Poor money management has been the cause of more business failures than any other single issue.
And it’s little to no wonder. We aren’t born knowing how to manage money. That is to say, for the most part, we 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. Such as 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.
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 before you purchase. If you cannot find a (realistic) way to make the purchase pay for itself, don’t buy it. For instance, we ALWAYS work out a way to get things going via a “quick-start or “jump-start” perioed of time with our program clients. This is to show them how our programs should be paying for themselves! Truth be told, most recoup their investment with us within the first 3-months! So, I believe we’ve dialed into this one pretty well.
2. For exciting new business ideas, create a “someday” list or an “idea journal”. 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 perhaps most importantly, 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**
I’d bet that you thought this was all going to be about _overspending_, didn’t you? HA! Here’s the real kicker:
>Underspending is just as bad for your small business! Truly!
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.
[**NOTE:** Permit me a moment to be SUPER clear: this blog post is for the small business owners who do this ALL the time … and you know who you are!! ]
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.** As if that wasnt bad enough, you’re reinforcing a **scarcity mindset**, which will continue to plague you for years if you let it.
Its like gum on the bottom of your show, on a hot summer day! – good luck with that!
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 ALWAYS pay for themselves.
