Money is a hard topic to discuss, and hard financial times can make people question their beliefs about money. In the wake of a devastating recession, it's not outlandish to expect that Americans would have re-evaluated their financial beliefs and educated themselves on their most deep-seated fears.
Stress fueled by finances can multiply: those who are anxious about managing money feel less confident doing it. That anxiety can prevent them from seeking out resources or changing their approach, eventually leading them to financially lose out to others.
Company leaders can find themselves in the same boat. While they may have access to more information and resources like expense management tools, stress can prevent them from making the most of it.
Higher-Level Roles Don't Guarantee Financial Success
Holding a leadership position doesn't mean you're immediately filled with confidence about every decision you make. If anything, it guarantees you'll face decisions you have no background in. That can fill you with anxiety—or push you to fill the void. Here's how to do the latter:
When approaching any financial deal or negotiation, look into how you'll be assessed.
1. Carefully weigh your fear before giving in to it.
Fear is the greatest marketing tool around. Advertisers convince us that we need to buy the next new thing; financial news shows try to convince us that interest rates have gone haywire and the market's doomed. But they play the opposite side of that coin, too: low unemployment or new technology can signal you're about to lose out on an opportunity your competitors will capitalize on. That new product you just bought is now going to be your undoing.
Evaluate your fears before jumping to conclusions. Is this factor truly important in your industry? What patterns have you noticed in recent months? Is there a financial incentive for the person stoking your fear? Even resources with good information and savvy insights can have multiple reasons for making a recommendation, so ask questions about the worst-case scenario. Position yourself as a critical consumer who needs proof before acting.
2. Arm yourself with data.
You probably check your credit score prior to seeking a mortgage or a new car loan. Did you know that your personal credit score can impact your business credit score? Depending on how you've structured your business's finances, these scores can be closely related. Without a lengthy history, banks may still ask to evaluate your personal credit as an indicator of what's to come.
When approaching any financial deal or negotiation, look into how you'll be assessed. If you're seeking auto insurance, for example, the insurance company may review your insurance score, which looks at how you've handled financial accounts in the past. Your risk profile could impact the rate you're offered. Likewise, online lenders may expect you to have been in business for a certain period of time or to have a minimum annual revenue. Come to the table ready to discuss how you meet—or surpass—the requirements to get a better deal.
One way to gather more data is through expense management tools. To find the right platform, look for accounting software that's intuitive—it can help you spot patterns and trends so you can act accordingly. Tools that offer assistance in managing cash flow and forecasting are also great for keeping your business in good standing with employees and vendors. Above all, look for a strong user experience: if a dashboard is difficult to follow, you're unlikely to use it or benefit from its insights.
3. Build your risk tolerance.
Some leaders live by the “go big or go home" mantra. Others decide to just stay home, where it's safe. That's a surefire way to stifle growth and lose out on opportunities. The trick isn't to outsmart the game by refusing to play it; the trick is to learn how to identify a risk worth taking.
One way is by tracking the decisions you've already made. Note the variables and the players. How did your choice play out? Do you see a pattern across the opportunities? For example, if you see that bets based on one salesperson's “gut feelings" don't pay off, that's a sign to stop betting on those instincts—and to work with the salesperson on evaluating opportunities.
Next, build a prioritization scale. That will pinpoint where your budget dollars could make the biggest impact. It also lets team members know what's most important. A prioritization tool should help your company weigh the cost of preventing a risk, as well as the cost of taking the risk.
Addressing financial fears may not be easy, but that doesn't mean leaders are doomed to failure. By building their mental strength, they can ditch the stress that clouds so many bad financial decisions—and position themselves to use their money better.
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