Business is tough work. Getting it right in business is even harder work. Sometimes we get in our own way when it comes to our businesses success. Are you carrying around money beliefs that could be hurting your businesses chances of success? I want to look at 5 money beliefs that have the potential to completely destroy businesses. Let’s see if you’re being held back by any of these.
“It’ll always come this good”
You’ve been operating for a few months and you finally land a whale; the customer big enough to single handedly support your small business. When the money starts rolling in it’s easy to get excited. Money plays on your emotions and you start believing it’s always going to come like this. So you decide to expand offices or get new equipment or expand via recruitment.
Steigers law states that members of an organization will spend more energy maintaining the structure of an organization than achieving the goals of the organization. So when the money starts rolling in and you consider expansion do fully consider the ongoing costs associated with your expansion. Do you genuinely need that extra employee? After all you landed the whale without any of these things.
It’s what you start with that matters
I’ve seen a lot of entrepreneurs and creatives hide behind this one. They speak about how lack of funds prevents their business or craft from doing as well as it should. Now I fully understand how important funds are in terms of cost of customers or customer acquisition costs. Just remember the true mark of a good business is how much money you make not how much you start with.
There’s a lot to say on this subject but most important is to remember that throwing a chunk of money into advertising is good but there are great ways that don’t involve such. Remember those clothing salespeople before social media got big how they would cater to the customer, offer good payment terms, keep the customer appraised of new trends? Guerilla marketing by Jay Conrad Levinson teaches guerrilla warfare tactics for businesses and how to turn your disadvantage into your advantage in marketing. If you are small, use your ability to engage customers one on one and cater for them. Don’t have an office? Offer mobility as your advantage. It’s out of the box thinking that could propel you forward.
Professionals are worth the money
You know what? The problem here is not that professionals aren’t worth the money. Professionals for services your business requires are worth every cent and more. Yet I have seen time and time again many “professionals” who have cost small businesses dearly. Some have wiped out small businesses chances of making it.
Professionals are worth the money but the money has nothing to do with it. My high school business studies teacher said it best: quality is the suitability of a product for its purpose. Not how much you pay. So be very careful when evaluating your options. Price should be the last consideration. Consider the work to be done and what quality really means in the case at hand. I always say never give someone a job you don’t understand. Invest a little time in understanding how the job is to be done. A good provider will make sure you understand what’s involved; they always like to show off how much they know.
Spending instead of investing
We laid the foundation for this in the first belief highlighted. There’s a tendency towards spending money instead of investing it. What’s the difference here? Investments bring in money. These could be things that improve your capacity to earn more money. But too often there’s a tendency to spend.
We generally see small business people intent on spending money on things that don’t necessarily bring in more money but will definitely take a lot of money out of your pocket. You can read my article on understanding assets and how you can evaluate your business and personal expenditures to see whether you are investing or spending.
Spending on image
Now this one is a big discussion point and gets a bit controversial. You’ve made it or at least are well on your way to making it. So you must show them right? Well, not exactly. Vusi Thembekwayo has an interesting discussion with his mentor where they stated that when meeting start ups or entrepreneurs in the majority of cases suits and overly formal wear were methods of covering up some sort of deficiency. It’s far from an empirical study but I’ll hazard to say there’s definitely some truth in their analysis.
If I’m going to meet with a professional I’m a little more concerned with your technical ability than your style choices, I’ll find a stylist when I need style tips. So that expenditure on high priced suits and a fancy vehicle may not be the best thing. Now granted there are some industries where people place importance in such things and there is of course a threshold of sorts; a minimum acceptable level.
There’s a story I was told of a telecoms entrepreneur who planned to visit a Chinese smartphone manufacturer to discuss switching manufacturing to them. He bought expensive suits from the US and had them shipped to China to coincide with his arrival. He hired a luxury vehicle for his time there in order to give the best impression he could. And when he met his future manufacturer he was surprised to not only find the man consistently wore T-shirt’s and cargo pants but also much preferred to get around on a scooter. Of course the scooter had more to do with understanding traffic in Shenzhen China but the manufacturer was more focused on letting his factory do the talking.
In closing there are many other money beliefs out that we have that are hurting our lives. These ones however I’ve seen cases where they have destroyed good businesses or brought them to their knees. It’s important to understand that our beliefs about money may be holding us back from realizing our full potential or may be counter-intuitive to the hard work we are doing in our businesses.