Episode 84: How to Reflect on Your Business Investments Without the Shame Spiral

Welcome to the creative mind smart money podcast, where we turn financial confusion into creative confidence. I’m Samantha Eck, bookkeeper and fractional CFO for creative entrepreneurs. Each week, I’m sharing my financial expertise and actionable strategies to help you build a thriving creative business.

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Most people never look back at big financial decisions, we either avoid it because what’s done is done. Or we judge it harshly and complain to ourselves that was so stupid. Why did I do that? But the key topic that we want to get through today is that reflecting on your past purchases isn’t about punishing yourself or saying, wow, I was kind of dumb for doing that.

Like, why would I have done that? It’s about extracting information instead of carrying the emotional residue. So this episode is about learning, not relegating and not kind of like reflecting on the past because we really want to just get into it overall and normalize that reflecting on these is actually really valuable to us as business owners just in general. So let’s really dive into this.

Why does reflection feel harder than making a purchase? Well, it’s because buying the things that we want to buy feels hopeful, like we spoke about in the last episode. And reflecting on why we purchased it makes you feel vulnerable. It could make you feel stupid.

It could make you feel like you’re not good enough. But looking back forces us to confront the expectations that we had for our business versus the reality that we have faced. It also allows us to think about the optimism that we had in our business versus the outcomes, because a lot of people will confuse that the self-reflection that we have is self-criticism.

Because we avoid it, it really keeps us in repetitive patterns because we’re not actually reflecting on the things that we purchased. We’re just kind of running into this wall again and again and it becomes this point where we are making the same kind of investments, but we’re not actually thinking on them. You know what I mean? So maybe you invested in a coach and that really wasn’t good for you, but then you just go ahead and invest in another coach and that coach still wasn’t good for you.

And it’s just a continuous cycle because you’re not actually taking the time to reflect and look at those purchases. You’re just going back and making them over and over again. I’ve done this many times where when I first started, there was a bunch of courses that I invested in.

I didn’t think about them. I just kind of was like, oh hey, let me go invest in this course. Let me invest in this course.

Let me invest in this course. And eventually, you know, we have all these courses. One, we don’t use.

Two, that maybe teach us information that we already knew or that we had already handled. And three, that we just don’t really actually need. It becomes this vicious cycle.

And if you’re not looking at it and saying, did I really need that? Did I use it? Did I utilize it? You’re never going to learn from it. And that’s what we want to do is we want to take this time to learn from the investments that we made over the past year, over the past month, over the past quarter, and grow from them. And this can be taken obviously in a business standpoint, but it can also be taken on a personal standpoint.

Making a bad investment doesn’t mean that you made the wrong decision. I want to make that clear. I know that I was saying, like sometimes you can be like, why would I even do that? It doesn’t really mean that you made a wrong decision, okay? Decisions are made with the information that we have at a point in time.

So if you are desperate to hire someone, that’s the decision that you made at that specific point in time. The outcomes of that decision don’t retroactively change the quality of a decision. So just because, you know, we had different outcomes, it doesn’t change the quality of the decision.

The difference is between this thing didn’t work and I was irresponsible. You weren’t irresponsible, right? It’s that most of the time the investment didn’t work for the person or the thought process that we had at that point. Now maybe six months down the road, you’ve gone back to that investment, you’ve put in the time, the work, and you’re utilizing it now, and that changes the perspective of it, right? But at the very beginning, you were like, oh, this didn’t really work right now.

So that might give you a better decision on timing of the investments. Maybe you’re saying, okay, maybe I don’t need to invest in this right now. Maybe I can invest in this in six months.

You know, that really does give you that confirmation and that ability to do so. So what actually matters when we look at and review our past investments? This isn’t the question or the time where we ask ourselves, did it pay for itself? Because looking at ROI is very different than the actual reflection. This is the time where we actually ask ourselves questions like, did this remove the friction that we were trying to remove, or did it add it? Did this reduce the stress that we were trying to reduce, or did it shift it to somewhere else? So for example, if you invested in a click-up build, did that click-up build reduce your stress, or did it make it more stressful because you really didn’t understand what was going on after you got your click-up built? And does this rely on your future growth to feel okay? So does it rely on you continuing to grow like let’s say you hired someone, does this rely on your business continuing to grow so that you can afford to pay for your employee? Because again, the ROI of a investment isn’t always financial because you could buy something and say, okay, well, I feel like this is 100% worth it.

Obviously the cash impact does matter, but if you feel it’s worth it based on the information that you got from it or the outcome of it, that’s what matters. You know, we’re not asking ourselves, okay, did we make back money from this? We’re really looking at, did this impact us the way we wanted to? And on an emotional level, right? Because if hiring someone added stress to our business or friction, then did that really do what we needed it to do? And that’s where you want to really just take that time to really think about those things. The most common patterns that show up in hindsight is overestimating how quickly something would help.

So saying, okay, you know, like I hired someone, I should be able to get this off board in 10 seconds. Realistically, that’s not realistic, right? Because you have to train them. You need to talk to them.

You need to be, they need to be able to understand your systems and people learn at different speeds. So when you hire that person, they could be someone who’s not going to pick something up in instantly. They could be someone who’s going to pick something up in a month.

So overestimating how quickly something would help is one of the biggest ones. But then it’s also underestimating how long your cash will feel tight. So if you have $5,000 in the bank account and your investment was $3,000 and you’re down to two, you might feel like a little bit unsafe in that $2,000 range, right? The other thing is assuming consistency that doesn’t exist yet.

So assuming that because you’re going to get this investment, you’re going to start seeing, you know, retainer clients or whatever it is. But that doesn’t exist yet. You’re assuming for it, right? So the final one is buying for the business you want it to be instead of the one that you had.

So you’re thinking that you want to be someone who has six employees and someone who has a really well-built system and someone who has $20,000 in income every month. So you’re like, okay, yeah, I’m going to invest in this $10,000 a month coach today because I want to be there in six months without knowing if you can afford that, right? There’s been countless times where I’ve had people invest in things that they couldn’t afford because they didn’t know their cash flow. They didn’t look at their investments.

They just kind of invest it. And you really do need to think about these things and look back at them again, because otherwise you’re going to keep on making those same mistakes. There is a lot of danger in rewriting and thinking of the story in our head than what actually happened.

So when we often look at these investment reflections, a lot of things that we think of is I should have known better. Everyone else around me has this figured out, but the truth of the matter is that you don’t know. You don’t know what’s going through everyone else’s head, right? You don’t know how they’re reflecting on their investments.

You don’t know where they’re at personally. You don’t know where they’re at in their business. Where someone could be making six figures behind the scenes, they could be an absolute disaster.

When you’re saying that everyone else has this figured out, that’s not necessarily true. The bias that we give ourselves in hindsight makes us harsher on ourselves than actually necessary. And we don’t really need to be that harsh on ourselves, because we’re not looking at these investments as a negative standpoint.

We’re trying to understand what they did for us and how they made us feel to determine if the next and upcoming year, we want to make those same kind of investments. Because if you are consistently giving yourself that harsher bias, you’re going to erode your decision confidence over time, because you’re eventually going to run into this problem where you’re like, do I really need this? Should I invest in this? You’re going to be scared to invest in things, period. And I’m not telling you not to invest in things, because your business needs these bigger investments.

Oftentimes it does. We just want to get smarter and wiser, not thinking about getting ourselves smaller and shrinking ourselves into a box, right? What does a good reflection actually give you? At the end of the day, when you’re reflecting on all of this, what does this actually give you? And if you want to go deeper into this topic, please look at the episode that we had last year. I explained how to reflect on this.

This is more of the contextual talk about reflections. So if you want to dive deeper into the investment reflection, check out that episode last year. I can’t remember exactly what the title is, but I will make sure to link it in the show notes.

But what does a good reflection actually give you? It is obviously clear instincts, because you understand what’s actually going on. You’re going to ask better questions when you actually invest in things next time. So you’re going to say, okay, like, is this going to make me the same way it made me feel last year? If I invest in this coach, maybe you need a different type of coach.

Maybe you need someone who does this. It’s going to force you to ask those questions. And then, of course, you’re going to have fewer emotionally driven purchases, because you’re actually going to think about them.

So instead of feeling like driven by your emotions for each purchase, you’re actually going to have the time to really think about it and really understand it, because you have those better questions, right? And then you’re going to build that trust in yourself and that confidence in yourself, in your ability to decide even when things don’t go perfectly. So obviously, this does help you overall, because you’re going to build that trust, and you’re going to know that things just feel good. When you reflect on your investments, the goal isn’t to avoid mistakes.

You’re human. You’re going to make mistakes. Humans make mistakes.

We all make mistakes. I make mistakes. I’m not a perfect person.

You’re not a perfect person. It’s to shorten the learning curve that we are giving ourselves by making these investments really quickly. The big investments that we have in our business are always going to exist.

There’s nothing we can do to avoid it. There’s nothing that we can do to try and bypass it. The difference is whether or not we’re guessing or whether or not we’re deciding with the context that we want to have, right? So clarity doesn’t come from never getting it wrong.

You have to get it wrong in order to learn from it. So it comes from actually looking at what happened and how you can change that. The reflection overall isn’t just about regret.

It’s how you stop paying the tuition, you know, the education that we’re learning twice. It’s how we stop paying for that twice. So you need to be able to look back on these, okay? Otherwise, you guys, if you enjoyed this episode, please like it, share it, subscribe.

Make sure you share this on social media so other people can find our podcast. And as always, if you have any topic suggestions, feel free to reach out to me and let me know. Otherwise, I wish you guys the best week ever.

As always, we will see you next week. Farewell, fellow travelers.