Good financial habits are vital to success in business. The way you make money and spend it can either take your business forward, or weight it down. Here are six poor financial habits that business owners often struggle with, and tips on how to break them.

Buying things that you haven’t budgeted for

Cash flow is of paramount importance to a small business. This is why it can be a bad idea to make unplanned purchases. Whether it’s an expensive coffee machine for the office or the latest computer peripheral, items that aren’t strictly useful or needed shouldn’t be on your list of things to spend on. Certainly, these can seem like minor indulgences. These expenses can add up, however. Before you spend on anything for your business, you need to ask yourself if it is necessary, and if it can help grow it. If the answer is in the negative, you shouldn’t buy it.

Working with worn-out sales strategies

If your sales strategy is about treating clients and suppliers to expensive dinners, it may or may not work. While anyone would appreciate being taken to dinner, such a move isn’t likely, usually, to deliver improved sales. If you’ve practiced an unsuccessful sales strategy in the past, it’s no reason to continue with it in the future. You need to constantly evaluate your sales strategies for potential for improvement. If client entertainment doesn’t seem to work, try investing your marketing dollars in other ways, say, on search engine optimization or conversion rate optimization. Sticking with the same old strategy that no longer works make little sense.

Not paying attention to your credit score

To many marketers, the term credit score only ever applies to their personal credit standing. It’s essential that you concern yourself with your business credit, however. Should you ever need to take out a business loan, your business credit will play a role.

Building a good credit score for your business can be vital. When you need to finance your business, a good credit score will let you see flexible options, and low interest rates. If you find it hard to figure out how to do this, it, could make sense to hire an outside professional.

Neglecting to count the number of hours that you work

As a small business owner, you set your own working hours. Sometimes, however, you may find yourself working overtime for no gain. It’s important to count the hours that you work. When you know the hours, you can plan to bring greater efficiency to the way you work, and also learn how much you need to charge your clients for the time you spend on their projects.

You’re pricing your products or services based on too little information

If you don’t price your products correctly, you may find that you charge too much or too little. You can either lose business, or gain much business without making a profit. It’s important to remember that you cannot price your products or services off gross margins alone. You need to take into account other expenses that are not accounted for in gross margin calculations – rent, utilities, marketing expenses, payroll and so on. Pricing your product while you take net margins into consideration can be a good way to make selling profitable.

You choose financial solutions without looking for the best deal

When you need a loan for additional working capital, it can be tempting to simply go with the financing option that’s the most readily available. Going with easy availability, however, can be costly. It’s important to realize that every financial vendor offers different rates and terms. You need to shop around and find the best deal.

Whatever it is that you may need money for, however, you do need to make sure that you can repay the loan that you take out. You’ll need to make sure that your accountant is on top of these calculations.

Every business owner struggles with a few bad financial habits. Change can be hard to bring about, but it’s an important part of staying afloat in business. Constant re-evaluation of your financial habits is key.

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