Cheryl Benadie, CEO, Whole Person Academy
You’ve chosen the path of most resistance for the risk of the highest reward. You’ve decided to venture out and start your own business.
Entrepreneurship is challenging because it forces an individual to face the truth about their core beliefs, abilities and potential. It stretches them to grow, as the ultimate success of the business is directly tied to the evolution of the business owner.
What many entrepreneurs don’t realise is that their personal finance habits will show up in their business. There isn’t a magic switch that turns your off your mindset about money when you are actively at work on your business.
Personal finance management mirrors your business finances
Be prepared to face potential financial blind spots that might jeopardise your business. A case study that we use in our training is an example of a female entrepreneur who relegated the managing of her finances, both personal and business, to her husband. It was a viable business and had potential but the avoidant approach of the business owner hampered the business from reaching sustainability. Eventually they got an accountant to help out, but it was too late. She was passionate about her business but eventually was forced to close.
Increase your level of self-awareness
Adopting a holistic approach to your relationship with money will help you break free from potentially limiting mindsets. Do you really believe that you are worthy of success? Do you have a scarcity or abundance mindset? What do you believe about rich people? If you harbour a core belief that rich people are greedy and selfish and that poor people are hardworking and noble, then you will subconsciously sabotage your efforts at exceeding your current financial level. You will not be able to charge what you’re worth if you don’t believe in your value.
Determine your primary driver
Entrepreneurs are a different breed. They are motivated by change, crave a challenge, they thrive in crisis. They subvert the status quo in order to meet gaps in the market that they’ve identified. While there are many models of financial success, the one that gets the most airplay is the “billionaire” archetype.
What is your vision for your business? Are you subconsciously comparing your first 1 000 days to the lifetime achievement of your role models?
As your craft your financial goals for your business, check in with a business coach or peer concerning setting targets that are the right fit for you. What does success look like for you? Will it mean creating a business that you will be able to sell one day, so that you can pursue other passions that might involve art, family or travel? Or will you build a business around your lifestyle, that enables you to choose the clients that you work for – and also how much time you decide to dedicate to your business?
Adopt a continuous learning approach to building financial wisdom
Studies show that women are less likely to invest their money, even though they often make wiser investment choices than men. Choose to become a lifelong student of how money works – because then you can make it work for your business.
Here are some practical tips:
- Separate your personal finance from your business finance:
- Have separate accounts for your business from day one. Funnel all business payments into the designated account and pay all business expenses from there as well. It is too easy to conflate personal and business finances if everything goes into one account.
- Keep personal expenses to a bare minimum:
- Your business idea will take longer to develop than you anticipate, and income will start out at a lower level that you might have planned for. You will be paying yourself last, so be prepared to cut down your personal expenses to the bare minimum while you are getting the business off the ground.
- Build an emergency fund for your business:
- Try to save up at least three to six months of expenses that will help you keep things afloat when customer payments don’t come in on time or when there are delays in new customers signing up.
- Stay away from debt as much as possible:
- It can be tempting to take up a business loan to get you started, or to tide you over during a tough spot, but make sure you evaluate the real cost of the loan over time. Not being bogged down by anxiety around debt repayments will free you up to focus growing your business!
- Develop multiple streams of income:
- Don’t be afraid to leverage other skills sets to make money while you are pitching your proposals to new clients. Brainstorm all the ways that you can earn money with your current business products, as well as your range of skills sets. Can you offer your services as a consultant that will help to build a monthly retainer? If the recent COVID-19 crisis has taught us anything, it is to never make the mistake again of relying on a single source of income.
- Automate as much as possible:
- There are amazing online tools that will help you make money management easier for your business. Explore what’s available and keep tweaking until you find the tools that work for you.
- Keep an eye on the money:
- Make sure that you schedule time in your calendar every week or month to revise the budget, review the income pipeline and track expenses. The buck stops with you!