3 Money Mistakes that Keep Your Business Broke
“Good companies fail to become great not because of bad employees, but rather bad management” ~ Ike Ikokwu
Poor money management has been the cause of more business failures than any other single issue. Having held a CPA license and worked with businesses for over two decades, I know this to be true. And, is there any reason to wonder why this happens?
If you think about it, you’ll realize that the vast majority of us aren’t born knowing how to manage money. Truth be told, our parents were likely lousy at managing money. And, our educational system does little to correct the financial illiteracy epidemic. With a vacuum in sourcing this piece of education, most of us simply “figure it out” along the way, through much trial and error, while creating a poor money mindset.
Those same money mindset issues and bad habits that wreak havoc in our personal finances can plague our businesses as well if we’re not careful. Below are 3 common money mistakes I see that keep your business broke.
If you’re a Coach, Consultant, or Professional Practice Owner, kindly pay attention to these 3 mistakes:
1. Catching Shiny Object Syndrome
Some things are just hard to resist. Apple pie a la mode was one of those things for me. But seriously, many things in life and business are kind of hard to resist—especially when your friends and colleagues are all jumping on board! New tools, training, group coaching programs and even business models can all have a strong pull, and if you aren’t careful, these shiny objects can quickly distract you from your current goals. Ask me how I know (wink wink).
If you find yourself catching shiny object syndrome frequently, try this three-step plan instead:
• For “too good to refuse” offers, make a plan for achieving a positive return on investment (ROI) before you purchase. If you cannot find a (realistic) way to make the purchase pay for itself, don’t buy it.
• For exciting new business ideas, create a “someday” list. Jot down your idea and a basic outline, then get back to the task at hand. Now that great idea won’t be lost, but it also won’t join the ranks of half-finished business plans that litter the internet.
• For other irresistible offers that you become aware of, do a “PVG” check. Look back at your Purpose, Vision and Goals and see if this new offer is in alignment with meeting the goals you’ve established to manifest the vision you have for fulfilling the very purpose you exist. If it is, give it further consideration. If it’s not, then you can calmly and confidently kiss that shiny object goodbye knowing it isn’t in alignment with your PVG. If you haven’t determined your PVG, that’s likely one of several reasons you should be working with a coach and/or mentor.
2. Falling for the Sunk Costs Fallacy
If you’ve ever said to yourself, “I’m not using this subscription, but I can’t give it up! I’m still paying the launch price and now it’s much more expensive!” Then you’ve fallen for the sunk costs fallacy.
This common mistake is famous among economists, and we all fall victim to it from time to time. Simply put, the sunk costs fallacy is what makes us justify investing more money or time in something—even though we’re not seeing results—because we’ve already spent so much. It’s what encourages us to repair the car one more time (after all, you just put new tires on it), eat a meal we don’t enjoy (simply because you’ve paid for it), and yes, continue to pay for tools and resources you’re not using.
Take a few minutes and examine your current business expenses. What are you paying for month after month that you’re not using? Either make a plan to put them to work for you, or cancel them. Stop falling for the sunk costs’ fallacy. Rather than focusing on the sunk cost, think opportunity cost. Had you not invested money into that subscription, what would it be worth today invested in somewhere else that would have provide a more productive return?
I saved five figures annually by simply letting go of subscriptions that at one point I thought were “good” ideas, but upon further consideration of my “PVG” and realization that I hadn’t done anything with those subscriptions in 3 years (shameful I know), it became obvious it was past time to cancel!
3. Too Much Penny Pinching
You thought this was all going to be about overspending, didn’t you? Here’s the kicker: Spending too little is just as bad for business.
When you’re constantly on the lookout for free and low-cost tools or working 16-hour days because you “can’t afford to outsource,” you’re not doing your business any favors. Sure, it looks like you’re bootstrapping and working really hard to make something from nothing, but what you’re really doing is digging yourself a rut it will be nearly impossible to climb out of. Not only that, but you’re reinforcing a scarcity mindset that will continue to plague you for years if you let it.
Rather than pinching pennies, learn to spend money strategically. Buy what you need, when you need it. Invest in top-quality products and programs rather than settling for the low-ticket, half-baked plans. Just like quality clothes, cars and furniture, quality services and software last longer and work better. And unlike that car, good quality business tools will pay for themselves.
Bottom line is that with resources in abundance to outsource a laundry list of tasks from as little as $5 per hour to $25 per hour, the simple question to answer is this: Do you know how much your time is worth? Or have you fallen into the trap of being busy doing those $5 an hour tasks in your business just so you can “come across” as being busy? Trying to save money not outsourcing is like tripping over dollars to save a penny. Don’t do it. Your wallet and business bank account will thank me later!
These 3 mistakes are just a few of many that could be causing you to repel all of the money that is trying to make its way to you. If you aren’t experiencing money and life abundantly, here’s your chance to fix it right NOW by grabbing your FREE GIFT below.
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If you think you can create a financially empowered life you can’t wait to live, one that’s designed around your purpose and that brings immense success, satisfaction and fulfillment beyond even your wildest dreams, you can. If you think you can’t, just borrow my “you can” until it turns your “I can’t” to an “I can.”
That can happen easily and effortlessly for you by simply taking your first step and completing the assessment and then booking a call so we can chat!
Cheers to you thinking BIG!
With Abundance & Fulfillment,