Finances and money can easily prompt countless emotions in all of us. These emotions can have positive or negative effects on people around us or on the organisation we are part of. We are all aware that our decisions are affected or the result of our emotions.
In running a business, financial decisions and financial emotions are also intertwined. In most cases, a financial decision is the most emotionally charged decision a person can make. Even experts say that without emotions, we become completely unable to make decisions.
For small to medium enterprises (SME), financial issues can trigger different emotions that affect its productivity. It has an impact on stress levels, mental health and personal relationships. In most scenarios, problems in running the business arise when decision making and financial emotions collide.
Relationship of Finances and Emotions
The global condition had created a storm that gave great stress to many business owners. The uncertainty of events and the toll of negative emotions affect their decisions on running the business. The ups and downs of finances is also a major factor in their decision making.
It may take years before our economy can recover from our current situation. Small to medium enterprises are all facing great threat due to unstable economic situations. They are the most financially fragile with a small buffer in their resources. Even a small financial change in their income can put them in the red line.
Our economic crisis came as a shock to us. And also, the financial impact because of it for the business owners. Their business is like their family, and their employees are their family members. Having to let go of their employees is one of the saddest things that an owner can do.
Many businesses now are pushed to the state of insolvency. Having more ongoing expenses and little to no revenue at all can affect the financial emotion of the business. Stress and anxiety are just some of the emotions that are caused by financial instability. Same as the turmoil of business finances, there is also the roller coaster of business emotions that small businesses are juggling.
Coach Doug Durie can provide you with knowledge and strategies on how to best handle your business during this current situation. We can help you in minimising financial risks and loss by guiding you in reforming your business.
Coping with Financial Emotion for Small to Medium Enterprises (SME)
Small businesses do face problems with their revenue and finances as part of running it and not just because of the global pandemic. In fact, we always asked ourselves almost every day what we are going to do with our finances.
But we cannot just sit around and do nothing. That will only bring us more harm.
For business owners, as the leader of their company, they need to control their emotions and be wise in making financial decisions.
Here are some ways how we can manage financial emotion.
- Accepting the current situation
Financial emotions like stress and anxiety stem out because of the uncertainty of the future. Some of our business plans are hindered by the current global situation. We do not know how long the ‘normal’ will be. When facing the unknown, we all experienced a paralysing anxiety.
One way of overcoming this anxiety is accepting the current situation. Let’s all face it that we are experiencing different situations than what we were used to. We cannot just sit in one corner and feel helpless. Our emotions will eat us in doing this! Instead, focus on the things that we can do and what we can control. It is better to focus on our strengths and abilities so we and our businesses can immediately adapt.
- Do make plans but do not rush your decisions
It is easy to make plans and decisions especially when we are triggered by a financial emotion. We fear and panic as we try to do what we think is best for our business. Don’t! Stop for a minute and breath. Some researches provided conclusions that people make mistakes when they are run by financial emotions.
During this period, find time to think first before making financial decisions. Many business owners are action takers. They like running out and making decisions just to do something. But that is a bad strategy when things are unpredictable for everyone. Wise decisions are made from tons of information.
Before making a big leap in your business, have a cooling period for your financial stress. By doing this, you can avoid actions that you will come to regret.
- Keep your best employees loyal
Having someone you can lean on and trust aside from your family can give a much reassuring feeling, especially if that someone is one you can trust your business in. This will lessen your financial stress as you have someone who can make financial decisions with you.
As we all know, a business’ best asset is its employees. Losing them can trigger unbalance in business finances and will make it hard to rebuild operations. Even if we want to cut our expenses by letting some employees go, deep inside there is still the decision of rehiring the best workers when the business is back on track.
Small to medium enterprises (SME) are facing difficult situations as the world is changing to cope with the current global situation. Making financial decisions is a big action for them as this will affect their business as a whole. Financial emotions are natural drivers in business decisions that is why it is important for business owners to manage and control them.
On the positive side, business owners are known to be adaptable, creative and resilient. With the right backup and knowledge, they can reinvent themselves to cope with the changes in people’s needs.
DougDurie.com is a small enterprise that focuses on effective leadership and management of businesses. We take great importance on continuous improvement of oneself to better their companies.
Doug Durie provides one-on-one sessions to focus on guiding you in your needs. They are knowledgeable with business financial strategies that can bring your business back on track and running.
