⏱ 3 min reading
New habits can be hard to establish, while bad habits can be quite difficult to get rid of. But forming habits is super beneficial for you, and if you apply habits to your business you will be even more amazed. When you think of financial habits, we can see you might not immediately jump out of your chair and get to work. But it is worth it. Honestly. We’re not lying. But first steps first, so just start by checking out the habits below which came from a study of 1700 small business owners in the US.
1. Make sure you have the right business structure
Maybe not so much a habit in itself, but it is the start of everything. From the study, it was concluded that 64% of small business owners do this, so it may be something you want to look into. Each different type of business structure, no matter if it’s sole proprietorships, partnerships or corporations, have their own structure which come with all sorts of legal and tax requirements. Therefore, it is quite essential to know you have a good business structure. When you’re not sure which one fits your business best, just ask for professional help.
2. Make sure you have and maintain a budget
The habit of making sure you have and maintain a budget will enable you to have more insights into your business. You can start very simple by just writing down two things at the beginning of each month. First you will write down what you expect to receive in terms of income that month, and then how much you will need to pay. As the month goes on, review your actual situation at the end of the month and then start again in the new month.
3. Regularly review your finances
This is something that 69% of all small business owners do. And honestly, can you really call it a habit if you don’t do it regularly? This one also intertwines with habit 2, because your finances could vary depending on all sorts of things. Therefore weekly and monthly financial reviews will enable you to get all the necessary insights into your business operations and tell you where you’re excelling and where you may need to chase a client to pay.
4. Maximize deductions
Done by 65% of small business owners. Now, we all know that every business has to pay taxes and while it may feel a bit counterintuitive, have a look into tax deductions and write-offs. These can reduce your taxable income and thus also the amount of taxes you have to pay. We know it can sound a bit daunting, but consult your accountant for this one.
5. Standardize Processes
Processes are vital and can increase efficiency in an incredible way. In order for this to make an impact on your finances, look into cloud accounting solutions or start small by online invoicing rather than doing everything manually. In most cases, you will be able to access the data in these systems from multiple devices which means you don’t always have to be behind your computer.
By adopting these financial habits, you will not only be more informed, but also be more in control of your business which will allow you to make better decisions on things to pursue.
Having trouble setting up new habits?
If you’re interested in the more psychological process of habits and why we do what we do and how you can actually change it, we recommend reading the book “The Power of Habit” by Charles Duhigg.