It’s easy to take the focus off your financial behaviors when you’re busy trying to build a successful business. But as Thomas Corley, author of Rich Habits: The Daily Habits of Successful People found when he spent five years researching the financial habits of “wealthy people” ( defined as having annual income of $160,000+ and net worth of $3.2 million), the sum total of all your little financial habits has major bearing on whether you’ll be a rich entrepreneur, or a poor one.
Here are ten small but mighty financial behaviors all entrepreneurs should embrace.
1. Check in with your finances each month. You can’t manage financial activity you don’t know about. In Corley’s research, 94% of the “wealthy” respondents (many of whom were “self-made”) were in the habit of balancing their checkbooks and checking in with their finances at the end of each month to see where they stood—compared to just 32% of the “poor” respondents, who he defined as those with a liquid net worth of less than $5,000.
Though it can be tempting to look the other way when your bank account isn’t where you want it to be, keeping your eye on your eye on the financial facts of your business ensures you can choose your best course of action, versus being left to react to whatever the competitive environment presents.
2. Use credit cards strategically. Credit cards may feel like the easiest place to turn when you’re boot strapping a business, but their high interest rates and potential impact on your personal credit score can jeopardize your long term financial success– particularly if you charge expenses you can’t cover in full. Not only did Corley’s data indicate only 5% of the rich carry a balance on their credit card (compared to 90% of the poor), those that did never let their credit card balance exceed $5,000.
3. Put your goals on paper. What are your financial goals for your business today, this week, this month—and this year? How close are you to reaching them? Ask these questions habitually, and hold yourself accountable. Nearly 70% of the rich respondents to Corley’s study said they always write down their goals; 67% of them set new goals each year—and 62% set new goals for each day.
4. Use the professionals to your advantage. Admitting you are not a financial expert doesn’t make you a less successful entrepreneur; it makes you wise. In fact, 100% of the “wealthy” respondents to Corley’s study use a certified public accountant to guide them in their financial decisions. (As an entrepreneur, you have the added bonus of being able to deduct those professional fees as a cost of doing business when you file taxes).
5. Be your own brand ambassador. Who you know can help you succeed as a business owner, but you have to invest the time to build your personal entrepreneurial brand. More than 60% of the wealthy respondents to Corley’s study said that “self-promoting” is important to obtaining financial success; more than half use their lunch hour to network, and nearly 80% spent at least five hours a month making new business connections.
6. Don’t put all your eggs in one bucket. Owning a business isn’t unlike investing in the stock market. Though opportunities for the greatest rewards often involve risk, you’re less exposed to uncertainty—and better primed for success–when you diversify. Consider ways to reduce your own dependence on own sole source of income: 65% of the wealthy respondents in Corley’s study had at least three income streams.
7. Stay aware of your financial surroundings. Staying in tune with the broader financial environment that impacts your businesses’ finances—including interest rates, lending options, investment opportunities, global stock market activity and changes in tax laws– equips you to be proactive in your conversations with financial professionals—even if you ultimately rely on their advice. Nearly half of the “wealthy” surveyed by Corley they regularly read financial news from credible sources like the Wall Street Journal.
8. Value all of your relationships. You may work for yourself (and even by yourself), but to be a financially successful entrepreneur, your relationships and ability to reach your business goals are not mutually exclusive. Of the wealthy Corley studied, 80% made phone calls to tell the people they know “happy birthday,” to connect during life events, and simply to check in and say hello. Nearly 90% said that their relationships are critical to financial success.
9. Establish a savings cushion. Saving money can be hard when you’re not even sure you’re in a financial position to collect a steady salary, but the wealthy in Corley’s study all saved at least 10% of more of their net income—and all contributed at least something to retirement. Regardless of how much money you’re able to draw as the business owner, make sure you consistently pay yourself—in a savings account, and self-employed retirement plan— every time payday comes.
10. Don’t forget the feeling of being cash-strapped. Even when business is going well and it seems you have plenty of cash—spend wisely. Nearly 70% of the wealthy surveyed described their spending habits as “frugal.”