Operating a business requires continuous cash inflow and outflow. And I’m not necessarily talking about no small potatoes. Sometimes there are some big ticket items weighing us down and we harbor them and hold them close and then implement other processes that end up hurting us in the long run.
These processes are not written in the Bible. They are not set in stone and therefore they can be tweaked at anytime. These processes are the lies you tell yourself about your business finances, when cash is tight. They are what is keeping you broke.
1. If I don’t pay when they ask I will lose that account.
Repeat after me: “This is my business and I call the shots.” You may be seated.
No seriously, more often than not I am running into business owners who allow their vendors to dictate when they get paid. The vendors will show up at your place of business or keep calling you wanting to know when the payment will be available. Part of the reason for this is because you allow it (sorry I know that stung); the other reason is that you don’t have any policies and procedures in place that explain how you operate your business, including the days you pay bills. Look, you have a business to run, and you won’t have one with positive cash flow if money is constantly flowing out the door.
2. I can’t raise my prices.
And why not? If you are getting clients easily, your prices are not high enough. If you have more clients than you can manage, your prices are too low. If your competitors are charging more, but providing lower value service or lower quality products, your prices are too low. Don’t be afraid to raise your prices, you will be surprised at the response. You may get a client who tells you that your work is so great that they would have easily agreed to pay more. Or they are surprised when you tell them the price because they were expecting it to be higher. If you don’t have confidence in yourself and your value neither will they.
3. There isn’t enough business in that geographical area.
I live in a tri-state area, even though the District of Columbia is a city not a state. And for those who don’t know, a tri-state area is basically an area where three cities or states are so close together and the residents and business owners cross over the boundaries more often than not for work and leisure. So for two years I have been networking with folks in one particular jurisdiction and finding more often than not that small business owners do not cross those boundaries. They feel that the licenses are too expensive for the work or they feel it’s too far to travel. I say to each one of you – you are leaving money on the table! And this goes for anyone anywhere, the business is there, but you have to go get it. It’s not going to appear just because your website or business cards says you serve that area. It’s not going to appear simply because you made the decision to serve that area. You have to put in the time and work to network, meet people and build relationships in those areas. Then and only then will the business come.
4. I have to pay my employee that rate.
As you business grows so does the need to hire employees. A common mistake small business owners make is paying people what they think they should pay them to get them in the door versus what the pay for that position actually is. As my business grows and I begin to bring people onboard, I realize that there is an art to hiring people. It’s not just about the skills on their resume and what they are able to do, it’s about their personality and values, whether or not they will make a good fit and if they have the ability to tackle the required task. Anything beyond that should not be your concern.
5. I can’t afford to pay myself a salary.
Small business owners constantly say they can’t afford to take a salary. But as they say this they are running all sorts of personal expenses through their business bank account. Is it not the same thing? Technically it’s not, but in theory it is. Are these not the same expenses you would pay from a personal account if you cut yourself a scheduled paycheck? YES IT IS! So stop doing it and just put yourself on payroll. It will save you money in the long run. See something psychological happens when you start using your personal account for your personal expenses. You start to monitor your business bank balance more closely and you begin to look at it in a different light. You began to see that you do have the funds to finance your business as needed and the urge to commingle your monies begins to go away.
What lies are you telling yourself about your business cash flow?
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