Hello Reader,

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Owning and running a business can evoke a scarcity mindset.

Do you ever find yourself saying anything like this?

• "I can't invest in growth right now."
• "We have to cut corners to stay afloat.
• "I'm overwhelmed with everything we have to do."
• "I'm worried about the competition taking away our customers."
• "I'm afraid to raise our prices."
• "There isn't enough time to get things done."

Any or all of these thoughts may or may not reflect the facts.

When scarcity hits, your thinking and behaviours are affected by the unique psychology that accompanies it.

But what do you do when you're in the grip of these thoughts?

Continue reading below to find out.

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In gratitude,

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What is a Scarcity Mindset?

A scarcity mindset (a term apparently coined by Stephen Covey) is often described as a belief there is simply not enough to go around, or a focus on lack, or living from a limited source.

“People with a scarcity mentality tend to see everything in terms of win-lose. There is only so much; and if someone else has it, that means there will be less for me,” is a quote attributed to Covey.

Scarcity Mindset in Business Owners

Scarcity psychology can show up in business in many ways, but they’re all about creating safety and predictability. Just like goals and values, safety and predictability are key for humans and humans who have businesses.

The difference is in the strategies used to achieve these goals. When scarcity psychology comes to the fore, it can result in strategies that stall or even harm your business.

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The Risks of a Scarcity Mindset

Business owners affected by scarcity trauma may be averse to risk. Your fears of potential losses and setbacks may make you hesitant to pursue growth opportunities and reluctant to invest in innovation or expansion. You might also prefer the security of maintaining the status quo to avoid any perceived threats to financial security.

When it seems like there’s not enough to go around, you might feel compelled to hoard resources, such as capital, inventory, or talent, out of fear of running out or being unable to meet future demands. This resource hoarding behavior can inhibit collaboration, innovation, and growth as resources remain underutilized or underinvested.

Entrepreneurs experiencing the effects of scarcity psychology can inadvertently prioritize short-term gains over long-term strategic planning. The effects of the tunnel vision that comes with scarcity psychology mean you are likely to focus on immediate needs and challenges rather than investing in future growth and sustainability. Sadly, this short-term focus can lead to missed opportunities and suboptimal decision-making. You might also feel so overwhelmed that you are unable to engage in strategic planning or connect with a long-term vision to guide the business forward.

It goes without saying that an actual or perceived lack of resources can be extremely stressful. Constant struggles to make ends meet and overcome financial challenges can wear you down. This chronic stress can lead to burnout, impacting productivity, creativity, and overall well-being, and ultimately undermining the success and resilience of the business.

One of the most common effects of scarcity psychology on business owners is that they tend to prioritize the needs of their business over their own well-being, sacrificing personal time, health, and relationships in pursuit of financial success.

Scarcity psychology means all of this makes sense in the short term when there seems to be such a lack of time and money and immediate survival is the guiding imperative. But as with all the strategies that arise from scarcity psychology, it’s harmful in the long term.

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Your Business is Directly Affected

​Personal health and the health of your business are intimately intertwined. You are your business’s greatest asset. Neglecting yourself can contribute to feelings of exhaustion, isolation, and dissatisfaction, thus undermining your ability to lead effectively and sustainably.

Conditions of scarcity, whether real or perceived, evoke the nervous system’s survival responses because it registers as a threat. The brain’s most important job isn't thinking; it's running the systems of your body to keep you alive and well.

When under stress, the brain directs the body’s energy and resources toward survival and away from creativity and innovation.

Not only do you not have access to your creative capacities when scarcity psychology holds sway over your thinking, but you may also perceive experimentation and risk-taking as luxuries you can’t afford. This kind of thinking can prevent you from exploring new ideas, products, or markets, limiting the business's ability to adapt to changing circumstances and capitalize on emerging opportunities.

If you’re experiencing any of these effects of scarcity psychology, there’s truly nothing wrong with you. Your brain, mind, and nervous system are doing their very best to help you respond to what’s perceived as an immediate threat to your survival.

2 Tips for Responding When You Are Gripped by Scarcity Psychology

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1. Kindness

The very first step for distress arising from any circumstances is to offer yourself kindness. A gentle moment with yourself can do a lot to remind yourself that, metaphorically speaking, there is no bear coming to eat you.

Self-kindness is an excellent strategy you can use in a moment of distress, but it’s also a beneficial position to adopt in relation to yourself because it is good for your mental health.

In case you think self-kindness means you will lose motivation or become self-indulgent, as in letting yourself off the hook for any and all obligations, you might consider that the self-compassion research has evidence that this is not the case.

Higher levels of self-compassion are linked to increased feelings of happiness, optimism, curiosity, and connectedness, as well as decreased anxiety, depression, rumination, and fear of failure. Self-compassion is associated with greater personal initiative to make needed changes in one's life. Self-compassionate individuals are more able to admit mistakes, modify unproductive behaviors, and take on new challenges. (Neff, Hsieh and Dejitterat (2005))

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2. Gratitude

Another strategy for overcoming a scarcity complex is gratitude. Before you roll your eyes, let me tell you that it’s not what you think, at least according to the academic research.

Gratitude is not making a list of things you should be grateful for and then beating yourself up for not feeling grateful for them or because making the list hasn’t made you feel better.

Gratitude involves a two-step process of (1) recognizing that you have obtained a positive outcome, and (2) recognizing there is an external source to it. It also focuses on teeny tiny life situations where you can experience appreciation rather than things for which you “should” be grateful.

I find the research on gratitude so compelling that I encourage you to read this article as a jumping-off point: The Science of Gratitude by mindful.org.

Ready to give gratitude a try? Listen to this recording of a guided gratitude experience you can use right now:

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More Strategies to Help Overcome a Scarcity Mindset

Heal your relationship with money

While you have good reason to be feeling and thinking the way you do, without care, a scarcity mindset can be a destructive force. It can lead to feelings of hopelessness, despair, and a sense of being stuck in an unending cycle of negative thinking. Working with a therapist to learn more about stress, trauma, and the nervous system and to attend to past distress and current distress can help you heal.

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Shame-free financial coaching and support

You might feel shame about your money struggles that have their roots in a scarcity mindset. It can help to join a supportive community. The Trauma of Money program is one such resource or you can turn to these folks who support a shame-free approach to money:

• Dana Miranda: Website
• Alyssa Davies: Website and Instagram​
• Lindsay Bryan-Podvin: Website and Instagram​
• Ellyce Fullmore: Website and Instagram​
• Bari Tessler: Website and Instagram​

Talking to a professional can also help you confide in friends and family. However, this is one of those areas where you need to use your discernment. Choose people you know will respond supportively to be your confidantes.

It can also help to get support for organizing or managing your finances better. A coach or a bookkeeper coach can help you do this. Again, it’s important to choose one who will be supportive of emotional processing and who is aware of the interplay of systemic issues in creating financial circumstances. This directory is a good place to start.

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Move your body

Surprisingly, movement can help you respond constructively to scarcity psychology. There are many benefits of movement for mental health, including reduced stress levels, improved mood, and even increased self-confidence. It’s also a tool for empowerment for trauma survivors.

Engaging in movement can also help you break out of a cycle of negative thinking that comes with a scarcity mindset. Physical activity encourages you to focus on the present moment instead of worrying about the future. Simple things like taking a little dance break (a mood induction practice) can help shift your mood.

Scarcity psychology can profoundly impact you as a business owner, shaping your mindset, behavior, and business practices in ways that may hinder growth, innovation, and well-being.

But the good news is there are lots of steps you can take to support yourself. Recognizing the influence of scarcity psychology and adopting strategies to mitigate its effects can empower you to effectively navigate challenges, thrive as a business owner, and grow a sustainable and profitable business.