I am speaking to all entrepreneurs but want to specifically focus on those of us that have worked for a salary and are switching to or have switched to becoming an entrepreneur. For those of you that haven’t figured it out yet an entrepreneur is the one occupation no matter how successful you are a salary is not guaranteed. Even the most successful entrepreneurs will have a story about a time when they had trouble making ends meet. Don’t get me wrong, there are always two sides to a story and believe me or not the worst of days are matched on the other side of the spectrum / axis by the best of days. Ever hear of the saying that with great risk comes great reward? I like to think that an entrepreneur is owed great reward. An entrepreneur to me is someone who is controlling their own destiny, someone who actively contributes to the economy by employing people and someone who has a fighting spirit. Yes, I consider entrepreneurs hero’s! Sure, in a perfect world, we will all be millionaires, but there is so much more to get rewarded with. Wealth of information? Wealth of experience? Not as appealing as just WEALTH, I realize but I would encourage you to start seeing wealth in its general term. Now that I have somehow managed to give pie in the sky advice and if you read it right, a disclaimer… I would like to talk about your salary.
You see in a normal job you get told what your salary is when it will get paid. When you are self-employed you decide. Sounds fantastic right, well it is! This has got to be one of the most wonderful and scary perks of an entrepreneur there is. In my opinion the trick is to pay yourself as much as possible while being responsible towards your business. Sounds simple and the more I write these article’s the more I realize that a lot of what my experience has taught me is easier said than done. I suppose that was just me feeling guilty about saying something just that. Easier said than done, but not impossible… I know it is possible, I haven’t always gotten it right but I know it is. I say this because I don’t want to give you the reader the impression that I am a know it all, but also state that although I haven’t always gotten in right, I have in fact gotten it right! You heard me, if a guy like me can manage to run two budgets, I.e. household and business then anyone can do it.
Here are my tricks and tips:
1. Realize that it is sometimes hard and tough decisions are going to be made. The reality is that I have had to choose between paying the utility bill or buying stock for a new project at work… FYI, I chose stock and prayed for the utility bill.
2. Follow through with decisions and don’t feel like every decision sets a president. Some days I choose stock and some days I choose utility bill. Fact is that each one is important and is in many instances dependent on the other.
3. Know your limits. Always know what you can give up and what you can make work. If you are not sure of these limits now, don’t worry you will soon find out. One of the hard lessons you will learn is your financial limits.
4. Be sure of your support structure and know how to use it. I once spoke to a guy who told me that his support structure was his savings account, how jealous am I. Truth be told he was a great accountant and obviously fantastic at working with his money. My support structure has always been friends, family and fellow businessman.
5. Know your worth and know your needs. Trying to balance them… therein lies the trick. I have always been a proponent of knowing what my monetary value is, what I would need to recover financially for each hour of my time spent on something. I also believe that it is important to know exactly what you need financially, personally and in business, so that you always know what your options are.
Budgeting has a very important role to play in financial planning. Even as I type this I am smiling to myself because I have a terrible history with budgeting. What I can promise is this, when you are budgeting, in personal finances or your business you won’t necessarily solve all financial problems but you will know your limits. Financial limits are what you will use when making those tough decisions on what to spend money on. It is tough to think that there might be a time in your life when you will need to choose between a business expense and a personal expense and believe me it isn’t something you will always have to do. As with all my articles I want to assure you that all I am trying to do is help you prepare yourself, perhaps even know that you are not the only one making these tough calls.
In conclusion I must say that even though this sounds daunting and possibly terrifying, don’t be afraid, it is possible! My last bit of advice, which I get from every financial planning resource I can find is this. USE A BUDGET. If you don’t use one yet, you should start. A budget is a terrific way to analyze your financial strengths and weaknesses.
As always, thanks for reading, I trust you found this useful and encourage you to help me by sharing this article on my social media options below.