Habits are in everything we do in our lives. However, habits can sometimes harm our lives, including business. And sometimes, even, they can be what determines if your small business will go bankrupt or not. That said, if you think you have bad financial habits hurting your small business but can’t pinpoint exactly what it is, let us help you with that. This article will list some bad habits you don’t know you’re already doing in your business. Let’s start.
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Not Having a Comfortable Safety Net
Having emergency expenses is a reality that all business owners must face. However, that doesn’t mean that we can always be prepared. Don’t let that dissuade you, though, as having a financial net for emergency expenses is always smart, no matter how successful your business is.
Of course, that is easier said than done since saving up money can be hard sometimes. In this situation, you can create a separate bank account for funding in case of emergencies. This way, if your business is struggling with its cash flow, you have a safety net that can shoulder your operational expenses if needed.
Not Tracking Expenses
One of the worst things you can do is not pay attention to your business expenditures. This often leads to business owners spending more than they have, like buying unnecessary equipment, giving too many bonuses, etc. Of course, if this happens too often, your business will eventually not even have enough money to cover the daily operations expenditure.
Of course, one thing you can do in this situation is to create a budget. This will help you identify the areas that your business is spending too much on and the areas that your business should also pay attention to. With this information, you’ll be able to pay attention to your weak areas and do something about your business’ overspending.
Relying Too Much on DIY
A do-it-yourself attitude is fine in some cases. However, some business owners rely on it too much to save money. Saving money on your business is a good habit to have but in excess. If you do this too much, it might spell disaster for your business.
For example, some business owners, instead of hiring someone for electrical installations, will try to do it themselves or have someone with no certifications do it to save tons of money. There are some things that you just have to pay for.
Lax Invoice and Billing Practices
Another bad habit you probably don’t know you’re doing is being very lax with invoicing and billing practices. This usually happens when you don’t send out invoices promptly or follow up on time on your unpaid bills.
Of course, both of these things could leave money on the table, which is bad for any business. You always want the money to be in the right place, and leaving money on the table will sometimes prompt you to forget what it’s meant to pay and use it on something else entirely.
To get rid of this habit or at least prevent you from picking it up in the future, you can make a schedule for your invoicing and billing. This ensures that your bills will be sent out on time and your invoices will be where they should be. This habit will prevent your bills from being overdue and not cost you a few more bucks. This could also apply to the online loan you got from the bank or lenders.
Of course, if you don’t want to do this yourself, you can hire a bookkeeper or an accountant to help you or be in charge of this task entirely. Billing and invoices are usually something that many business owners overlook, so hiring someone to take care of this is a common move.
Impressing Clients Too Much
While it’s essential to impress your clients with what your business offers, sometimes, business owners can do it too much to the point of overspending. Suppose your business offers something intangible like consultancy instead of meeting them all the time in expensive restaurants.
In that case, you can meet them in a coffee shop or somewhere cheaper but still decent. It’s always better to impress your clients with your track record and results instead of impressing them with superficial things like an expensive lobster dinner or a day at a golf course.
Fixing Bad Financial Habits
These are the most common bad financial habits that you might already be doing. Luckily, these are easily recognizable habits once you know the signs. That said, if you determine that at least one of these habits is something that you do, it might be time to stop doing it. Take this as a sign to stop your bad financial habits, and you’ll have a smoother time with your business.