Poor money management has been the cause of more female 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 The Shiny Object Disorder
Some things are just hard to resist—especially when your friends and colleagues are all jumping on board! I have to admit it, when I see a fresh new Micheal Kors bag roll out…I’m like YASSS, I GOT TO HAVE THAT LOL 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 the shiny object disorder frequently, try this two-step plan instead:
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 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 Retrospective 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 retrospective 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 broken heel on your favorite pair of stilettos (after all, you just got those eye candies), 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.
Wealthy women prepare for success and if you want to Master Your Money Mindset; you need to do the same! 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 retrospective 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.