Financial Vulnerability - Five Easy Ways to avoid the Pitfalls
Last week I told you a story about the importance of money. When you are in the process of growing a successful business your eye needs to be on the financial picture. When you have a business that supports employees, overhead, vendors, inventory and the complex world that a vibrant company lives in, you are constantly making financial decisions based on the needs of the organization. You are considering what can be done within the parameters of cash flow, robbing Peter to pay Paul, as well as the money you can lend the company or is available to borrow (Line of Credit, for instance). In this scenario, you and your team are making financial decisions daily that require knowing your real time financial reality and what financial options exist. For the most part you are weighing pros and cons and making educated financial decisions. Let’s switch gears and talk about the solopreneur or small business owner who knows their craft like the back of their hand but has little or no business acumen. Perhaps they’re new in business, hanging out their own shingle for the first time, recently downsized out of a corporate job, or realizing that they want to grow their business from where they are to where they want to be. I could be referring to a doctor, attorney, massage therapist, coach, accountant, gardener, architect, consultant, maker of widgets, website designer, interior designer; you get the picture.
A big difference between the vibrant organization and the solopreneur who hasn’t yet developed business acumen is Financial Vulnerability. It is likely that the owner of the vibrant organization was at one time the solopreneur. What makes us less vulnerable is the knowing that comes with experience - knowing what is important, knowing who you can trust, knowing how to ask for help, where to get help, knowing how to say yes, knowing how to say no, knowing how to draw the line, when to go forward, when to retreat, what is in your best interest, what is dangerous, and how to pay attention to knowing what you know, the feelings in your gut.
When we’re new at doing something, we tend to distrust ourselves and downplay our instincts. We listen to the experts, those in the know, and we believe they recognize what is best for us and we let their voice overshadow what we feel. We shift away from ourselves and move towards the perceived beacons of light, those we believe will pave the way to our success. This is where financial vulnerability comes into play, sometimes in a big way.
I remember a story related to my first brick and mortar business, Cheap Frills. I was sold a bill of goods by a person selling radio advertising for a local Country Western station. I knew intuitively that country western listeners were not a good fit for buying antique textiles and vintage clothing, but the salesperson persuaded me otherwise. I was young, inexperienced, and she convinced me that I was overlooking a huge opportunity to expand my client base. She told me that since I was new to this market I needed to engage in an extended package for the best results (in theory she was right about this, long term overtime is the best form of advertising, but you need to be reaching your target audience!). We put an offer in place to track the response; everyone who came in would receive a discount and a free “I Love Country Music” button. I had zero responses to this advertising effort and as you know radio time is not cheap. Lesson learned was expensive and I felt foolish and stupid because I knew better but didn’t trust myself enough to say no.
I don’t want you to make the same mistake! Here are five easy ways to keep yourself from falling victim to Financial Vulnerability:
1. Trust yourself to know what is best for you and your particular business. For instance, there is a lot of hype focused on engaging with Social Media to build business. The reality is, not all businesses need social media and few need all the social media platforms. 2. Get a second opinion. When something sounds too good to be true or you find yourself on the fence, talk to someone who knows more about the situation than you do. Ideally someone who has been there before. 3. Sleep on any significant financial decision. A good salesperson, even one who appears to have only your very best interest at heart, knows how to get you to sign on the dotted line. That is their job! Even if they offer you the moon when you sign up “right now”, the moon will likely be there tomorrow! And next week, as well as next month. 4. Do some research, always ask for references (and use them!) to find out the lowdown on the opportunity being presented. Sometimes you’ll be given the names of people who are part of the inner circle and I suggest you find a way to get to the outer sphere, the ones who haven’t drunk the Kool Aid! 5. If you don’t have the money, don’t spend it! Don’t put it on a credit card unless it is in alignment with what you slated to spend on your business. Going into debt, spending savings and retirement are not the best strategies for success.