Avoiding the Three Most Common Financial Problems for Small Businesses: Insights from Kelli Lewis

Running a small business comes with countless responsibilities. Managing finances is one of the most critical, yet often overlooked tasks. For many entrepreneurs, financial mistakes happen not because they’re careless, but because they don’t have a clear strategy to avoid common problems.

A small business expert, Kelli Lewis is the founder of KelliWorks and has spent nearly 20 years helping small and mid-sized businesses overcome financial challenges, ensuring that entrepreneurs don’t have to navigate these hurdles alone—KelliWorks, so you don’t have to. She’s witnessed firsthand how small changes can make a big difference, transforming financial confusion into clear, manageable solutions. Let’s take a look at three common problems and how to fix them.

Ignoring Cash Flow

Profitability and cash flow aren’t the same thing. You might be making money on paper, but if you don’t have enough cash on hand to cover daily expenses, even a profitable business can run into trouble.

For example, a bakery that lands a big catering contract but has to wait 60 days to get paid. Meanwhile, it still needs to pay for supplies, staff, and rent. That big deal could create financial stress without a cash reserve or proper planning.

To avoid this, it is important to track the cash flow weekly. There are too many tools to predict when money will come in and go out. Set aside an emergency fund to cover unexpected costs, and try to get clients to pay you upfront or pay you faster.

For seasonal businesses, like landscaping companies that do well in the summer but struggle in the winter, it’s crucial to plan for slower months. A cash flow forecast for the next 6 to 12 months helps you plan for big costs, like buying equipment or hiring staff, so you're not surprised when business slows down.

Mixing Business and Personal Finances

Mixing personal and business expenses may seem harmless, especially in the early stages, but it creates confusion and complicates everything from bookkeeping to tax filing.

The problem usually starts small, a quick office supply purchase on a personal card or using business funds for groceries. Over time, this makes it nearly impossible to track what’s truly happening in the business’s finances.

The solution is simple: separate everything. Open a business bank account and use it exclusively for business-related transactions. Apply for a business credit card to make expense tracking easier. These small steps ensure a clearer financial picture and prevent unnecessary stress during tax season.

Having clean financial records isn’t just about convenience, it’s about credibility. If you ever need a loan or seek investors, well-organized finances send a strong message about how you run your business. Make it a habit to review your financial statements regularly to catch mistakes early and stay on top of your numbers.

Sticking to Manual Systems

Many small business owners still depend on spreadsheets or manual processes because they’re familiar with them. While this may work for a time, these methods often become inefficient as the business grows.

Take the example of a manufacturing company that kept track of everything, inventory, payroll, and invoices in Excel. Without automation, they ended up with double entries, missed deadlines, and wasted hours fixing mistakes every week.

Automated tools can handle repetitive tasks, reduce mistakes, and provide real-time updates, making your operations smoother. By connecting these tools with other systems, such as inventory or project management software, you can save hours of work and focus more on growing your business. Automation also allows you to delegate everyday financial tasks to trusted team members or assistants, freeing you up to concentrate on strategy and innovation.

Although adopting new technology might feel overwhelming at first, the benefits in the long run are well worth the effort. To get started, focus on automating one task, like invoicing or payroll, and gradually expand as you become more comfortable. This approach will help streamline your processes and give you more time to focus on what matters most.

Conclusion

Smart financial management doesn’t require perfection. It’s about small, consistent actions that bring clarity and control to your business. By keeping an eye on cash flow, separating personal and business finances, and embracing automation, you set yourself up for sustainable growth.

Kelli Lewis’s advice is rooted in practicality. Her strategies show that overcoming these challenges is less about complicated systems and more about making better habits part of your routine. With a few adjustments, you can transform how you manage your finances and focus on what matters most: growing your business.