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Make more money right now by avoiding these 12 revenue sinkholes

You just need to be a wise spender and saver.
By Garrett Gunderson |

 

Here’s some good news for entrepreneurs: You are wealthier than you think.

 

Think about it for a moment. You can make yourself wealthier, beginning today, without working any harder, taking any additional risks, trimming any lifestyle expenditures or learning any new systems of investing.

 

Here's the best part: It's your money. You've already generated this income, but until now, you've let stacks of it escape out the door, unchallenged. As you read each of these 12 items, ask yourself if you’re unknowingly stepping in a financial sinkhole and make a mental checkmark.

 

1. Credit scores.

Raising your score by as few as 50 to 100 points (which is faster and easier than you may think), can help you refinance debt to lower interest rates, reduce many insurance premiums and possibly even save you thousands in closing costs when buying a home.

 

 

2. Not all expenses are equal.

 “Expense” is a word that gives most people a negative feeling. We’re taught to avoid expenses. But this naive attitude won’t grow your business and it won’t enhance your life.

 

The truth is, the only type of expense that should give you a negative feeling are destructive expenses. Overdraft fees, using credit to consume, spending on vices, products or services you don’t use or that don’t add to your life, are all expenses that should be cut out entirely.

 

Productive or rainmaking expenses, however, are how you make money. Spending more money on the right employee, the right equipment, the right marketing campaign or the right mastermind group can pay for itself over and over again.

 

 

3. Investment advisors.

The retirement planner’s #1 interest, because of the way they get paid, is to get your assets under management and keep them there. They’ll always tell you to keep funding your retirement accounts, even when a bigger picture of your finances suggests otherwise.

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For example, if you’re paying higher interest on a loan than the interest you’re earning on an investment, the wise move is to pay off the loan before adding any more money to the investment. It may even be wise to completely cash out the investment to pay off the loan.

 

Related: Should you tap your 401(k) to start your business?

 

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4. Taxes.

Preparing your taxes months before its due, can save you from spending a lot of money on penalties. Make sure you meet with your tax preparer prior to the deadline to avoid paying unnecessary charges.

 

 

5. The structure of your business.

Far too often business owners don’t incorporate because they think it’s too complicated and their accountant says not to. But by not incorporating, you’re exposing yourself to more liability and could end up overpaying on your taxes.

 

Meet with a legal professional who specifically understands corporate structures at least once every three years to make sure you’re getting all the savings and tax deductions you can.

 

 

6. Business loans.

Many (if not most) entrepreneurs spill away profits on poorly structured loans and repayment strategies more than on any other oversight.

 

Entrepreneurs should choreograph loans in a way that reduces the cost of borrowing, to free up cash for better uses, to save on taxes and to flip what most people perceive as a liability into a productive asset.

 

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7. Personal loans.

When you have multiple assets each with their own loan, the interest rates you’re paying will vary based on the asset class. By refinancing and combining loans, many times you can lower those interest rates. And many times you can also lengthen the term of the loan, which lowers your monthly payment and increases your monthly cash flow.

 

Related: Puncturing the 3 newest myths about small business loans

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8. Monthly payments.

As a business owner, it’s really important to free up cash flow fast. So instead of taking that shotgun approach, it’s better to use a focused, deliberate, intentional methodology to choose one loan to pay off first.

 

A focused approach, where you pay extra to the least efficient loan that can be paid off the fastest, will improve your debt to income ratio, increase your cash flow and actually improve your credit. This allows you to qualify for lower interest rates on every other loan, saving you even more money.

 

 

9. Investments

The best way to invest is to leverage your instincts by staying closer to home with your money. That means only invest in what you know, because everything else involves too much risk.

 

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10. Sharing with employees.

The first question to ask yourself is, are you providing this profit-sharing plan because you truly want to benefit the employee, or were you sold that it’s a tax advantage? Because if that was compensation you weren’t planning on giving them, you’ve increased your expenses in the name of saving tax. You should never let the tax-tail wag the dog.

 

 

11. Savings.

As an entrepreneur, you are your greatest asset. Your ability to produce is going to give you the greatest return.

 

If you can take small trips along the way rather than just wait for retirement, you can enjoy what life has to offer, and the people in your business will pick up the slack and learn how to do things without you. This empowers your employees and ultimately improves your business results, all while you get to actually enjoy life more along the way.

 

 

12. The thrill is gone.

If you build a team and infrastructure that supports you in doing the things that you’re not only best at, but that also give you more energy, you’ll increase your results, your energy and your passion.

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Remember, you’re the asset, and if you exhaust yourself to the point of no enjoyment, then you won’t have the passion to push forward past the inevitable obstacles every entrepreneur faces—and it will cost you money.

 

After all, it’s your money: you should keep more, grow more, and enjoy more.

 

Related: You need a real vacation (and so do your employees)

 

Copyright 2015 Entrepreneur Media, Inc. All rights reserved.
This article originally appeared on Entrepreneur.com. Minor edits have been done by the Entrepreneur.com.ph editor.

 

Photos from Pixabay and Flickr (Anthony Chang and Wonderlane)

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