3 MONEY MISTAKES THAT KEEP YOUR BUSINESS BROKE

Poor money management has been the cause of more business failures than any other single issue. 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.

Shiny Object Syndrome

Some things are just 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.

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

  • For “too good to refuse” offers, know how you will achieve 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 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.

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 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.

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More Important Than Money: Understanding Why You Really Do What You Do

What do super-successful small business owners and entrepreneurs all have in common?

It’s not experience.

It’s not extraordinary skills.

It’s not even a powerful drive.

Although all of these things can definitely help your business grow, they’re not a prerequisite for success. After all, no one is born with experience or skills, and plenty of successful people lack drive.

The one thing that does make a difference, though, is your “why.”

Why did you decide to start a business?

Why do you spend too many hours in front of your computer every week?

Why do you stay up too late and get up too early, just so you can work on growing your business? Why do you buy every online marketing program, but rarely implement it or if you do, it doesn’t work for you.

The “why” is what ultimately drives us to success, but here’s the thing: it’s different for everyone. Your why is not my why, and my why is not your why.

It’s a deeply personal choice that can have great meaning…or not.

For example, a survivor of domestic abuse might happily spend 60 or 70 hours each and every week mentoring other victims of abuse, or counseling couples on how to break the cycle. Her big why is a strong desire to prevent other women from suffering in the same way she did.

A mother of small children may be saddened at the thought of sending her kids to daycare, just so she can go to work to (barely) pay for it. Her big why is a drive to spend as much time with her kids as she can, while still supporting her family.

A young, fresh out of school entrepreneur might resist taking the same path her parents took, working for a corporation for 40 years, only to retire and find themselves with barely enough to live on. Instead, she dreams of having the income (and the time) to see the world while she’s still young enough to enjoy it.

So, what’s your big “why”? It might be the freedom to travel, the option to spend time with your family, the ability to take weeks off at a time to care for a sick family member, or even to earn enough money to support a charity that’s close to your heart.

Whatever it is, your “why” is the driving force behind every action you take. When you’re deciding whether or not to take on a new client or customer, ask yourself if it’s aligned with your “why.” When you’re setting goals for the year, ask yourself if those goals are moving you closer or further from your big why.

Thinking of branching out into a new business venture? Make sure it’s in alignment with your big why, and success is suddenly much more attainable.

What’s YOUR BIG WHY?

Join us in the Be Boldly Brilliant Facebook Group to find your “why” or for support in achieving your “Why.”

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