8 Bad Financial Habits You Should Drop
Bad habits, you may have heard, are just as much work as the good ones.
Once you establish a good habit, it's a matter of routine. Imagine having routines in place that keep your finances on course. Sounds great, right? To get those good habits in place, you first must face the bad financial habits you have now. Face them, and then drop them like the hot potatoes they are.
1. Being Disorganized
Disorganization costs money. Lots of money. Money spent on late fees, interest charges, memberships with groups you no longer associate, subscriptions to journals you no longer read, customer invoices that go unpaid, and warranties that never get filed.
Guess what the default system for everything is? Disorganization. Without intervention, the world tends toward chaos. This is especially true of desks.
That means that if you haven't consciously put systems in place, all the paperwork and upkeep of business finances will morph into a hideous beast of chronic disorder. Don't let your papers stack up, your invoices fall behind, or your payments arrive late.
2. Doing Your Own Taxes
Unless you are an accountant, it's good business practice to hire one to make sure your taxes are done properly. It isn't that the system is so complicated you could never handle it. It's more that your time is better spent doing what you already know how to do.
Doing your own taxes may not get you in trouble with the IRS, but it will probably cost you in taxes you didn't actually have to pay.
3. Being Afraid to Get a Loan
There are plenty of bad reasons to get a loan. There are also plenty of good reasons.
- You might get a low-interest loan and avoid high interest charges on inventory.
- You might get a loan in order to relocate your business to a bigger and or better location, with a resulting increase in profit.
- You might need a loan to purchase equipment that will automate some part of your business process, speeding up production and freeing up your employees for more important work.
A good loan is one that will result in your business being able to make more money. Don't let fear keep you from building your business.
4. Undervaluing Your Products or Services
I recently purchased some handmade baby care items from a friend who is much more craftily inclined than I am. Every piece is high quality, hand-sewn, and detailed.
And the amount she charged me? Ridiculously low.
I'm no expert in handmade baby gear, but I know a good thing when I see one, and I'm willing to pay a decent amount of money for it. So are your customers, unless you tell them they don't have to. If your products and services are meeting a demand, allow your prices to rise to that demand. Value what you produce as much as your customers do.
5. Letting Small Leaks Sink Your Big Ship
Two examples: overdraft fees and warranties.
Overdraft fees, late fees, and the like, can suck your bank account dry and can mar your financial reputation with potential lenders and investors. It's money spent on nothing but your own disorganization. Don't do that.
If you perform any type of warranty work but fail to submit a warranty on time or according to proper procedure, you're doing work for free. Is this your intention? I'm guessing not. Don't do that anymore.
Look for the small leaks, because small leaks have a way of becoming big leaks.
6. Ignoring Investments That Boost Productivity
It may be a new piece of equipment, a new hire, or a new system that will take some time and money to implement. If you know you can increase the overall productivity of your business, you shouldn't ignore the opportunity to do so.
There are smart investments that can help your business be a leaner, meaner, profit-producing machine. Or you can stick that money in your pocket and keep chugging along at your current pace.
7. Trusting That You are Getting the Best Value
Your customers do comparison shopping, and you should as well.
Two years ago when you got that new software or signed that phone contract or joined that big box store for better deals on office supplies, it was the best value. Is it still the best value?
By doing a little homework every six months or so on your standard operating costs, you can be sure you're not missing out on a better value. And the best part is that you don't always have to switch services or providers. Keep reading...
8. Failing to Negotiate
Say you do some research on Internet providers and discover that there's a great deal from another source. Don't call your current provider to cancel; call to negotiate.
In order to keep your business, your provider might quickly match the competitor's offer, and you're saved both the hassle of switching and the extra money you were paying.
Don't be afraid to negotiate. It's not bad manners to negotiate; it's good business.