Everyone wants a do-over. Here are the top regrets of entrepreneurs and what they'd do differently
If only you could go back in time, but with today's 20/20 vision.
Starting a business is a little like that. You're fired up with enthusiasm for your enterprise — but maybe not so excited to dig into the numbers and tax regulation.
Running a business means juggling multiple priorities and never letting your guard down. If you're a service-based company — hiring, for example, movers or painters — you always need to be on the lookout for the next crew members, says Anthony Hartzog, 33, co-owner of Maids 2 Match in Dallas.
"One good person on your team can make you thousands of dollars," Hartzog said. "The same amount you spend on marketing, you should spend searching for good people."
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But Hartzog, who runs the cleaning service with his wife, got caught in the tax trap.
"The biggest mistake: We didn't take out sales tax, and it was a requirement in Dallas," Hartzog said. "We wish we'd hired someone to help us with our numbers early on.
"It would have saved us an extra $5,000 or $6,000 that first year."
Here's a look at what some entrepreneurs wish they'd done differently.
A steep learning curve
Learning to manage taxes was the biggest hurdle for Mariah Hudler, 43, who runs a financial therapy practice in Sacramento, California.
Budding business owners walk a fine line between knowing they need to spend money on some supplies and support, but also wanting to save money where possible. The accounting software program QuickBooks didn't seem worth its price to Hudler, though there are different tiers of service. She created her own spreadsheets but felt she was still missing out on some of the finer points.
She knew the basics — keeping receipts, tracking expenses separately — but how to link everything to the IRS form Schedule C was a challenge. "What goes under what?" she asked. "How to track? I have a home-based business. How do you claim that?"
Hudler couldn't set up a profit-and-loss sheet or categorize expenses — "I'm still working through the ambiguity of that," she said. She didn't know what tax forms to use.
One day, Hudler thought to herself how great it would be if someone were selling something that could be downloaded from Etsy. She decided to take a look and found that a CPA was selling exactly what she wanted: the Home Office Spreadsheet, for a modest $9.95.
The spreadsheet lets Hudler plug in the numbers each month. If her practice becomes more complex, she'll consider buying a more sophisticated program. "I should have met with a bookkeeper [in the beginning] but you have so many costs when you start, it's prohibitive," Hudler said.
When taxes aren't paid ...
Sarah Rickerd, 35, says an unexpectedly large tax bill in 2015 and a penalty from the IRS was no surprise.
Rickerd, who lives in Saline, Michigan, had just started her own content marketing business and she was busy with her first baby. She had recently moved to a different state and money was tight. When you wonder if you should pay rent or buy groceries or pay the quarterly taxes, "you do what you have to do," she said.
The taxes went unpaid.
In looking back, Rickerd says she might have worked longer hours, made more calls to potential customers and looked for ways to cut expenses.
Luckily, she and her husband worked out a payment plan with the IRS and repaid the money over five years. The problem is now behind her.
"Knowing what we know now, we would have contacted an accountant," she said. "A good accountant can work miracles."
Show your work
If you're an absolute beginner when it comes to taxes, get help.
Read a book. Consult helpful websites. Talk to other business owners. Consider an accountant. The additional cost could head off even bigger expenses in the form of tax penalties.
One of the worst things you can do is assume that your own common sense will see you through filing your taxes.
A common mistake, according to Josh Bauerle, a Willard, Ohio-based CPA and co-founder of The Prestige Journal, is being foggy about your business expenses.
For instance, the IRS wants to see the full details, Bauerle says. Just like in math class, you must show how you arrived at your income after deducting costs. He recommends accounting software such as Xero or QuickBooks since they can track income, but even your own spreadsheet can be effective.
Schedule C income
Gross Income $50,000
Office Expenses $5,000
Didn't run the numbers
Hartzog and his wife, Jhanilka, 31, didn't make the mistake of trying to save money on advertising and marketing. They realized it was an investment rather than an expense.
They understood the concept of ROI — return on investment — so they spent freely on a number of sites to generate leads.
The problem was, they did not track their numbers. They didn't know what percentage of their take was going to marketing or whether Yelp or Google was actually worth the expense. They didn't know how much they were spending.
After looking carefully at how much each web page was helping to generate in business, they decided to concentrate their marketing dollars on one site.
Didn't invest in the right tech
Nick Loper, founder of Side Hustle Nation in Livermore, California, says he was overly optimistic about his first business. "I naively thought it could last forever," he said, "or at least that it would last longer than it did."
Loper's comparison-shopping site for footwear originally relied on paid search traffic. But things changed — among other factors, the rise of search engine optimization, or SEO, and tougher guidelines that meant the site could no longer advertise on Google. Profitable traffic became harder to generate.
"Had I realized my window of opportunity with that business was closing, I would have tried to scale faster by bringing on extra help and reinvesting profit in diversifying traffic sources," Loper said.
Instead, Loper tried to save money by doing the extra work himself. He saw SEO as speculative compared with paid traffic sources, which had been working well.
He regrets not investing in SEO when times were good. "Maybe if I'd diverted some of the profits from the paid traffic into building an organic presence, I would have been able to keep the business alive," Loper said.
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