Business expense vs Business Investment

As a Certified Financial Planning professional, I work with many different entrepreneurs. In fact, it’s one of the job classifications that I love the most because I feel that it’s an opportunity for a more inclusive conversation around them as a person and them as a business. So often we’re told that our business finances and our personal finances are separate. One of the things I always love to show is just how interconnected they actually are. 

One of the ways they are interconnected is in our mindset on business expenses. When working on my client’s financial planning needs for their business, their planned expenditures are a part of the conversation and so is the way that they feel about them. 

There’s a significant difference in the feelings and beliefs behind the idea of an expense versus an investment in the business and with that comes very different results. 

Expenses are often viewed as negative and with them come negative feelings that they are sunk costs.  When the idea of sunk costs come to mind our focus goes to all the limitations and stays in a negative loop of ideas like loss, depletion, and depreciation. Then your focus on the negative can continue as you it remains solely directed on the expense side of your statements instead of generating the income that you want. There might be something that you want to do for your business, but you’re focused on the expense of it. 

While making decisions for your business involve many factors, I want to give you one idea that I always apply to help me and the entrepreneurs I work with. When you’re making a decision on an expenditure for your business, begin by asking yourself questions like, “What will this do for my business?” and “How will this help move my business forward?” 

When questions like these have your focus, the positive idea of returns does as well and, at this point, you’re making decisions from a very different mindset. You’re not thinking about what you can do to afford it anymore or what you have to sacrifice, you’re thinking about all of the things that it can do for you and what you can accomplish! In the process, you’re establishing your expectations and determining how (and if) it will truly benefit you. 

From this positive mindset and in establishing your expectations, you have a focus on growth, opportunities and potential expansion for your business. The key is that when we start in a positive place, we can continue from a positive place. These are tools for starting a positive financial conversation that is truly empowering.