Roger has an abundance mentality. I have more of a scarcity mentality. As Roger’s wife and fellow business owner, I’m exposed to the abundance thinking regularly… thankfully.
What does a scarcity mentality look like?
I’m fearful of not having enough… that the world will run out of books I like or TV shows. (I do however believe there’s an abundance of good music to listen to so maybe I’m not a hopeless Scarcity Thinker).
Investing money for longer term gains is difficult for me. The adage “you have to spend money to make money” freaks me out a little. Can we afford a TV ad or should we just do radio?
For a lot of business owners, scarcity mentality manifests as anxiety over where the next customer will be coming from or a lack of money to pay the bills. I experienced this in the early stages of our business. Maybe it’s a refusal to pay overtime when its due, to pay employees fairly, to give praise, or to purchase the supplies necessary for your employees to do their best job.
You can see it in the small business owner who won’t spend money on improvements, who believes she must hold on to every dime “just in case.” One business owner’s facility was dark, dingy, with a leaking roof, grimy broken windows, and ancient equipment that was barely functional. He’d convinced himself he can’t afford any of these improvements.
We all want to be careful, to protect what we have, and to hold on to it. It’s natural to worry about what’s coming especially when there’s politically motivated headlines or recession talk. You need to be prepared for a recession and have a certain amount of savings, but don’t stop growing and leveraging opportunities.
Where does a scarcity mentality come from?
Maybe it was the world you grew up in or maybe it’s the pressures of the situation you currently find yourself in.
As a business owner and Inspire Results’ CFO, it’s part of my role. I’m the one accountable for expenses and balancing the books. Maybe growing up as the oldest kid in a family of 8 kids with a stay-at-home Mom and a truck-driver Dad causes me to be more cautious than I need to be.
Ask yourself where it comes from for you. It could be useful in helping you understand yourself and the people on your team who operate with a scarcity mentality. We can all fall into that mentality from time to time, when we’re frustrated or not having success.
What are the effects of a scarcity mentality?
If you’re afraid to spend money, you’re not going to make the right kind of investments for growth. If you as the leader and owner have a belief system of scarcity, it’s probably ingrained in your company culture. This creates a negative culture that can significantly limit the growth and success of the enterprise. The business owner with the dark dingy facility probably has an organization that’s not functioning nearly as well as it could be.
If you think someone has to lose so you can win, your main focus will be on trying to take someone down or take something away from the other guy. If you’re price-matching to a competitor, then you’re not focusing on the customer who may pay more for who you are and what you do. A myopic focus on competition vs doing things that fit who you are can severely limit growth. If you feel you’re not winning because of the competition taking your clients, then you’ll tend not to identify who your unique client is and take steps to go after them.
The zero sum game belief means you view the other guy’s wins as a loss for you. You spend precious energy blaming others for what you don’t have instead of focusing on what you do have.
If you have a leader or someone else in your company with a scarcity mentality, it can be the source of conflict. It can affect hiring, selection, and retention, and whether you need to let someone go.
A scarcity mentality can cause an adversarial relationship. If you think the customer is trying to take you for everything you have, you try to take them for everything. Our son took his jeep in for what he thought was a transmission issue. The mechanic did a lot of work but it didn’t solve the problem. Our son asked if he could have some money back but the owner told him he would’ve needed the work done at some point anyway. Giving some of the money back would’ve been a win-win that’s more powerful both in the short term as well as the long term. Instead, he lost the customer as well as the customer’s friend.
How to move from a scarcity mentality to an abundance mentality
As with anything, the first step is becoming aware of it. Next, choose to have a different worldview—an abundance mentality, then begin to put disciplines in place that cause you to respond that way until it becomes a second nature. If you catch yourself blaming someone, ask yourself what part of it you can control. Try to catch someone doing something well at least once a day and praise them for it. Check to make sure you’re paying employees fairly and more. If you’re about to say something negative, don’t, or change it to something positive.
Take small steps. Roger encouraged me to outsource accounts receivables. I didn’t think we could afford it but after I finally did it, it freed me up to focus on ways to drive profit. Best decision ever and I wish I’d done it sooner.
A scarcity mentality can kill a small business. An abundance mentality will spur positivity, growth, and profit.