Whether you’re in the very first days of starting your own business or you’re years into running it and chasing that entrepreneurial drive, there’s one thing that’ll always be on the ‘make you or break you’ list: financial wellness. It’s a skill that comes more easily for some than others, but in order to do the work you love, smart money management can’t sit on the back burner. We know all too well that while we can’t predict the unexpected, we can prepare for it with a business that’s ready for the good times and the tough times alike.
As you grow, you have to be willing to conquer those very normal money fears and get that financial literacy up, but that task is far easier said than done. How can you learn how an entrepreneur uses money if you’re still learning how to scale your business? What’s the best approach? How do you start investing like a seasoned entrepreneur… if your income doesn’t match theirs?
Related: Tips for Managing Inconsistent Income as an Entrepreneur
Before you waste any more time in that zone of overwhelm, I want you help you set yourself free and give you a few mindsets and quick tools. As an entrepreneur who is a recovering perfectionist, I know what it’s like to always want to it get it exactly right the very first time. The truth is that we can’t do that and don’t need to aim for that. Instead, learn from my perspective and lessons I picked up over the years of running my business and conquering my own financials fears. Let’s work through some frequently asked questions to help you get clear on how to budget, invest, and even seek guidance like an entrepreneur!
Easy Steps to Level Up Your Financial Literacy
Just like getting a check-up with your doctor, the first step to financial literacy and wellness is to simply assess where you’re at. To peel back the scary curtain and actually look at your numbers, your systems, your expenses, and whatever else you can glean from the data you have access to. Rather than letting yourself get overwhelmed with all the numbers swirling around in front of you or feeling anxious about what you don’t know (yet), tackle a few of these questions first:
Do you know your total expenses as a business? Are there places you can cut back? Sometimes a larger amount of money than we think is slipping through the cracks simply because we didn’t know those cracks were there. Memberships, subscriptions, ineffective marketing (like ads that aren’t converting), or software platforms you aren’t using as much as you thought you would — these are all great places to scan for expenses you can cut!
Do you know what your hourly rate is? Have you increased your rate to keep up with cost of living and your growing expertise? Have you researched what a competitive rate should be for someone with your skills and level of experience? Knowing your rate helps you project your income which can help you plan and pivot when you need to.
Do you know how many clients you need, customers to convert, or products you need to sell to hit your goals? Have you done the math to figure out your selling goals each month? Determining your monthly budget also means nailing down performance numbers for your business to help you breathe a sigh of relief when you reach or exceed that goal. As a photographer, I knew I needed to book a certain number of clients each wedding season in order to make it through my off seasons and meet the rest of my business budget needs (including tax season!)
Do you know your tax breaks and tax relief options? Getting tax savvy isn’t up everyones street, but sometimes if you don’t have it in your budget to outsource your taxes, you have to wise-up on your own tax breaks. Carve out time to research (you might be surprised about what you find!) so that tax time isn’t as stressful!
Related: 5 Ways You Can Cut Costs in Your Business Today
Cultivating An Entrepreneurial Money Mindset
It can be so exciting to reach your first financial goals! But is that goal just an arbitrary number of success, or do you have a plan for how you want to spend, save, and invest that money? As entrepreneurs, our end goal isn’t to manage a business until we make money; it’s to get smart about managing the money our well-planned business is going to make. When the money comes, you need to know what to do with it! Make a plan before you get there.
What areas of your business drive the most results for you? You might have more than a few irons in the fire, so to speak. As a huge ideas-person coupled with my drive to achieve AND my ADHD — I get it. I have to often sit back an examine what’s adding and what’s taking away or distracting from driving results for my business. My team and I are currently in what I’m calling an “optimization” year where we aim to spend our energy on slightly tweaking what’s working to see if we can make our systems that’s much better. When our main profit drivers are optimized and updated, the business can grow!
What expenses are tied directly to results? When I see a plan performing well, that’s a signal to me to put more energy, time, and money toward it. And in many cases, I need to then think about where I can pull that energy, time, and money from other projects. As your business grows, you get a lot more analytics to work with and pull from, which makes examining your expenses a far more regular process. No matter what part of the journey you’re in, starting to build this habit now will make it easier to scale your finances and financially plan for both the business you have now and ones you might start in the future!
Related: Don’t Make This Mistake with Your Finances
Financial Planning for the Highs and Lows
Unfortunately, even for seasoned entrepreneurs, a constant flow of income isn’t a guarantee. Smart money management means we have to be prepared for the seasons of surplus and seasons of drought. Sometimes you can predict when these will be, perhaps even planned slow seasons, and sometimes they’ll sneak up on you. And sometimes? Life just throws you a curveball and you need to take your eyes off your business for a while. Financially planning for both the expected and the unexpected can be done when the going isn’t so tough! Here are some questions to ask yourself:
How are you setting aside money for the quiet seasons? Have you assessed whether your business will likely have a slower season or not? Some industries already have data on when you can expect to sell or convert more or less successful that other times of year. Do some research or hop on Reddit or Facebook to ask your own questions and see if other professionals have some insight for you.
Do you need to plan for a slow season? As a photographer, I knew I couldn’t shoot weddings all year round. I needed a season to be able to have time to market my business in new ways, schedule new clients, redesign, work on my website, and simply spend time on my business. So, I spend 6 months photographing, and called the other 6 months of the year my ‘dry season’. Plus, I knew I’d be hustling for 6 months straight and wanted to be able to have time to relax, enjoy, and refocus.
Do you have an offer than can make money for you while you’re in a slow season? While there are some parts of business that function best when you’re at the wheel, it’s important to find ways to drive a profit that don’t require your full energy and attention! Do you have an offer you can ‘evergreen’ and sell all year round? Could you turn some of your expertise into a digital course? Think through ways you can serve new and current customers while you’re “offline.”
Related: Can You Really Make Money with an Online Course?
Outsourcing Your Financial Management Needs
Here’s an important reminder to give yourself as often as possible: You don’t have to do all of this yourself. If figuring out your finances feels like trying to summit a mountain that you’re not equipped to do well, find guides. Find a mentor, research a good software, app, or program to help you organize, network and trade your skills for financial advice, or hire someone to help you!
Should you hire an accountant? If you’ve never worked with one before, I know that this can feel like a big, intimidating, and expensive step. But if the expense is possible, let me say that regret for not hiring one will always be a bigger cost to you than the accountant’s fee. When I left my corporate job, I knew one of my biggest areas of weakness/lack of knowledge was financial literacy. So, I hired an accountant before I ever made a single penny. And I ended up saving a lot of money in the long run!
Do you need a financial advisor? Is this the same an as accountant? Not exactly. Sometimes all you need is really good, clear, actionable advice. You might not need someone to do the juggling for you, but you do need the wisdom of someone who knows where to start, what goals to reach for, and what to do when you get there.
Have you looked at local or online support? Check out local community boards for small businesses hosting meet-ups or financial wellness classes. There could be opportunities to meet with experts for free! Online networking groups, Reddit pages, Facebook groups, and even community websites dedicated to smart financial planning, budgeting advice, investing, and small business ownership are popping up all the time. Research some options!
Related: Practical Money-Saving Tips for the Financial Feminist
Financial Wellness Takes Time
Remember: experience is going to be your best teacher. It takes experience to get to know how you want to do business! It takes experience to get clever and wise about what works for you. Because anyone can hustle hard for money, but the ultimate goal isn’t just to get more money. That’s a renewable resource. The non-renewable resource that your money can help you save? Time. Money is best used to help you get back your time, because as your business multiplies and grows, you can’t multiply yourself. An entrepreneur is always looking for ways to get back their time and truly live their life — it’s why we went into business for ourselves in the first place!
Related: 5 Easy Ways to Trade Money to Get Back Time
Your entrepreneurial journey isn’t going to look exactly like anyone else’s, which means your financial goals can’t be held to anyone else’s standard or timeline. You’ll need to give yourself plenty of time to examine what works, analyze why it worked, and scale your strategies to grow your profit. Schedule check-ins with yourself to work through some of these mindset strategies and make sure you’re on the path you want to be on. Reflect and learn as you go!
