As I meet fellow small business owners and entrepreneurs through networking and referrals, I am curious to see how well each person understands financial concepts and if they have the skills needed to manage their business’s finances, such as creating a budget, planning cash flow, or overseeing their bookkeeper, to create a profitable business.
This has led me to realize something paramount to business success: it is not only the level of understanding or skill that impacts a company’s ability to be profitable, but the mental approach, or mindset, of the owner.
So what makes a good financial mindset? Is it a single way of approaching your business financially, or a combination of many different mindsets? Based on my observations, here are four mental strategies to consider if you are looking to become a profitable business.
The Investment Mindset
The investment-driven business owner is looking at how much money can be made, how little money needs to be spent, and how quickly the money starts coming back. They then make decisions that will produce the biggest result in the shortest amount of time.
The Speed Mindset
Entrepreneurs and business owners with this mindset believe that the faster you develop new products, the sooner you are to market, and the quicker you produce, the sooner you will see the bottom line increase. Patrick Flynn of Smart Passive Income has said that one of his regrets early on was delaying his marketing until he thought things were perfect because his mailing list could have been larger even sooner.
With the Speed Mindset, you need to remember that good enough (which does vary depending on the situation) is your friend when it comes to speed, whereas perfection is the enemy!
The System Mindset
Those with a System Mindset have figured out that developing processes and systems to get results fast and efficiently allows them to minimize both time and money costs. Most importantly, those with this mindset are freed up to pursue high-value pursuits, which will add to the bottom line.
The Prudence Mindset
Entrepreneurs with the Prudence Mindset have that little voice inside saying that things can, and will, go wrong. They constantly look for the potential downside, take steps to minimize it and then, like a stop-loss order on a stock, make sure to divest when it is evident that the effort will not pay off.
If you find yourself struggling, or if you are doing well financially but sense things could be better, then perhaps it is a change of mindset that will make the difference. Give each of the mindsets above some thought, and see if by employing them they make an impact on your business.