Business money habits, like any other habit, can either make things worse or make them better.
No one wants anything to get worse, but often before they get better this is exactly what happens.
When it comes to money, we have all experienced the highs and lows in business. Some of you are probably thinking more lows than highs, but you’re in luck because we’re going to talk about the top three bad business money habits and how to break them.
So let’s get started.
Giving things away for free. I believe you should always support your clients with some freebies. But you should not provide endless client discounts that drain you on multiple levels. And those additional small items you don’t charge for once in a while “just because”? Stop.
I used to decide to give something at a discount or free depending on my mood or even the mood of my client. This is NOT how you run a business.
Even though my intentions were good, it was emotionally and financially draining and extremely confusing to my staff and clients.
So how can you break a money habit like this?
It all comes down to boundaries. Make clear what you are willing to do for free and how often.
Having a clear answer when someone wants a discount gives you time to focus on more important money making matters instead.
Getting that “one more thing” that will change your business.
Spending money on that one thing that will change your business is an addicting habit. I should know. I've spent countless hours and tens of thousands of dollars in this area simply because of my way of thinking.
Basically, I was taught I had to spend money to make money. Then somewhere along my journey, I turned it into I had to spend a lot of money to make a lot of money.
Of course, that is not the truth, but I learned some important lessons and how to break this habit.
I first got clear about what I wanted to spend my money on and why.
In understanding the why behind the spending, I learned if it was a necessity or me emotionally wanting the next thing that would change my business.
So first step: Take the emotional things off the list.
Then set a clear budget on each thing. Remove it from your list if it is above your budget.
Now you should be clear with what can support your business and be within your budget.
With these steps I broke my emotional and wasteful spending, and when the next best thing came along, I was not so quick to spend money to make money.
Next we go to the most challenging bad money habit: undercharging.
This was one of the toughest habits for me to break.
I had not raised my prices in more than six years and business was booming.
Sure, my clients were increasing. I mean, why wouldn’t they? I was dirt cheap, but I was buried with work and my staff was too. I was looking at hiring more staff to keep up, then realized I was not making any more money – only working more while my expenses went up.
It took me several months to see the financial impact of continuing on this road. Then several more months to figure out my monetary value and take action and inform everyone.
Why did it take so long to change? It was a habit that went on for years and everyone had to break it. It started with me, then my staff and more than 10,000 clients.
Raising prices is actually common in most industries, except mine, so I thought it was something I just had to suck up. I was so wrong. The truth is no matter what industry you’re in, your worth should never be based on someone else’s. Period.
To break this habit, take the time to know what your business worth is, then price your rates accordingly. Don’t wait six years to stop and look at your worth. Do it often and review it at least annually.
Remember, as you provide your services year after year, your value goes up. Your ideal clients will understand the quality service you provide and gladly pay it.
The results I’ve seen from breaking this most challenging money habit have been amazing. My team has more time to focus on our ideal clients’ needs and make more money than ever before.
Breaking bad money habits in your business is tough, but can really make a difference from trying to make a living and living financially free doing the work you love.