Every small business owner faces challenges, so they have to be diligent about how they spend money and allocate resources. A new study suggests that entrepreneurs with a “growth mindset of frugality” were more resilient to resource setbacks.
This mindset refers to the belief that one can learn and improve how to manage and conserve resources and that frugality isn’t a fixed trait. The research was published on February 9 in the Journal of Business Venturing Insights.
The stronger an entrepreneur’s growth mindset, the more optimistic they were about achieving future success, the study found. They also felt less discouraged and put more effort into finding solutions to their challenges.
Stronger growth mindsets withstand setbacks
The research involved two studies assessing whether entrepreneurs’ beliefs about frugality affected their response to business-related setbacks, particularly entrepreneurs’ negative feelings, optimism about the future, and coping strategies.
In the first study, more than 700 entrepreneurs participated in an online survey. They were told the definition of frugality and answered questions about their views on the subject.
They were then instructed to remember a time when their business faced a setback. They answered questions about the event, including how they felt about it, their thoughts, and how they coped.
Entrepreneurs with a stronger growth mindset of frugality demonstrated fewer negative emotions, higher expectations for future success, and more mastery-oriented coping responses.
“In short, the growth mindset of frugality was associated with adaptability and a desire to make positive adjustments, as opposed to feeling miserable and getting stuck,” said study co-author Jon Carr, who is a professor of entrepreneurship at North Carolina State University, in a statement.
Having a growth mindset of frugality could have “large implications for how fast someone grows and scales their venture,” the study’s authors concluded.
The study was replicated with 281 participants, and the second findings were consistent with those of the first study.
The stronger an entrepreneur’s growth mindset, the more optimistic they were about achieving future success. They also felt less discouraged and put more effort into finding solutions to their challenges.
How to adopt a growth mindset
Every small business owner faces setbacks. Changing your mindset, especially in how you allocate funds and other resources, can help you become more resilient to challenges. Here are three ways to start.
Think about costs as investments
Running a small business comes with many expenses. Reframing your perception is important. Rather than seeing expenses as money out, think of them as opportunities for delivering a potential return. For instance, will paying for a service or software allow you to focus on more important matters? Try to think of some expenses as an investment. Focus on intentional spending that delivers value to your business.
Invest in learning
Courses, books, networking events, or professional memberships are good investments. One can always benefit from learning more about reaching customers, marketing, operations, or other aspects of running a business. Investing in learning keeps you current with industry trends and expands your network, according to the National Association for the Self-Employed.
Set a budget for experimentation
Budgeting is crucial for small businesses, and so is experimentation. Setting aside a certain amount each month to explore new things, such as a new marketing tactic, a customer relationship tool, or a new product or service, helps unlock discoveries that could contribute to growth.
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
CO—is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce, here.
What can membership do for your business?
Gain tools to stay informed, competitive, and connected by becoming a U.S. Chamber of Commerce member. Membership gives you direct access to expert policy insights, economic updates, and exclusive resources designed to help your business thrive. From behind-the-scenes analysis from D.C. to exclusive discounts and expert support, U.S. Chamber membership helps you navigate change and seize new opportunities.
