money myths Archives - Solopreneur Profit Coach |

Why You Don’t Need to “Spend Money to Make Money”

A big myth that many small business owners fall victim to is the idea that you need to “spend money to make money.” This couldn’t be further from the truth – there are many ways to be creative when starting a business that don’t demand a huge amount of startup capital. Let’s take a look at a few different ways this myth can show up in small business spending, and why you don’t need to repeat the same mistakes in your own business.

You Don’t Need a Huge Amount of Startup Capital

Starting a business can be much more financially accessible than many of us might believe. Depending on what type of business you’re starting, you can begin to pilot your business idea and make a profit with only a little bit of startup cost.

Many service-based businesses require very little upfront investment. Product-based business will require expenses for inventory, but these can still be managed and kept low.

Evaluate what your goals and values are for your business, and be thoughtful about how you can achieve your goals while keeping your expenses low.

You Don’t Need to “Keep Up with the Joneses”

Teddy Roosevelt said, “Comparison is the thief of joy,” and he was certainly right when it comes to small businesses! Comparing your branding, your website, or any other aspect of your business’s appearance can lead to emotional spending decisions and a desire for perfection.

The irony of comparing your business to another is that you usually have no way of knowing how other businesses are doing financially. For all you know, they could be close to bankruptcy, no matter how slick their branding or packaging is.

Instead of trying to “keep up” with other businesses and striving to achieve a perfect image of what you deem is professional, evaluate what’s truly important to your business. With each spending decision, ask yourself a couple questions: “Will this help me make more money?” and “Is this aligned with my goals and values for my business?” If your spending decisions are being influenced by comparisons to other businesses, take some time to ask yourself why you feel the need to do that, and how you can take that pressure off. Your business is yours, do it your way!

You Don’t Need to Take Every Training

Being experienced and well-trained is important. However, there is a strong tendency, especially among women who run service-based businesses, to over-invest in trainings, masterclasses, and certifications in their field. This typically stems from impostor syndrome, or some other version of the feeling that they are “not good enough.” This can prevent a variety of issues for the small business owner, but one of them is definitely overspending.

Reconnecting with your values can help you see past this impostor syndrome pitfall. Take some time to take stock of what you already know, and any certifications or experience you already have, before spending money on another. It might be helpful to keep a compliment file of positive feedback you’ve received on your services for when you need a reminder of the value of your abilities. Any or all of these ideas can help you re-evaluate overspending on education.

I hope that breaking down these 3 myths helped you see that spending money to make money is not necessary. If you enjoyed this post, you’ll also probably like my eBook, Reach Your Life Goals: A Business Owner’s Guide. Click here or below to download your free copy.

Three Money Myths to Avoid When Starting a Small Business

If you’ve ever expressed interest in starting your own business, you’ve probably come across a lot of money myths designed to discourage you. I’ve busted three of the most common ones below. Here are some ways to avoid the pitfalls they warn of:

“You have spend money to make money.”

One of the most common money myths would have you believe you need a lot of capital to get a business venture off the ground. The great thing about starting a small business is that it can be just that – small. You don’t need a lot of money to start testing out your business idea now, and you can always scale up later.

It also depends on what type of business you’re looking to start. Service-based business may not call for any upfront investments in materials or supplies. Craft business may be able to source up-cycled materials at lower costs. The possibilities for starting business without a lot of money are numerous. For more reading on this subject, I suggest The Toilet Paper Entrepreneur.

“You have to look successful to be successful.”

This money myth is sort of the “keeping-up-with-the-Joneses” mindset of the business world, and many fall victim to it. Just the other day, I was listening to Hilary Hendershott’s Profit Boss podcast, and she was discussing an earlier part of her career in the mortgage business. She felt that in order to be a successful professional, she needed to project a certain image. She ended up spending all her money to keep up her appearances, and eventually had to turn it around and re-evaluate her financial priorities.

Ultimately, she learned an important lesson – success can come without material trappings. You don’t need to get caught up in spending your startup cash on the best technology or a new car, and you certainly don’t need to fret because your office doesn’t look like Google HQ yet. (Anyway, does anyone actually use those nap pods?) Evaluate what success means to you, and make sure every dollar you spend in your business serves a purpose that agrees with your goals and values.

“Your income becomes less dependable.”

This is a myth-bust within a myth bust! In a Wisebread article on this same topic, I read, “As a business owner, I seemed to have little or no control over my income. I worked hard all the time trying to bring in income and win new business. Sometimes there was a lot of income, but sometimes there was none, despite my best efforts. My income ultimately depended on fickle customer decisions and economic forces beyond my control. Income for small business owners can be quite volatile.”

Clearly, this particular business owner was using the GAAP (Generally Accepted Accounting Principles) Formula, rather than the Profit First formula. Profit First asserts that Sales – Profit = Expenses. This equation lets business owners create a system to stabilize their income and plan for incoming expenses. The author above probably would have benefited from the free download of the first 5 chapters of the Profit First book! I know I definitely could have benefited from Profit First when I was just starting out as a small business owner.

If you’re looking for more reading on this topic, definitely download those chapters and read through my other blog posts! If you think you can benefit from some one on one help with your business finances, schedule a curiosity call with me. I wish you the best business beginnings – don’t let these money myths stand in your way!

☮
Angela

Image sources: Thought Catalog, JoelValve