Posts Tagged ‘small business’

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Throw Your Spending Plan Out The Window

August 10, 2011

In “Entrepreneurship and Making ‘Adult’ Financial Decisions” I Told the Truth about why I wasn’t at the eWomen Network Conference this year. And I outlined a spending strategy I had developed with a client:

“One of my favorite clients loves conferences and trainings; she has about $4,000 annually in her spending plan. She wants to spend more, but her business’ budget doesn’t allow for it. We developed a profit-splitting plan that puts a percentage of her business’ net profits into a savings account titled “Business Investments.” She doesn’t have to spend that money, but when a conference pops up that she wants to attend, she no longer has to discuss it with me or agonize over the pros and cons of the decision. If the money is in the reserve account, she goes.”

Best laid plans. While she was away at the eWomen Network Conference I received a text from her:

 

There are a lot of gurus out there selling marketing, sales and mindset training/coaching programs. Entrepreneurs invest hundreds, thousands, and tens of thousands in these programs. The potential and possibility of learning from someone like Lisa Sasevich can be irresistible, and in the moment of making the buying decision, it’s challenging at best to separate logic from emotion.

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Entrepreneurship and Making ‘Adult’ Financial Decisions

July 7, 2011
Adult Financial Decisions

When I launched on Forbes.com I promised myself that I was going to start Telling the Truth. It’s easy to be a financial guru, talk at people, and tell them, “This Is How You Should Handle Your Money.” It takes more courage to be transparent and share stories not just from our clients, but from ourselves, and even more courage to share not just from our past, but from our present. So here I am, being courageous.

Every summer I head to Dallasfor the annual eWomen Network Conference. I look forward to it all year long. It’s the largest business women’s conference in North America, and an amazing place to learn, connect and be inspired. Sandra Yancey, CEO of eWomen Network, provides the incredible opportunity to learn from a long list of business rock stars: Michael Gerber, Tony Hsieh (zappos), Robert Stephens (Geek Squad), Lisa Nichols, Zig Ziglar and the list goes on. This summer, I’m not going.

What’s an ‘Adult Financial Decision’?

Adult financial decisions are logical decisions—ones we intuitively know are good decisions even though every other part of our being disagrees. When we make adult financial decisions, our inner child screams, “But I wanted that!” or our lips pout or our hearts feel heavy. Last month I made the adult financial decision that my team was not going to the conference this year. As a result, I’ve been walking around pouting and having a heavy heart. And then I heard a voice shout: “Stacey, how many hundreds of times have you advised people who were conflicted about when and how much to spend on professional development??? Stop being a weenie and write a blog.”

Entrepreneurs make the assumption that they are the only ones making emotional spending decisions. “If I just ran my business more like a business owner, I don’t think I’d have these cash flow issues.” The truth is that entrepreneurs are human beings, and most of us humans make emotionally-based financial decisions. That’s not a bad thing. It’s when we don’t balance emotionally-based decisions with logical ones that imbalance can capsize our ship. Over the past year, my business has made a number of bold spending decisions, some logical, some emotionally-based. We’ve also pruned our client tree (let a few clients go who were no longer a good fit). The end result is that our reserves are at low tide.

Could we go to the conference? Yes. Do we have the cash? Yes. Would there be consequences? Yes. Is it worth the consequences? Logically, no.

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Tax Day: Our Collective Moment of Financial Clarity

April 18, 2011

Financial Clarity CardSome people think April 15th is an icky day. I see it as our collective moment of financial clarity. Tax day is the one day that we all know exactly how much our businesses earned, or didn’t earn, last year.

I hear a lot of people focus on their refund amount. From my perspective, that’s NOT the number you need to focus on. Leave that to your tax accountant. The number that an entrepreneur should focus on is the one that gives you absolute clarity about what your business truly earned.

Employees have financial clarity about their earnings. They know exactly what their hourly wage is. If your value in the workplace is $25/hour, you work for$25/hour. If, due to economic or other circumstances, you take a job at a lower wage, you are usually VERY clear that you are working for less than your value.

Entrepreneurs don’t often have the same clarity. We don’t get paystubs. We often pay ourselves inconsistently. We pay taxes from our business account, so we never get to see the equivalent of ‘gross wages.’ When our businesses need money, we funnel into them from our personal funds. And when our businesses are flush, we sometimes plunder them.

Employees have clarity about time too. A full time employee works 2,080 hours a year. Those that work more, or less, know it. Entrepreneurs don’t have that same clarity. Some of us come in early, stay late, go to evening networking meetings and work weekends. Others spend half of their days doing laundry, running personal errands and picking up kids. When they look back on their week with honesty they they’ve only worked 20 hours.

  • I believe there is great power in simplifying financial data.
  • I believe there is great power in putting pencil to paper.
  • I believe there is great power in saying out loud to yourself and to a trusted adviser “I made $XX/hour last year.”
  • And I believe there is great power in writing about your feelings about your earnings.

Print the Annual Clarity Card, fill it in and share with your fellow Creating Answers readers in the comments, anonymously if you’d like, what you learned from the experience.

If you’d like a free PDF of our Monthly Clarity Cards, send a request to info@creatinganswers.com.

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Entrepreneurial Passion vs. Sales

March 23, 2011

To succeed in business you must sell yourself!I was listening to a new client tell a story that I’ve heard many times.  She is in a creative field and passionate about her work. She really wants to work, but contracts aren’t coming and she is struggling financially. I asked the obvious question: “How are you marketing and selling yourself?” She looked a little blank; and then she scrunched her face; and then she launched into an explanation of the ways in which she was kind-of sort-of maybe marketing herself. Which really was to say: she wasn’t.

Through years of working with small business owners, many have come seeking answers to their financial issues. As an accountant, I would like to think that good accounting would provide the answers. But the truth is that it’s usually not about the numbers. The truth is that the most important component of impacting one’s financial issues is sales and marketing.

If you’re tempted to stop reading because you don’t own a business, please keep reading. I also work with people around their personal finances, and one client comes to mind. She’s a baby boomer with no retirement and no assets. She’s preparing to leap from a $90,000 job to a $115,000 job. How is she going to do that? Selling and marketing herself. I could work with her for the next five years on reducing her spending and building an investment portfolio and blah, blah, blah. Or….I could lovingly push her out of her comfort zone, make her pick up the phone, and start selling herself to headhunters and leaders in her industry.

Fortune 500 companies spend upwards of 10 to 20% of their budgets on sales and marketing. As small business owners, we often spend time, rather than dollars, on those areas of our businesses. What I like to ask every new client is: “How much time are you spending selling and marketing your business?” If the answer is significantly below 20%, they are usually having financial issues, and I have an answer for them. But it’s usually not the answer they wanted to hear. They usually scrunch their face at me. In the case of my new creative client, she quoted an expert in her field who advised that about 75% of a newcomer’s time should be spent on selling, networking and marketing activities. 75%! This expert had built a very successful business, but my client was hoping I’d have a better answer for her. We often know what we need to do; we just don’t want to do it. After all, we opened these businesses of ours to do the work we were passionate about, not so that we could spend 30 hours a week selling!

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My Dad: Lessons In How NOT to Own A Small Business

March 3, 2011

My Dad: Small Business Owner Mickey PowellToday is the anniversary of my dad’s passing. I learned a lot from him, many lessons to share with all of you about small business ownership. In summary: do not do it the way my Dad did!

First, to alleviate any perception that I am speaking ill of him, I want to share what a fine man he was. My love of community service comes from him. His dedication to making this world a better place is clear in this tribute:

http://www.fedflyfishers.org/Default.aspx?tabid=4520

Even his business ownership was, in a way, community service. He was ‘saving the family business.’ http://www.davidlnelson.md/FFF_FlyTyingGroup/Buszeks/BuszekHistory.htm

Now, on to telling the truth. As a child I watched my father work, work, work, and then work some more. He came home late for dinner, went back to work at night, and worked most weekends. Even our few vacations were often spent at work-related fly fishing conclaves or networking conferences. Both of my parents worked, hard, yet we never seemed to have any money. We weren’t destitute; dinner was always on the table. But money was always an uncomfortable issue. Always having a keen sense of numbers and business, even at a young age it was apparent to me that something wasn’t right. I often wondered, weren’t business owners supposed to be rich?

As a teenager, I became the bookkeeper for my dad’s business, and my childhood observations were clarified. The business was barely profitable. My dad either trusted me enough to let me see his truth, or he thought I was so inexperienced I wouldn’t get it. It wasn’t my place to ask.

But the questions I kept to myself then are the exact kinds of questions I ask clients now. And they are questions I want you to ask yourself if you own a business, no matter how large or small. Yes, even a side Tupperware business, or a little consulting gig, or do a bit of wedding photography. These are all businesses, and they do impact your family!

Here are 12 questions to ask yourself.

  • Do you spend less time with your children, spouse, or friends as a result of your business?
  • Have you ever paid an employee late?
  • Are there months that your business doesn’t pay you?
  • Do you ever put off buying basic things your family needs because your business needs the money more?
  • Have you ever lied (or avoided the truth) about your business’ finances to your spouse?
  • When was the last time you took a real vacation?
  • Do you avoid asking for professional advice about your business’ health?
  • Do you truly know how profitable your business is?
  • Is your business contributing to a retirement fund?
  • Do you have partnership agreements that aren’t in writing?
  • How much have you borrowed against your family’s home, retirement, savings, children’s college fund or inheritance?
  • Does your spouse’s income support your business?

If you don’t like your answer to more than a couple of these questions, it’s time to find a trusted advisor, a business coach, an external CFO, or a mastermind group and tell the truth. Print this blog out and put it in the front of a binder titled “Making My Business Better.” Make an action plan. Make it better. In six months, ask yourself the questions again. Then repeat.

What would my dad’s answers to these questions have been? 100% not good. In the 32 years I watched him run his business, I only saw his business run him. I’ve taken these lessons and have been committed to reverse engineer his mistakes into a balanced plan for running my business. I haven’t always been successful, but one of my life’s quests is to be just like my dad when it comes to community service, and exactly opposite my dad when it comes to small business ownership.