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 tend to make better decisions than those who lack them.
If you have poor financial habits, then your family business could be suffering as a result. What’s more is that many family business owners aren’t even aware of the behaviours that are costing them money and slowing their growth. Let’s take a look at four bad financial habits that could be hurting your family business.
#1 – Not Paying Attention to Expenses
One of the biggest killers of family businesses is neglecting to keep track of expenses. This often leads family business owners to overspend on unnecessary items, or worse: not having 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 family businesses, especially those with little experience in managing their own finances.
#2 – Paying Too Much for Office Space
Another common mistake that family 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 family 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 family 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 family 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 family 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 family 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.
Using cloud accounting technology to its fullest can automate this process, especially for recurring invoices which can be sent out at a set time and date.
Make sure to avoid these bad financial habits if you want your family business to succeed! Implementing a budget, working with professionals, and sending out invoices on time are all great ways to keep your finances in check. Remember that over time, good habits compound to provide great results!