Financial management is an essential skill for every small business owner. But, money can make us feel squishy and uncomfortable. You need to learn how to manage money in business – that starts with your mindset and how you think about money.
Your Ultimate Guide to Small Business Money Management
Small business money management is probably not a phrase that gets you excited to jump out of bed every morning. But, your small business – and the dream it represents – won’t last long if you don’t buckle down and manage the heck out of it. This is your ultimate guide to small business money management, so you can stop avoiding this gross, uncomfortable topic and start growing your business with confidence.
How to Manage Money in Business Starts With The Way You Think 🤔
How do you feel about money?
It’s not something we’re supposed to talk about, is it? At least, not in U.S. culture.
Well, how’s that working for you?
Money tends to bring up feelings of discomfort, fear, scarcity, and even anxiety for some people.
It’s normal to feel these things because society has forced us to bottle up any discussion of money that could potentially alleviate these feelings.
It’s understandable, therefore, that the question of how to manage money in business, would leave you feeling anxious and confused.
If we’re “not supposed to” talk about it, then by extension, we’re “supposed to” just suffer alone? That’s ridiculous.
So, in this article, we’re going to talk about money.
And, critically, we’re going to focus on getting into an effective money management mindset.
What is Mindset?
- Mindset is how you think and feel about what you’re doing. Your thoughts and feelings impact your actions in the moment, which then have a direct impact on your results.
- Your mindset, therefore, has a multiplier effect on your business – with either positive or negative effects. That’s why financial management for entrepreneurs should start with a mindset boost.
Critically, your mindset doesn’t magically solve financial problems in your business.
This isn’t about toxic positivity or manifesting anything.
No, the thing is, it’s much harder to solve problems in your business and make thoughtful financial decisions when your mindset is fixed – that is, when you:
- Don’t believe you can learn that new hard thing
- Feel frustrated at the 87th attempt to get something right
- Avoid new and difficult challenges
- Act out of fear or concern about what others might think
Money management for entrepreneurs is an essential skill.
And, as mentioned, it’s perfectly normal to have some inner challenges or sensitive emotions on this topic.
In addition to any of your personal money hang-ups, there’s a lot to learn: navigating an income statement, managing costs of goods sold, setting financial goals, measuring business performance, and more.
To set yourself up for success, you need to believe in your ability to grow.
Growth Mindset vs. Fixed Mindset 🧠
Our brains are dynamic and capable of change.
In fact, as neurons fire and make connections, they get stronger with each additional rep.
Yes, practice makes perfect. Well, progress.
According to psychologist and researcher Carol Dweck, there are two key mindsets to be conscious of:
Growth Mindset
In a Growth Mindset, you tend to believe in your ability to learn, grow, and meet new and/or difficult challenges.
Fixed Mindset
In a Fixed Mindset, you tend to believe that you can’t learn or grow, so you avoid new and/or difficult challenges.
You can think of these two mindsets as lenses, through which you see the world and the challenges around you.
When a new challenge pops up, if you don’t believe you can learn, you might not even try to solve it.
Conversely, if you believe in your ability to learn and grow from challenges, you’re more likely to work the problem into submission.
Again, that’s why your mindset has a multiplier effect on your business – with either positive or negative effects.
If you’re holding a Fixed Mindset, and you’re learning how to manage money in business, you’re more likely to get frustrated, avoid problems, and focus on activities that feel safer.
A Growth Mindset is an effective money management mindset. It’s a mindset that says:
- This might be hard, but I am capable of learning what’s needed
- I made a mistake, but now I know how to do it better next time
- I wish I didn’t have to deal with this obstacle, but it’s here and I am trying
By the way, a Growth Mindset will strengthen your ability to run your business overall — something you can explore further in my workbook.
| WORKBOOK: 3 Entrepreneurial Skills That Fuel Your Ability To Run Your Business
Reflect on Your Money Management Mindset 😅
Take a moment to reflect. This is an opportunity to pause and build some self-awareness.
Take this mini Self-assessment…
What comes up for you while thinking about how to manage money in business?
Consider the options below, then select the statement that best aligns with your reality. Tap or hover your cursor over each card to reveal more information.
4
I’m generally optimistic about my ability to learn and grow. I tend to believe that my actions will lead to positive results. I view most things as an opportunity to learn and grow – even when it’s hard. I regularly reflect on my own thoughts and feelings. I’m not always sure how to manage money in business, but I’m committed to trying and learning along the way.
You’ve got this!
That’s great. Remember too, that a healthy mindset is just the beginning. Financial results aren’t a given and failure is still a possibility. But, you’re mentally set up for success – that’s an important factor.
3
I’m generally optimistic about my ability to learn and grow, but, if I’m being honest, I occasionally waver into pessimism or frustration when things don’t go as planned. I understand the idea that challenges are just opportunities to learn and grow, but I haven’t consistently put that into practice.
You’re getting there!
Small steps add up and it all starts with self-awareness. Sometimes it helps to slow things down. As key financial or business decisions present themselves, pause and ask yourself: how do I want to show up at this moment?
2
My mindset tends to be negative. I tend to focus on things that are outside of my control and I get frustrated easily when things don’t go as planned. I’m not really pausing to reflect before acting either. I’m pretty confident that I can’t learn how to manage money as a business owner, so why bother trying something new.
You’ve got some work to do.
No worries, we all do. But, good news, your brain’s neuroplasticity means you CAN learn and grow and adapt to change – if you choose to lean in and embrace the challenge. Looks like you’ve got a choice to make.
1
I have not taken the time to pause and reflect on how I might be thinking or feeling about my actions, but I’d like to start. This is all quite new for me – can you say that part about meeting obstacles with a smile again? How exactly am I supposed to do that when my sales are so low?
You’re getting started.
It is okay to be exactly where you are. Be patient with yourself as you figure this whole thing out! And, great news, there’s plenty of resources here to help you. Yes, every obstacle hurts a little, but with every rep, they can also strengthen you.
Keep in mind, there’s no “correct” answer. It’s just an exercise to help you build some self-awareness.
It’s also not about being a “4” all the time. You’ll have moments that feel like 4s and moments that feel more like a 1. It’s even topic-specific.
And, you’re not alone there – for some parts of my business I feel like a 4, but I’m often a 3 or even a 2 on some days depending on what else is going on in my life.
Fluctuating is normal and expected.
The key is to notice how you’re thinking and feeling as you make decisions.
If you’re in Fixed Mindset territory, just be mindful of how it might be impacting your next move.
In those moments, you can challenge yourself to get into a Growth Mindset about whatever challenge or decision is in front of you.
A Growth Mindset makes it easier to give your business a financial health check-up too! Instead of beating yourself up for poor performance, you can take advantage of the opportunity to improve.
| FREE CHECKLIST: You Absolutely Need This Simple Business Financial Health Checklist
Financial Management for Entrepreneurs Starts with Mindset 😇
Mindset applies to everything you do as an entrepreneur – it drives your thoughts, informs your actions, and impacts your results.
Let’s take a look at some examples of ways you can start to shift your thinking that directly relate to how to manage money as a business owner.
Examples of How Mindset Impacts Money Management for Entrepreneurs
Sales
Shift your mindset: from asking people for money… to offering people something of value.
When you do, you put yourself on a more confident footing – it’s a mindset that says what you offer matters, it’s not something you have to shy away from.
You need to feel pride in your craft – whether it’s roasting coffee, selling toys, taking photos, and everything in between. Be proud.
| RELATED: How to Manage Business Money Starts with the Difference Between Sales & Profit
Prices
Shift your mindset: from setting prices based on not wanting to be rejected… to setting prices based on knowing your worth.
For that to be true, you have to do the research to set thoughtful prices. And, to do that research, you have to believe in your ability to figure it out.
If you’re setting prices out of fear, you’re leaving money on the table.
| RELATED: How to Set Prices For Your Small Business You Can Feel Confident About in 5 Steps
Costs
Shift your mindset: from guessing, ballparking, or justifying costs… to doing the math, budgeting, and being disciplined.
If you’re learning how to manage money as a business owner, you need to know how to lower costs of goods sold and manage a healthy profit margin.
If those are new terms for you, that’s okay – because with a Growth Mindset, you’re capable of learning and experimenting with these concepts.
| RELATED: How to Lower Business Expenses & Increase Profitability with 1 Essential Idea
Profit
Shift your mindset: from saying yes to every order or customer request, no matter what… to saying yes to orders or customer requests that meet your requirements.
If you’re taking on more orders than you can handle or saying yes to orders that aren’t profitable, you’re setting yourself up for failure.
A Growth Mindset isn’t about magic, it’s not about expanding to meet an impossible goal. It’s about small steps, over time. You still need to be pragmatic and thoughtful about what you can take on.
| RELATED: How to Make a Business Profitable with 4 Clear Financial Boundaries
Financial Forecasting
Shift your mindset: from looking reactively at your finances when something goes wrong… to looking proactively at your finances to keep everything going right.
An effective money management mindset looks ahead. You have to understand your financial trends, so you can diagnose problems before they become major obstacles.
If you’re avoiding these things, you’re going to negatively impact your business in the long-term and, likely, be surprised at your lack of financial performance in the short term.
| RELATED: How to Manage Small Business Finances And Spark Your Imagination with 1 Report
Marketing Expenses
Shift your mindset: from seeing money through the lens of scarcity… to seeing money through the lens of abundance.
Again, fear makes for bad decisions. It narrows your vision and makes you feel small.
You wouldn’t choose to play small intentionally. So, why would you allow that little voice in your head (fear) to decide the path forward?
| RELATED: How to Find the Keys to Successful Marketing with 3 Metrics
How to Manage Money in Business Starts Here – Get In the Right Mindset 🤓
Remember, when you’re learning to manage money in business, it’s not going to go right every time.
There’s always a learning curve. Mistakes happen.
But, with a Growth Mindset, you are capable of navigating that learning curve effectively, gaining proficiency over time.
You can continue building a money management mindset with my Small Business Money Management email course, which helps you navigate the financial growing pains associated with starting and growing a business.
| COURSES: 4 Amazingly Simple Email Courses For Small Business Owners
Also explore the resources I’ve put together below, including questions to get you thinking, actions to try next, and other tools and places to begin.
Take this as an opportunity to further challenge the way you think about money today.
Finally, take a deep breath.
Remember, it’s okay to be new at this – you’re learning, you’re stretching your comfort zone, and you’re finding your footing.
That takes time and practice. It takes patience and pragmatism.
Again, that’s why the above worksheet might come in handy – to help you stay in a productive mindset when (likely not if) you get it wrong.
When you feel stuck, take a break. Better yet, come right back here to 321 Liftoff for more support & inspiration.
And, when you’re ready for more momentum, learn more about working with me 1:1.
Take a moment to pause & reflect.
- What thoughts pop into your head when it comes to managing money in business? In life?
- When you think about money, what emotions come up? When you feel those emotions, what actions do you take?
- What do you think would happen if you thought and felt differently about it? How important would that be to you?
- What would be a new, more powerful thought about how to manage money as a business owner? How might that thought make you feel?
- If you had that kind of energy, what new actions would you take as a result? What’s your plan to make this happen?
Actions, experiments, and things to try next.
Create a growth mantra. When you get stuck, it can be helpful to give yourself a little pep talk. That’s where a growth mantra can be useful. It’s a little nudge to remind yourself that you’ve got this – it can be a short phrase or a word, something to get you moving back in the right direction.
Keep a journal. Track your money management mindset by jotting down the actions you’ve taken each week. Really analyze them. What thoughts/feelings drove those actions or decisions? What are you learning about yourself?
additional tools, links, & downloads.
Start here:
- Read: Mindset | Carol Dweck
- Watch: The Power of Positivity | Brain Games
- Listen: Cultivate an Entrepreneurial Mindset | Masters of Scale
You might also like:
Make a commitment.
Hopefully, you’re leaving with several ideas of what to try next. So, take a moment to aim your effort.
- What’s one thing you’d like to do differently after reading this article?
- What commitment are you willing to make in service of your growth?
- How will you hold yourself accountable?
Questions, comments, or ideas for the blog? Sound off in the comments!
Join the conversation.
What thoughts, feelings, or old habits do you have about money that you’d like to challenge?
What ideas or questions does this spark for you? Share some of your reflections in the comments or send me a message.
Starting and growing a business is not a straight line.
It can feel messy – it zigs and zags, it starts and stops. It can feel frustrating even for the most seasoned business owners. And, that’s ok.
It’s also an exciting challenge. It’s going to stretch you. You’re going to learn a lot – not just about business, but about yourself.
And, that’s why it’s worth it.
TAKE THE SPIN OUT OF STARTUP 😵💫🤩
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