If you have a small business or what you consider a side hustle then the #1 thing you think about is money, how to make it, how to keep it and how to make it grow. Having the right financial management is important to becoming a profitable business. Your business needs a solid financial structure to ensure its growth potential, right from the start. At every stage of business developing the proper money mindset and habits will encourage financial stability for your small business.
A money mindset refers to your attitude towards your finances. As entrepreneur’s your money mindset will influence the way you evaluate potential growth opportunities and make financial decisions. It is not uncommon for those new to entrepreneurship to underestimate the power of a healthy mindset and how creating good habits from the start are important.
Here are 3 tips for improving your money mindset and habits for your small business:
1. Financial Education is Your Best Investment
When starting a business one of the first things that you should do is educate yourself about the various aspects of finance. You’ve probably heard this before; most successful entrepreneurs keep their skills sharp by reading books. One of the top books written that covers the topic of money mindset is Rich Dad Poor Dad by Robert T. Kiyosaki. This book teaches you how your relationship to money forms the habits you have around money.
Once you’ve gotten a handle on your mindset now it’s time to begin learning about the basic financial statements that all entrepreneurs should have for their business. 3 key financial statements are the cash flow statement, income statement, and balance sheet. If you are a member of the HerSuiteSpot Accelerator then you should checkout the Financial Management webinar in your money module. The cash flow statement analyzes operating activities, investments, and financial in/outflow. The balance sheet provides information related to the company’s assets, liabilities and shareholder’s equity. The income statement reflects the revenue earned within a specific period of time. Maintaining a simple business budget should prepare you to handle these statements should you decide to maintain your own finances.
2. Pay Yourself from the Start
If you’re running a small business, it can be easy to try and put everything back into the business, which is great. After all, if you expect to grow your business you will need that capital to keep it going. But as the chief motivator of the business it’s important to think of yourself as an expense. You are working hard at making this business succeed so it’s important you pay yourself, if not because you are worth it then pay yourself as motivation to keep going. I know you can see the big picture and are waiting for that million dollar payday but in the meantime you have personal expenses.
You can decide to pay yourself enough to get by while you are building the business or pay yourself what you are worth. Keep in mind with doing the latter you must have a solid business plan and the cash flow that will support paying you your worth. By paying yourself what you are worth, you can more accurately forecast the business for when you reach the black – allowing operating costs remain the same.
3. Keep an Eye on your Books
If you are a member of my group coaching or the accelerator you know how important I think tracking your finances are. As you plan your daily or monthly schedule add some time whether it’s daily or monthly to review and keep a close eye on your financial records, even if you have a bookkeeper. Remember back in the day when Oprah said she signs every check, well be sure that you are watching the money at all times. It will allow you to become more familiar with the finances of your business, but also provide you with a view into if and when you need to make changes to support fluctuating cashflow.
Establishing financial habits even if it’s as simple as blocking out that set time to review and update financial data can go a long way in protecting the financial health of your business. It helps you lessen fraud or risk.
Ultimately, when it comes to developing your money mindset and habits—plan ahead, review everything thoroughly, and always seek an expert’s support when needed.