As an entrepreneur, running a business means making the most of your money. Yet a common mistake among entrepreneurs is spending more money than a business actually takes to run. To avoid this common pitfall, you must stay conscious of what you are spending money on, and focus relentlessly on your revenue. Sounds easier said than done, doesn’t it? There are four main ways in which I see entrepreneurs making mistakes when it comes to their business and their money.
1. Emphasizing Anything Over Connection
The No. 1 thing that all businesses must do is acquire clients. If you’re prioritizing taking a class, building your website, or putting together your newsletter over prospecting, you’re not thinking like an entrepreneur. Talking to existing connections and meeting new people should always be the top priority in building your business.
2. “Bright Shiny Object” Syndrome
When you’re in business for yourself, it can be isolating and sometimes lonely. That loneliness can lead to questionable decision-making, especially if we lack someone to bounce ideas off of. We might make the mistake of thinking that the next course, class, or coach is going to be the end-all solution to speedy profits and a six-figure income. This is a great way to waste thousands of dollars on a new distraction, when we may have had a perfectly functional solo plan already in place.
3. Not Trusting Yourself
No matter how little you think you understand the intricacies of building a business, it’s a poor idea for an entrepreneur to delegate or defer strategic decisions to someone else. If you don’t trust yourself, the next step is to educate yourself so you never second-guess yourself in that area again. I wish someone would have told me this about 15 years ago. I now cringe at the amount of money I have wasted wishing someone would just tell me what to do!
Everything in life is a work in progress, yet entrepreneurs often hesitate to put themselves out there. The perfect name, website, program — you’ll wait forever and never get to actually help anyone if you wait for perfection! You must retrain your brain to believe that perfect is the enemy of moving forward, and that “good” is good enough.
How to Decide Where to Invest Your Money
Once you have identified where you might be wasting money in your business, you can start to assess your planned spending more rationally by asking yourself these three questions:
1. Am I making a business spending decision based on emotion or need?
You’ll know the difference because emotional spending often causes a predictable physical reaction (my shoulders always hunch when I am reading about a course that sounds too good to be true), whereas just buying stuff you need evokes zero physical reaction. For example, I’ve never gotten nervous buying yellow notepads or re-upping my website hosting fee for the year. If you’re having an emotional reaction, stop and figure out the deeper need you might be trying to fill.
2. Do I need to buy this to get more clients?
When spending in your business, your money should be primarily focused on revenue production. So if the expense doesn’t help you build your list faster, or meet or convert more prospects, you can probably avoid the purchase for a while. Force yourself to be specific as to how it’s going to help you and how you’re going to track and assess your return on investment.
3. Am I purchasing more than I can implement?
I find most people overestimate the amount of tactics they are able to implement. Buying a product that promises “20 Ways to Build Your List” is likely overkill; you can focus on one tactic for six months and see major changes. Instead of dabbling in multiple tactics, concentrate on going deep on each individual tactic for a longer time frame. In this way, you’ll save money and become much more effective in your chosen strategy.
Mindy Crary is a member of the DailyWorth Connect program. Read more about the program here.