The Clarets won promotion to the Premier League via the play-offs when they defeated Sheffield United 1-0 at Wembley last month.
However Flood has warned fans that the club would not be spending millions just because they were in the Premier League.
The Clarets director felt the need to speak out after rumours linked the club with a £6million swoop for Reading's Kevin Doyle - rumours that Burnley have denied.
"In an interview, Peter Coates (Stoke chairman) said he felt they'd made a number of mistakes last season like signing (Dave) Kitson for £5million," he told the Lancashire Telegraph.
"We've got to be careful not to make mistakes. I think you can get caught up in the noise of the Premier League and having to spend loads of money."
The likes of midfielder Chris McCann and winger Chris Eagles were linked with moves away from Turf Moor in January and Flood stated that if the money was right it would be hard to reject bids for the duo.
"Inevitably, if we were in the top half of the Premier League we'll get bids for players, and you've got to be open minded and say 'we might sell someone for £5million plus, because that's good business'," he added.
"Then you can buy another lad who's as good as Chris McCann or Eagles for £1million from lower down. We've got to be prepared to do that.
"Automatically all the players are worth more because we've gone up, so we've got to say we might still sell players, but there won't be a need to sell players next year.
"It will be a pure business decision if we did."
Prem To Finish Bottom 2009-10 Finish Bottom: Burnley 2/1