Common money mistakes that hold entrepreneurs back

I’ve observed hundreds of fellow entrepreneurs building businesses during my own career, presiding over my share of great deals and spectacular failures. Most work very hard, many are smart, almost all have good ideas, yet most never build serious wealth.

Experience tells me it’s because they’re looking at business through the wrong lens.

Mistake one: thinking in increments instead of doublings

Most business folk follow a plan to do just a bit better this year than they did last year and pat themselves on the back if they do. I’m not sure that’s the right strategy. It might not even keep up with inflation.

We get stuck in the weeds fixing problems and forget to stand back and remember – you only have to double £100,000 ten times to make £100 million. Ten doubles. Ten good decisions in your lifetime. That can’t be too hard, can it?

Using the right amount of leverage makes it even easier.

Mistake two: not using the 66% leverage sweet spot

Some entrepreneurs won’t use leverage at all – “I don’t like debt, it’s too risky” – or they leverage themselves up to the hilt chasing growth.

Both approaches are wrong.

The sweet spot is 66% leverage. Two-thirds borrowed, one-third yours. That ratio gives you enough buffer if things go wrong, but amplifies your returns significantly when things go right.

Buy a business for £300,000 with £100,000 of your money and £200,000 borrowed. Improve it over three years and sell it for £600,000. After paying back the loan, you’ve turned £100,000 into £400,000. You’ve quadrupled your money, and if you’ve planned correctly, the profits or rent roll funded the debt interest along the way.

Do the same deal without leverage? You’ve turned £300,000 into £600,000. Congratulations, you’ve doubled your money, but it took three times as much capital.

The entrepreneurs who never build wealth either don’t understand this mathematics or they’re too scared to use it. The ones who blow up use too much leverage on deals that haven’t been stress-tested properly.

Mistake three: not adding real value

Too many entrepreneurs buy something – a business or property – then just sit on it, taking the profits each year, hoping it appreciates.

Business isn’t like a football game where you sit on the sideline cheering your favourite team, hoping you’ll win.

Wealth builders buy something specifically because they know which levers they can pull to improve it. Better systems. Brighter people. Higher margins. Improved market position. Then they set about doing that work.

This is the “add value” part that many people skip. They want to buy low, sell high, without doing anything in between.

Business seldom works like that. Left to their own devices, even the best businesses decline slowly. We need to outpace our competitors, improve the recipe and give the cake enough time to bake.

Mistake four: ignoring management fatigue

Throwing yourself into running the same business for 10, 15 or 20 years is exhausting. Even if you love it. Even if it’s successful.

Management fatigue is real. Tired or bored entrepreneurs make bad decisions, miss opportunities, stop innovating and don’t face the difficult decisions that will make the most difference.

I prefer to buy or build something, improve it, sell it after three to five years, then do it again – often in a similar sector where I’ve already gained the techniques, kept the contacts and learned what works in that particular lane. You stay fresh, you stay engaged and you crystallise your gains rather than watching them evaporate because you got bored or sloppy.

Sell to keep score and invest again. Forget about building a legacy.

Mistake five: ignoring tax until it’s too late

Getting structure wrong is a real wealth killer. Entrepreneurs who’ve done the hard work – built something valuable, sold it for a great price – get massacred by tax because they didn’t set up their businesses tax-efficiently at the beginning.

Tax planning isn’t something you bolt on at the end. It’s something you build in from day one.

Should you hold the asset in a corporate vehicle or your own name? UK structure or overseas? What’s the exit strategy, and how does that affect the wrapper you choose?

Here’s a sobering thought: if you double £100,000 ten times without paying tax, you end up with £100 million. But if you pay 24% Capital Gains Tax on each double along the way, you’ll only have £34 million.

That’s £66 million left on the table because you didn’t think about tax structure before you started.

My conclusion

After founding or backing 30+ companies, I’ve worked out that there is a way entrepreneurs can find financial security for life more easily.

The system isn’t complicated. Stop thinking in increments, start thinking in doubling up your starting stake. Use the 66% leverage sweet spot. Add real value and plan your tax structure from day one. Sell before management fatigue sets in.

Whether you’re a middle manager stuck in corporate purgatory, someone already running a business but never quite making the leap to the next level, or a student living on pizza wondering if you’ll ever get ahead – this works.

You don’t need family money, insider connections or a degree from the right university. You just need to understand that building wealth is systematic, not magic. You need the discipline to trust the maths and stick with boring, well-tested plans when everyone around you is chasing excitement.

I didn’t make this stuff up. I’m not that clever myself. Serious wealth creators have been doing this for thousands of years.