3 Money Mistakes That Keep Your Business Broke

Money mistakes in business, everyone makes them. (le sigh…)

Poor money management has been the cause of more business failures than any other single issue. And it’s no wonder. We aren’t born knowing how to manage money. Most of us aren’t taught how to handle it either. We figure it out along the way, through much trial and error.

Those same mindset issues and bad habits that wreak havoc in our personal finances can plague our businesses as well if we’re not careful.

Catching Shiny Object Syndrome

Some things are just hard to resist—especially when your friends and colleagues are all jumping on board! New tools, training, services 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.

If you find yourself catching shiny object syndrome frequently, try this two-step plan instead:

1. For “too good to refuse” offers, make a plan for achieving a positive ROI (return on investment) before you purchase. If you cannot find a realistic way to make the purchase pay for itself, don’t buy it. I have been known to FORBID my private clients from purchasing anything for their business before running it by me first. I don’t do that to be a control freak, I do it because I know how easy it is to invest in things we think will make growing a business easier,  when in reality it just gives you one more thing to learn, do or spend your valuable time on.
2. For exciting new business ideas, create a “someday” list. Jot down your idea and a basic outline in a dedicated journal. I suggest naming the journal,
   “the parking lot”, 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.

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.

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.

In the grand tapestry of business, money is but one thread. Learning how to build a solid foundation for your business will ensure that you can grow a thriving business and not a house of cards that will fall down all around you.

Should We Talk?

Are you curious about how my approach could help you scale your business so you grow exponentially, positively impact many more people, make very good money and regain your freedom?

Let’s talk and see what’s possible for you. Just this one conversation has the power to change the entire course of your life, for the better.

Here’s where you can schedule a free exploratory session with me today. This is the conversation that can change it all. I want to get to know you, hear more about your current situation, strategize your next steps for your business with you (at no charge) and explore the resources available within my scope of programs and Roledex.

No strings attached, just a powerful, heart-centered conversation all about you. Go ahead and book that call, there’s everything to gain!

To moving your business forward together,