Top 10 Financial Challenges for Small Businesses + Free Guide to Work Through Them

If you’re reading this before your first DNEP accounting appointment, welcome! You’re about to join dozens of Detroit entrepreneurs who have come to our team and said: “I know my business is making money, but I can’t prove it” or “I’m not sure where to start.” Here’s what I want you to know: You’re not behind. You’re not doing it wrong. And you’re definitely not alone.

Based on hundreds of appointments every year, we have identified the ten most common challenges we see every week, in order, AND how you can collaborate with DNEP’s accounting consultants to work through those challenges.

Does this Sound Like You??

Here’s are the Top 10 things Detroit business owners say when they meet with one of our student Accounting Consultants from the Ross School of Business at the University of Michigan, for free, confidential, one-on-one support—listed in order of frequency:

#1 — “I Need to Set Up QuickBooks (Or I Have It But Don’t Know How to Use It)”

You’ve been tracking expenses manually in Excel, on paper, or not at all
You have a QuickBooks account but haven’t linked your bank account
Your bank account is linked but you have hundreds of uncategorized transactions
You’re not sure which subscription level you need

Find Bank login credentials (username and password)
Create a list of all accounts you use for business
Gather your Bank statements (last 3 months minimum)
Figure out your current QuickBooks status (Do you have an account? Is it linked?)
Write down your biggest questions about accounting software

Assess if QuickBooks is the right tool for your business
Link your bank accounts
Create a customized chart of accounts
Set up rules to automatically categorize transactions
Show you how to pull the reports you need

#2 — “I’m Applying for a Loan or Grant and I Need Financial Statements”

You found a funding opportunity (CDFI loan, Motor City Match, grant program)
The application requires financial statements you don’t have
You’re not sure what “balance sheet” or “profit and loss statement” means
The deadline is approaching and you’re panicking

Name of program/lender and deadline
Funding amount you’re requesting
Specific financial documents they require
Bank statements for the past 12 months
Receipts for major purchases
Use-of-funds plan (exactly what you’ll spend the money on)
The actual application (printed or on your laptop)

Create or clean up your profit and loss statement
Build your balance sheet
Develop realistic financial projections
Create a detailed use-of-funds breakdown
Prepare you to speak confidently about your numbers

#3 — “My Personal and Business Money Is All Mixed Together”

You use your personal checking account for business expenses
You pay personal bills from your business account
You use Cash App, Venmo, or Zelle for both family and business transactions
You don’t have a dedicated business bank account
Why This Matters: Commingling funds makes it impossible to track true profitability, creates tax nightmares, can pierce your LLC liability protection, and prevents you from getting loans!

List of ALL accounts you use (personal and business)
For each account, estimate the percentage that’s business vs. personal
Statements for the past 3 months for all accounts with business activity
List of regular business expenses you pay from personal accounts
Do you have a business bank account? (Yes/No)

Assess the extent of commingling in your accounts
Create a plan to separate personal and business going forward
Help you open a business bank account if needed
Go through historical transactions to separate personal from business
Set up a proper “owner’s draw” system to pay yourself correctly
Build clean financial statements from the separated data

#4 — “I Don’t Know If Something Is Cost of Goods Sold or an Operating Expense”

You’re not sure where to categorize certain expenses
You’ve heard the term “COGS” but don’t really understand it
Your profit margins seem off but you’re not sure why
You’re categorizing everything as “expenses” without distinguishing types

Is the expense directly tied to producing or acquiring the specific product / service you sold?
If NO – it’s likely an operating expense.
If YES – Continue to next question.
If you made zero sales this month, would you still have this expense?
If NO – it’s like a Cost of Goods Sold (COGS).
If YES, it’s likely an operating expense
Examples of COGS:

Raw materials or ingredients
Products you purchase for resale
Packaging materials
Direct labor (workers who make the product)
Shipping costs to customers

Examples of Operating Expenses:
Rent or mortgage
Utilities
Administrative salaries
Marketing and advertising costs
Insurance
Software subscriptions

Describe your business model in simple terms
List your major expense categories
For product-based businesses, calculate one product example
Bring examples of confusing transactions

Explain COGS vs. operating expenses specifically for your business
Walk through the decision tree with your actual transactions
Set up your chart of accounts correctly
Calculate your true gross profit margin
Identify if your pricing strategy is sustainable

#5 — “I’m Just Starting and I Need to Build Financial Projections”

You launched recently but don’t have much historical data
You need projections for a business plan or loan application
Your projections feel like you’re just making up numbers

Define your revenue model (what will you sell? how much will you charge?)
Research your market (competitors, pricing, customers)
List all startup costs (one-time expenses to launch)
List all ongoing operating expenses (monthly costs)
Identify your assumptions (how did you arrive at your estimates?)

Review your assumptions and test if they’re realistic
Build month-by-month projections for Year 1
Create annual projections for Years 2-3
Calculate your break-even point
Identify your key metrics and how to track them
Stress-test your projections (what if sales are 20% lower?)

#6 — “I Operate Multiple Businesses or Have Multiple Revenue Streams”

You run two separate businesses (e.g., construction and property management)
You have one business with multiple distinct revenue streams (e.g., café and brewery)
You’re not sure how to track each business/stream separately
Money flows between your businesses and it’s confusing

List each business or major revenue stream
For each, estimate monthly revenue and major expenses
Describe how money flows between them
Identify shared expenses
Do you have separate legal entities (LLCs) for each? (Did you ask a lawyer about this?)

Set up QuickBooks “classes” or “locations” to track each business separately
Create a system for allocating shared expenses appropriately
Build separate P&L statements for each business/stream
Identify which is most profitable and why
Develop a strategy for managing cash flow between entities

#7 — “I’m Hiring Employees or Contractors and Don’t Know How to Handle It”

You’re ready to hire your first employee or contractor
You’ve been paying people through Zelle, Cash App, or Venmo
You’re not sure about the difference between employees and contractors
You don’t know about payroll taxes, 1099s, or W-2s

List everyone you pay or plan to pay
For each person: what they do, how much you pay them, how often
For each person, answer:
- Do you control when, where, and how they work? (Yes/No)
- Do they work for other businesses too? (Yes/No)
- Do they use their own tools/equipment? (Yes/No)
Describe your current payment method
Bring any contracts or agreements you have with workers

Determine if your workers should be classified as employees or contractors
Explain the tax implications of each
Show you how to set up payroll in QuickBooks
Explain 1099 and W-2 requirements and deadlines
Set up proper categories for labor costs
Create a system for tracking and documenting payments

#8 — “I Have a Language or Technology Barrier”

English is not your first language and financial terms are confusing
You’re more comfortable speaking Spanish
You’re not familiar with computers or accounting software
Technology feels overwhelming and you avoid it
Why This Matters: Language and technology barriers shouldn’t prevent you from accessing the financial tools and support your business needs. We’re here to meet you where you are.

Identify your preferred language (English, Spanish, other)
Assess your technology comfort level
Bring what you have (paper records, receipts, notebooks)
Bank statements (printed or on your phone)
Your phone, tablet, or laptop if you have one
Let us know in advance when you book your appointment

Conduct your appointment in Spanish (or use an online translator for other languages our students don’t speak) if needed
Take extra time to explain technology step-by-step
Show you how to use tools at a pace that works for you
Provide written instructions in your preferred language
Connect you with additional technology training resources
Be patient and supportive—there are no “dumb questions”

#9 — “I Need to Understand My CFO Dashboard”

Someone gave you DNEP’s proprietary CFO Dashboard template but you’re not sure how to use it
You attended the CFO Bootcamp and want help implementing what you learned
You have the Dashboard but don’t know what numbers to put where
You want to use it for projections or loan applications but need guidance

Locate your CFO Dashboard (do you have it? can you access it?)
Gather your financial data (bank statements, revenue/expense records)
Identify which sections you need help with
Define your goal (track performance, build projections, prepare for lender)
Write down your specific questions about the Dashboard

Walk through each section of the Dashboard and explain what it does
Help you input your actual financial data
Show you how to calculate key metrics
Connect your Dashboard to your QuickBooks data
Build projections based on your historical performance
Teach you how to maintain and update it going forward

#10 — “I Just Need Help With Specific Transactions or Questions”

Your books are mostly in order but you have specific confusing transactions
You’re not sure how to record a particular type of income or expense
You received an investment or loan and don’t know how to account for it
You have a few specific questions but don’t need a full setup

Write down each specific transaction or question:
- Date of transaction
- Amount
- What happened (be specific)
- Why it’s confusing
- How you currently have it recorded (if at all)
Gather supporting documentation
Provide context
Identify related questions

Review each specific transaction and explain the correct way to record it
Show you the QuickBooks steps needed
Explain the “why” behind the accounting treatment
Create rules or processes for similar future transactions
Identify any tax or reporting implications

Suggestions for Making the Most of Your Appointment

Before Your Appointment:

✓ Book enough time ✓ Gather everything on your checklist ✓ Write down your questions ✓ Bring your laptop or tablet ✓ Bring login credentials

During Your Appointment:

✓ Be honest about what you don’t know ✓ Ask questions ✓ Take notes ✓ Let us know if you need us to slow down ✓ Tell us about your goals

After Your Appointment:

✓ Complete any homework or action items ✓ Practice what we showed you ✓ Book a follow-up if you need one ✓ Reach out if you get stuck ✓ Share this guide with other entrepreneurs

The Bottom Line

These ten scenarios represent the most common challenges Detroit entrepreneurs face. You’re not alone in facing them, and you don’t have to figure them out by yourself. DNEP’s accounting program exists specifically to help you navigate these challenges, build the financial infrastructure your business needs, and position yourself for growth and funding opportunities.

The entrepreneurs who succeed aren’t the ones who never face these challenges—they’re the ones who get help solving them. Ready to tackle your scenario? Contact DNEP today to schedule your accounting appointment.