All too often small business owners don’t look at the financial habits they use to stay in business. Many business owners become reliant on unhealthy financial habits that cut into their profits and compromise the health of their business. Yet, they don’t know how to stop the behavior because they have become addicted to using these methods. Here are 3 financial habits you can kick in 2019 that will make your business stronger long term.
Stop using credit: For any business small or large, credit is expensive. The issue with using credit is that most businesses only pay the minimums on their card. When you buy for your business using credit, you are regularly being charged more than you are aware of by paying only the minimum. Interest rates, for small business, are especially high and you can lose your break-even point on high interest purchases. The best position for any company to be in financially is debt free. A debt free company stands a better chance at weathering economic storms.
Reflexive spending: I’ve done it, you’ve done it, and we’ve all been there. You go to a store to pick up a carton of milk and walk out with bags full of groceries you did not intend to buy. Over time, you have stockpiled items in your kitchen because the sale price was too good to pass up. This can also happen in business, and most business owners do not evaluate their own spending habits. Overspending is not only dangerous, but more often it is unconscious. Because the credit is available, you are not spending the cash from your business account. This is a bad financial habit and many small businesses go belly up, because their inventory isn’t turning as fast as their vendor is selling to them at his “too good to pass up” sales prices.
Not understanding your numbers: Most small business owners agree that one of the most hated parts of owning a business is dealing with accounting. They don’t understand what those numbers actually mean. More often they see accounting as an obligation to taxes, instead of the business health checkup it really is. If your numbers don’t jive, your business won’t jive.
Understanding accounting helps you guide your business. It is important for every business owner to have a pulse on their business and the best way is looking at and understanding accounting, because it is a map of your business. Avoiding the accounting in your business is a habit you want to kick in 2019. Make friends with this aspect of being a business owner.
When you kick these bad financial habits you will not only feel good, but you will have improved the strength of your business as well as its longevity.
Vickie Helm is a bestselling author, business and asset strategist, and the CEO of Smart Group Firm. She has improved the success of more than a thousand companies and the lives of thousands of individuals throughout her career. You can learn more about Vickie at https://thesmartlifeclub.com or https://vickiehelm.com.