive, but it’s a real thing. Keeping too much of your earnings in a cash reserve can mean that money isn’t working effectively for your business. You should have enough to meet your forecasted cash flow, and emergencies, but you don’t want to be sitting on a huge pile of cash.

If you think your cash reserve is getting too big, look for ways to improve your business. Invest in growth, make your product better, or pay off some of your higher-interest business debt. Putting your money back into your business is a long-term investment that can pay off big.

3. You’re not sure where the money is going.

Do you track your money through your business?

If you don’t know where the money is going, that’s a problem. You should have an idea of how much money is spent on payroll, taxes, overhead, and other costs. You should also have a pretty good idea of where the money is coming from.

Don’t just pay bills as they come in. Pay attention. Do you actually owe that bill? Is there a mistake? Are you spending money on items that are worthwhile? Make sure your money is going where it should.

This doesn’t mean you need to do everything with your accounting team, (it’s one of the things you should outsource as a business owner), but you should at least know what’s happening so you can stay on top of it. Catch small problems before they become catastrophes.

4. You aren’t building business credit.

It’s nice to think you’re going to use cash for everything or raise capital through angel investors. The reality is that successful businesses utilize credit. Even the biggest, most profitable companies on the planet use credit. If you aren’t building credit, your business sucks at money.

Start building credit as a business. Open a credit card. Get a small loan. Apply for a Data Universal Numbering System, (D-U-N-S) number. Look for vendors that will report your good payment history. In the long run, your good business credit can mean savings on future loan rates, more opportunities to secure capital, and you might even get better insurance rates.

5. You scramble to pay the bills each month.

Are you always behind on the bills? Maybe you’re not late, but you find yourself scrambling to make things work each month. If you aren’t sure how you’ll pay the next bill, that’s a sign your business sucks at money.

Sit down and look ahead to what’s coming up. Don’t be taken by surprise by any expense. You don’t have to pay expenditures a long time in advance, but you should have an idea of what’s coming and when it’s due. Set aside what you need, or look for ways to get the capital ahead of time. If you need a loan to bridge the gap, apply before it’s too late, and then look to grow revenues in the meantime so you can get on top of the bills.

6. A large chunk of your business income goes to interest payments.

You need credit to fund most businesses — especially at certain stages of growth. However, that doesn’t mean you want everything to go to pay interest.

If paying interest is an increasingly large obligation for your business, you’re at risk. Review your debts. Figure out if you can pay some of them off faster. Look for ways to refinance to a lower rate. Make sure the things you spend money on are offering a return that can help you get out from under your high-interest debt in a shorter period of time.

7. You don’t negotiate.

Nearly everything is a negotiation. If you aren’t negotiating with your service providers and suppliers, your business sucks at money. Ask for bulk discounts. Find out if there are ways to save money by shopping around, and take that lower price to your current providers to get a better deal.

You can also improve your bottom line by negotiating payment terms. Find out if you can get a grace period of 30, 45, 60, or 90 days. While you don’t want to let people who owe you money get away without paying you on a Net 90 basis, you can also see if it works for the instances where you owe money. A little longer can help you streamline your business finances, and give you breathing room.

8. Cash flow isn’t a focus.

Profitability is not the same thing as good cash flow. You can be profitable on paper and still go down due to cash flow problems. You need to make sure the money is coming in when you need it to cover the essentials.

Stay on top of cash flow by finding different ways to keep money coming in. When things get tight, look to clients and products that provide you reliable income. These may not have big profit margins, but they can bring the money in the door when you really need it. Sometimes that matters more.

9. Invoicing is an afterthought.

Why aren’t you seeing the cash flow you should? Is it an invoicing issue?

If invoicing is an afterthought, your business sucks at money. You need to put systems into place that allow you to quickly invoice others — and get paid faster. Set up recurring invoices for regular customers to reduce the amount of time and money spent. Use tools like to help you streamline the process at a low cost. Don’t underestimate the importance of a solid invoicing process when it comes to getting paid.

10. You dip into employee withholdings.

Seriously? Are you dipping into employee payroll withholdings to meet your obligations? Don’t do it — no matter what. That’s a dangerous road.

As an employer, you are required by law to make these withholdings. That money isn’t yours. Come tax time, you could feel the wrath of the IRS, and that’s enough to take down many small businesses.

Take steps such as getting another line of credit or putting out a product that can improve your cash flow, to keep from turning to employee withholdings. Employee withholdings should be going into a separate kitty that you don’t touch until it’s time to send the money to the IRS. Again, don’t do it.

11. You don’t have a tax plan.

You need a tax plan. Tax time isn’t just the end of the year when you’re cramming in deductions, or March when you’re frantically trying to find documentation. Without a tax plan for the whole year, too much of your money could be going to Uncle Sam instead of being used to grow your business.

Meet with an accountant or business tax specialist to help you analyze your situation and put together a plan for your business. You might be surprised at how much you could be saving.

12. You don’t spend money on the right people.

Being a cheapskate doesn’t necessarily mean you’re good with money. It just means you hate spending it. Sometimes, though, you need to spend money in order to get the best long-term results.

One of the best ways to invest in your business is to invest in good people. Invest some money in developing the right talent for your business and in hiring people who have strengths where you have weaknesses. These folks will prove beneficial in the long run as they can help you grow in unexpected and profitable ways.

Don’t waste money on constant turnover and training. Focus on the right people, and you’ll build something that lasts.

Miranda Marquit

Miranda Marquit

I'm Miranda and I'm a freelance financial journalist and money expert. My specialties are investing, small business/entrepreneurship and personal finance. The journey to business success and financial freedom is best undertaken with fellow travelers.

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