Most entrepreneurs learn quickly that you need to stay positive in business, or you will give up. Positive thinking helps, but so do the words you choose in your daily interactions. Throughout my 20-years of consulting entrepreneurs and startups, I have observed many businesses go under.
I've noticed most of these failed entrepreneurs frequently repeat similar phrases as they discuss their routine operations. If you're trying to grow your business during tough times, here are a few phrases you should be conscious of using when times get tough.
1. “I combine my personal and business expenses."
Combining personal and business expenses make any bookkeeping complicated. It adds more stress and increases your chances for audits as you try to identify which expenses can be deducted and which are personal. A recent TD Bank survey revealed that 56 percent of small business owners use a personal checking account for both business and personal finances.
Businesses must provide the IRS with all records related to the operation of a business. The supporting business documents required at tax time range from gross receipts, purchases, expenses, assets, employment taxes to travel and transportation costs, entertainment costs and gift expenses.
When these documents are combined, it will require a lot of time and effort to separate them and the risk of human error increases. Mistakes made with regard to filing taxes can result in hefty fines. Using a simple expense tracking system like Receipt Bank can help business owners separate personal from business expenses.
2. “I'm not good at delegating."
Successful business owners know they must delegate if they are going to grow their business. When entrepreneurs do everything themselves, they are preventing the business from succeeding and growing.
Many inexperienced entrepreneurs don't know when to delegate and when to do the work themselves. Generally, a task should be outsourced when it's not central to generating revenue for the company. If a task doesn't increase a company's competitive edge or requires specialized knowledge, farm out the work. It will give you more energy to focus on growing your business. Accounting, payroll, website design and public relations are good examples of tasks that should be outsourced.
3. "I do my own accounting."
The majority of small business owners opt to do their own accounting to save money. However, in the end, this approach may actually be costing them more money. Accounting requires time and effort, and when a business owner utilizes their valuable time towards accounting tasks, they are not making the best use of their time. The opportunity costs of accounting are exponential. The opportunity cost is the loss of potential gain from other alternatives when one alternative is chosen, like focusing on growing and expanding the business.
Accounting can also reveal the health of a potential failing business. If the books are in disarray then a business owner can't properly evaluate the financial health of the business - which is the starting point of financial growth.
4. "I gave my client (or vendor) a financial break."
Entrepreneurs don't want to lose any deal, which is why many small business owners squeeze tight profit margins as a way to win the business. This isn't a smart approach. When I hear businesses say they gave a financial break to win the business, I know they are headed on the wrong path. Offering a client (or vendor) a financial break might be a genuine gesture, but it is not good for future business. The value of a product or service should reflect the quality of work. And by diminishing the cost, you are effectively telling the client your product or service is inferior. Entrepreneurs must be confident in what they offering, and giving financial breaks implies the opposite.
5. “I use Excel for bookkeeping."
Excel can be a great starting point for startups because it's easy to use, free, and chances are; you have it on your computer. But when businesses continue to use Excel past that initial startup period, they start to get into trouble. Excel provides many opportunities to make manual or financial mistakes in the books. Manually entering the formulas, filters and data connections in Excel is time-consuming and is prone to human errors. Excel also doesn't have the capacity to help you scale your business. As new products are introduced, assets are acquired and new employees join the team, books become more extensive. Excel can't keep up with these changes. Abandon Excel as soon as possible to give your business the foundation it needs to grow into a thriving organization.
6. “I was denied a Business Loan because my books are a mess."
This phrase is too common especially since today, we have online access to information with notes on preparing for a business loan application. A crucial point to remember as a small business is that most banks will evaluate the fiscal health of your business as well as the business owner's credit rating and personal financials. The best way to prepare for a loan application is to have a conversation with your Bookkeeper or Accounting Advisor. He or she can research what will be needed to accompany your application submission and get your books properly prepared for running financials the bank will want to examine like Cash Flow Projections, Collateral Schedule, and Outstanding Debt.