Habits are everything. From getting up early to working out and eating healthy, habits are what differentiate successful people from others. The same applies in business – entrepreneurs who have good financial habits, such as budgeting wisely and investing strategically, tend to make better decisions than those who lack them. Recognising and breaking free from bad financial habits is crucial for achieving long-term success and stability in the unpredictable world of business.
If you have poor financial habits, then your business could be suffering as a result. What’s more, many business owners aren’t even aware of the behaviours that are costing them money and slowing their growth.
Here are four bad financial habits that could be hurting your business:
#1 – Not Paying Attention to Expenses
One of the biggest killers of small businesses is neglecting to keep track of expenses. This often leads business owners to overspend on unnecessary items, or worse, not have enough money to cover necessary costs. The key to overcoming this habit is creating a budget and sticking to it.
This will help you identify areas where you’re overspending, so that you can make the appropriate changes. For example, if your business spends too much on travel expenses, then consider having meetings via Skype or Google Hangouts instead of in person whenever possible.
Working with an accountant is a great way to keep you accountable when it comes to your finances. This person can help you create a budget and assist you with making financial decisions on behalf of your business.
Having someone who assures that things are done correctly is a lifesaver for many small businesses, especially those with little experience managing their own finances.
#2 – Paying Too Much for Office Space
Another common mistake that business owners make is spending too much on office space. This can be a major issue, especially if your business isn’t generating a lot of revenue yet.
There are several ways to avoid overspending on office space. For starters, consider working from home until your business is more established. You could also look into renting office space on a shared basis or taking out a flexible contract with a coworking space. This means you won’t have to worry about forking out for furniture and equipment, and you’ll have the flexibility to pay for less space when things are slow.
#3 – A DIY Attitude
Doing everything yourself saves money, right?
Many small business owners try to do things on their own, but this can be a huge waste of time and money. In some cases, you may end up doing more damage than good. This is especially true when it comes to financial matters – unless you’re an accountant or bookkeeper, there’s no reason for you to handle all the financial tasks for your business.
Hiring professionals to help you with bookkeeping, accounting, and other financial matters can save you a lot of time and money in the long run. Not only will you have more time to focus on what you’re truly good at, but you’ll also have peace of mind knowing that everything is being handled correctly.
#4 – Lax Invoicing and Billing Practices
Another bad financial habit that can hurt your business is lax invoicing and billing practices. This happens when you don’t send out invoices in a timely manner or when you don’t follow up on unpaid bills.
Both of these things can lead to money being left on the table, which is obviously not ideal for any small business.
To make sure that you don’t fall victim to this bad habit, it’s a good idea to create an invoicing and billing schedule. This ensures that your bills are sent out on time each month, without fail. It also helps you avoid forgetting about overdue bills so that you can follow up with clients in a timely manner.
You may want to consider hiring an accountant or bookkeeper to help you with this task, as it’s something that can easily be overlooked by busy business owners. A simple mistake like forgetting to send out invoices on time could cost your business thousands of dollars each year – money that could have been spent on paying bills, marketing your business, or hiring new staff. Cloud accounting can be employed to automate these processes.
Boost your financial health and break bad habits with Atek
If you recognise any of these bad financial habits in your approach, we can help get you back on track! We work with our clients to break bad habits and instill sound financial judgement to support good business decisions. Remember that over time, good habits compound to provide great results! Give us a call, and let’s see how we can help.
Discover how a skilled accountant can maximise your money – Read our article, 5 Ways a Good Accountant Can Save You Money now.