Entrepreneurs, especially solopreneurs, can end up neglecting their personal finances, to the detriment of both their business and life.
I can still remember the coaching session with a client who owned his own business.
I asked him what his income was:
“Well, I made [some figure] last month. And [some figure] the month before that.”
“Yes, but what is your income?”
He indicated that he didn’t understand the question.
“You’re saying that your business took in a certain amount of money, but what about the income the your business pays you?”
It was clear that this was the first time that he had considered this.
Over time I’ve learned that entrepreneurs, especially solopreneurs, spend so much time and effort working on their business, that they can almost entirely ignore their personal finances.
It’s time to change this.
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Entrepreneurs and income
As a business owner, you have a number of ways of turning your business revenue into personal income. And a lot of this comes down to the type of business you have.
To give two examples:
- If you’re a sole proprietor, then your business is really just an extension of your self. Any income your business earns is just like income you earned. Your business doesn’t file a separate tax return. It’s basically just you, but with a dba.
- If you have an LLC, then your business is a separate entity from you. You are an employee of your business, but when the business earns income, that doesn’t mean that you personally earn anything. Your business needs to file a separate tax return.
The lack of separation between sole proprietor business and personal finances can seek to muddy the waters of what constitutes income and what constitutes revenue, but let’s be honest, any one of any business type can muck up the details.
And that’s because business owners focus on their business to the detriment of their personal finances.
Entrepreneurs and expenses
I love the passion that entrepreneurs, especially solopreneurs, bring to their business. At times, it often resembles a parent nurturing a child, such is the level of dedication.
But just like the parent can give their all to their children, neglecting themselves in the process, so too can the business owner to their business.
For example, I know plenty of business owners who know their profit and loss statement backwards and forwards. They know where the money is coming in and where it is going.
But could those same people speak in detail of their own personal finances?
In my experience, that’s not what I see.
And that needs to change.
Because just as the parent can’t be the best possible caregiver when not taking care of themselves, a business owner won’t be in the best financial health until they tackle their personal finances as well as their business finances.
You have a business coach. You need a money coach.
When I talk to business owners about money coaching, they inevitably see my work through the lens of their business. “Oh, you can help me figure out how to grow my business.”
No. No, I do not.
(As an aside, maybe I should start a series on all the things I’m not, as I’ve in the past talked about how I’m not a therapist or financial planner either.)
I’ve worked with business coaches, and they are an indispensable sort, but if you’re looking for a business coach, you can look elsewhere.
What I’m here to say is that if you have a business, you need a money coach for your personal finances as well.
I help business owners, especially solopreneurs, take control of their personal finances so that they can maximize their impact in their business and their life.
Let the business coach handle the ins and outs of your business. I’m here to help you with the ins and outs of your personal finances.
And as my client mentioned above had to learn, the first step is to realize that your business finances and your personal finances are different things.
Improve one and you improve the other
Obviously, when you have a successful business, it makes sense that it would improve your personal finances; you make more money!
But the opposite is also true: when you have a more successful personal financial situation, when you know where your money is going and what it’s doing, your business will be healthier.
So why are you avoiding taking control of your personal finances?
It time to invest in that area of your life too. Your business deserves it.