Your attitude to Money will make or break your Business


Your attitude to money can make or break your business

Money and your attitude to it plays a huge role in determining the level of business success.

The right money mindset for a new business owner can dramatically improve your chances of success. If you want to own a business, then obviously, understanding money is crucial. We can assure you that many new owners make some common mistakes, resulting in hard lessons and stress, which is unnecessary.

Its also interesting that many people start businesses for reasons other than money which we explain in Understanding Your Motivation.

This article highlights some issues we have frequently observed you can avoid in your new business by adopting a money mindset. We also give you 11 practical money attitude tips based on experience.

What is a money mindset for new business owners?

To be successful, you must, among other things, understand how money is used to make your business to grow.

Our money mindset for success includes:

  • Define your attitude for risking your money.
  • Considering how much money you expect your business to make.
  • Doing basic home budget planning before you start a business to avoid many stressful issues and business failure.
  • Using a business plan as an important tool to predict how money flows in and out of your new business.
  • Being prepared to make sacrifices and use your money wisely to get your business growing.

A money mindset for success accepts that business success is never guaranteed; consequently, there is a risk and reward equation. Starting or owning a business is a risk, and the potential rewards can come through financial success. The converse is also true, as a business failure can destroy your wealth and even land you in debt.

Consider your attitude to that risk as part of your money mindset by asking yourself these questions.

  • How much money am I prepared to invest in my business idea, and how would I feel if I lost it all?
  • Where will I get this money?
  • How much time, energy, and stress am I willing to invest?

The money stakes can be very high when starting or owning a business.

Starting or owning a business is a significant undertaking, and frankly, the statistics for success are not great. The majority of new businesses fail within a few years. Through years of experience running businesses and mentoring, we see some hidden reasons, not often discussed.

One of the hidden causes of business failures are due to is not having a money mindset for success.

Start your money mindset by understanding your ambition.

It is crucial to understand whether your business idea can meet your ambition and aspirations to avoid disappointment and stress in the future. You can read more about this in our podcast How to evaluate a business idea in 3 steps.

To do this, you must understand what you want, and only you can answer this.

Pouring your money or heart and soul into a venture that cannot give you what you want, can be soul-destroying.

The right business knowledge, preparation, and money mindset will give you the best chance of success, whatever you choose.

11 Tips for a money mindset for success

#1 You and your business entity

Getting advice on the best structure for you is very important, and it also determines your legal responsibilities and the legal responsibilities of your business. Your choice will depend upon the country you are in, the structures available, the tax and liability laws that apply.

Whichever legal structure you choose, embrace the concept of your business and you being “entities” and adopt a mindset around your duality. See you and your business entity as separate.

Avoid blurring the edges between you and your business.

#2 Money Segregation in Account Buckets

Recognise the boundaries between you and your business to make life much more straightforward.

Keep your personal and business finances separate. Open different bank accounts and credit cards, for example. Avoid inadvertently spending money that is needed to meet your business liabilities.

Don’t pay personal expenses directly from your business account.

Do these simple things, and you are ahead in the game already.

#3 Your usual money mindset

How are you with money? Are you good at planning and saving-or are you always being surprised by overspending on your credit card statements?

Honestly appraise your money management capability before starting or buying a business.

Listen to Episode 7 The Fundamental 4 as it gives you insight into the importance of money management and other great tips.

Work out your personal or home budget accurately. There are some excellent online planners for this. ASIC’s Money Smart planner is a simple place to start. This planner is handy even if you’re not in Australia!

Do a household budget that lists out all of your expenses and makes some allowance for unexpected costs.

#4 Need and want are not the same

Assess what you need in your home budget as opposed to just what you are used to spending. Be brutal.

Do not confuse “need” with “want” because you have gotten used to a certain standard of living.

Get real about starting or buying a business and the sacrifices you might need to make if things don’t go plan.

Budgeting will prove invaluable when you come to assess your business idea and understand the cash flow you need. It will also help you to understand if owning a business is for you.

Highly motivated and driven individuals live on what they truly “need” to get their business up and running before they draw an income from it.

Be prepared to sacrifice lifestyle, in the short-to-medium term to enable your business to succeed.

Have a realistic expectation of what you can draw from your business. 

#5 Adopt a money attitude for growth.

Stripping cash out of your business for personal living expenses can starve it of money when it’s needed most. Taking too much cash out too soon stops business growth.

Use your budget preparation as a good test of your money mindset. If you find the thought of slogging through your finances and bills to get an accurate weekly, monthly, and annual budget too hard, watch out.

How do you expect to build a business that depends on budgets and plans if you can’t budget and manage yourself?

This preparation is a crucial step in avoiding a financial problem, so do it. Avoid this at your peril.

In your home budget, list ALL of your obligations such as loans, weddings, holidays, cars, hobbies, school fees, etc. The last thing you need is a big bill that you forgot to include!

Identify the resources that you have available to fund your business, e.g., savings or investments. Decide how much you are willing to invest in the business and the consequences if you lose this money.

#6 How much money and how quickly do you need to earn it?

Once you have had a thorough re-evaluation of your household budget and financial obligations, you have an excellent foundation. You can calculate how much money your business needs to provide, along with how quickly it needs to provide it.

Produce your business plan budget to compare how well the business will meet your personal financial needs. Work out how quickly your business needs to grow to do this.

Ask yourself if your business plan is realistic?

If the business plan shows it cannot provide the income or cannot provide it quickly enough, stop and re-think. Revise the budget to make it realistic, or, revise your expectations about how much cash you can draw from the business. Do not just manipulate the budget to give the answer you want, for example, by using unrealistically high sales figures.

Running out of cash is a major cause of business failure, and therefore careful cash planning is time and effort well spent. A money mindset for success has a strong focus on cash flow.

#7 Don’t rely on your bank balance to manage your business

When customers pay your invoices, the cash in your bank account increases, which can be a false sense of security. A simple money mindset is to accept that the majority of it is not yours!

For example, in an established business with a 10% annual profit margin, 90% of the cash flowing through the business goes to paying expenses. It is not yours! Seeing money in your bank account does not mean it is yours to keep. The majority of it is likely to be spent on business costs.

Looking in the till or your bank account is not managing your cashflow.

Using accounting software or apps, or at least a spreadsheet to manage your cash-flow and budget is essential.

It’s easy to spend the money needed to pay for a future bill and then run out of cash. Avoid this is a common trap by applying some knowledge and simple discipline.

#8 Does your partner share your money mindset?

Typical triggers for relationship friction are often around lack of money. Businesses can be very demanding, and the choice between business needs and partner needs can be a delicate balance.

Involve your partner if you have one, when working out your home budget and the business risk. Having a partner that understands your budget assumptions and commits to it can help avoid friction later.

Share your money mindset with your partner as they will know how you think, which can help avoid unpleasant surprises.

#9 Set money aside to pay your taxes

Your business may have to collect a sales tax on your invoices, such as GST or VAT. Periodically (usually quarterly), a calculation is made between the tax on your sales and your purchases, to calculate what you must pay to your tax authority.

A proportion of cash in your bank account is for the tax authority, so it’s not your money to keep.

If you have employees and depending upon which country you are in, you may also have to pay other employee costs. These could be, for example, pension payments, medical levies, or welfare-related taxes.

Using separate account buckets to set money aside for these types of payments can help you avoid a cash flow issue when they become payable.

Consequently, when you have to make payments, you will have the funds available.

#10 Profit & cash are not the same

The lack of cash flow is a significant constraint on business growth, not to mention one of the top killers of businesses.

Ignoring cash flow won’t help-understanding, and managing it will.

The concept of profit seems natural for many of us to grasp as it’s the surplus left over after we pay for costs.

Profit, however, is only an estimation that appears in your accounting profit and loss statement or job costing system, so in effect, it’s not real.

Cash is real and it is the money in your account available to spend now.

Learning some accounting basic terms and practices is part of your money mindset for success.

#11 Cost and price get confused

These two often get confused by people who are new to owning a business.

Cost means the cost to your business of producing your product or service.

The price is the selling price that a customer pays you, including a healthy profit margin.

Working these two out can be tricky if you are new to business. Do not ignore this critical part of your money mindset as charging the right amount for your product or service is crucial.

Many business owners wrongly assume a fixed relationship between cost and price but the only link is your pricing policy.

If you set prices by adding a mark-up or margin to your costs, you can create a formula.

Alternatively, if you set prices by a value pricing method, there is no relationship between the cost and price but a connection between the price you charge and the value to give to your customer.

Many factors come into play when setting prices, such as the industry you are in, your brand positioning, and the degree of competition.

Price setting is often more of an art than a science.

Knowing how to use your money wisely to get your business thriving is critical to long-term business success. Having realistic ambitions for your business that tie in with your motivation for owning one is a great place to start.

Our Entrepreneur Personality Quiz has other insights into the Personality and Mindset of Business Owners.


The information contained in this podcast is general and does not take into account your situation. The content does not constitute business, legal or financial advice and should not be used as such. You should consider whether the information is appropriate to your needs, and where applicable, seek professional advice from a business adviser, financial adviser or lawyer in your jurisdiction. To find out more, please go to



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