My Top 4 Rules of Money for Entrepreneurs
Ok my fellow rule-following entrepreneurs, are you ready for this?
Ok, quick side note, can entrepreneurs be rule followers? I mean, we go against the "norm" every day, so I am going to say we tend to be breakers more than followers. Anyways, enough of the pondering.
Entrepreneurs tend to be doers, movers, and shakers- otherwise, we would never accomplish anything honestly, but in the doing, the moving, and the shaking, our finances tend to get the least amount of our attention and time. However, it is one of the most important aspects of running a truly successful business. (And... success is defined by YOU... not anyone else... I just wanted to throw that in here.)
As someone who has been a full-time entrepreneur for 15 years, I feel like I have made many mistakes when it comes to my finances, but I have also come across some really great advice that helped me propel myself forward. However, amongst all the advice I have been given, all the books I have read and the classes I have taken, I always come back to four basic, yet important, money rules for entrepreneurs.
Pay yourself FIRST
When we are running a business, all the things feel like a priority.
Getting all the software and automation set up, a pretty logo and website, advertising, hiring, office space... this list could truly go on for pages... but I think you know where I am going.
What never seems to be on this list when I am talking to an entrepreneur is themselves!
Let's keep this simple- you went into business most likely for one of two reasons:
Time freedom always comes eventually if you set things up right, but financial freedom is the one that everyone feels is just out of reach... when they aren't prioritizing it.
If you are working hard to get clients, deliver your service, and keep things running, wouldn't you expect to get paid for that if you were working for someone else?
So why are we not setting that same expectation in our businesses around paying ourselves?
When you prioritize yourself and pay yourself before paying for all the fancy bells and whistles, you will see yourself progressing and you will not HATE your business for taking all your time and giving you nothing in return.
Don't spend what you have not yet collected
As entrepreneurs, we must be growing constantly! This means we need new things in our business but it also means we need to be investing in ourselves also!
The mistake occurs here when you are spending money that is not yet in your possession. You are banking on that client to actually pay the invoice you sent them on time. Which is nice, but not always the case. When we spend money that we don't have yet, that we are just banking on, we end up overextending ourselves and this creates a spiral of shame and guilt around our money which can easily and quickly lead to avoidance of it altogether.
Be intentional with your spending and only spend what you actually have and what is not allocated for something else! (I.e. don't spend the money you saved for taxes to hire a coach and think you will have time to save the tax money again before it is due.)
Keep your business and personal finances separated
This is so simple, yet not implemented as often as it should be.
Have bank and credit card accounts that are ONLY used for business, and keep them that way!
That is truly how simple it is.
Dedicate time each week to work on your numbers
I call this CFO time for my client - Chief Financial Officer.
This is the time EVERY week that you review and record your information. You are looking at your revenue collected, you are looking at the money you spent, you are making sure you paid yourself. If you have a bookkeeper, you can get them what they need during this time. What you do will vary for each of us, but doing it consistently is what is going to create not only reliable information you can use to make financial decisions, but it is also going to start allowing you to feel more confident in your numbers and your skillset with managing them.
So there you have the 4 rules of money for entrepreneurs that I live by.
Do you have any other rules of money that you would add to this list? Let us know in the comments below!