I was very excited to write this post. It seemed it would be very easy. Financials are an important part of my #healthyWEALTHYWISE hashtag and theme of this blog. At one time a day didn’t go by with yet another financial advisor reaching out to me. I thought that my network would jump at the chance to get a quote in this post and perhaps drum up new business. So yes, I am amazed, as I always am, when my ideas don’t work. Better luck next year.
Moving on, I decided to put together my thoughts on being financially literate and an entrepreneur. But, please remember I’m just a mompreneur with a blog where I share my thoughts on this entrepreneurship journey. I AM NOT A FINANCIAL ADVISOR.
Financial Literacy for Entrepreneurs
I don’t believe there is one way to success for entrepreneurs. We arrive at the starting place for a new business from many different avenues. Some of us have saved for years to achieve our dream. Others know that they are going to get loans. Some go the venture capital route. Others, like me, believe in the bootstrap theory.
But I do believe that understanding your businesses finances are important to your journey to wealth. As business owners, we need to plan our growth. Depending on your business model it may take a year or so to reach a profit. Understanding how long it will take and preparing for the days, like today, when you may not hit your numbers is crucial to your staying power.
Click here to read my post about the the reports I use and recommend for all entrepreneurs:
- Cash Flow – Read my post on the importance of this report here.
- Profit and Loss
- Accounts Receivable
- Income Statement
- Balance Sheet
- Credit Report
I have used Quickbooks since I started my business. I recommend it as way to have a quick and in depth look into your finances. It will also help your accountant pay your taxes and payroll.
Knowing Your Finances Means Growth
For us, the business owner, we need to know where we are financially. This is our investment money and helps give a value to our companies. As a bootstrapper, I don’t believe in spending before I have it. But for those that are going for loans, you need to know how much you have, your forecast and how you can pay it back.
Knowing your finances means you understand the risk of advertising, hiring employees, buying equipment and other decisions that impact your business. It also helps you understand your value to the business. Sweat equity is real.
I truly believe you can’t grow unless you where you are today and create a plan for where you want to go. This includes finances.
Simple Saving Rules
I am a saver. I have always enjoyed watching money grow and once I had my first 401K, it solidified my excitement. In fact, I am launching another business to spread the excitement of saving to Black Women. My philosophy is that all of us need to save money for the future regardless of your socioeconomic status. Saving and achieving your goals is one, but very important, way to build self-esteem. And if you believe in yourself, you have the confidence to build your dream.
My fates is linked to my target market of startups and small businesses. While I love what I do, it means that my revenues are dependent on factors outside of my control. Despite this, there are three important financial actions almost every time I get a check. I put money in:
- My IRA
- My son’s 529
- Emergency savings
The rest is used for life’s expenses, charities, and fun.
Whether its for a rainy day or our futures we have to save. And you have to know where you are financially in order to save money. So whether you hire a financial advisor or DIY, start today. It can only help you.
COVID 19 and Your Business
This post is important because we all have important decisions to make when it comes to the government’s programs to help our small businesses. We have to measure the reward and the risk of taking the loans and more importantly paying it back. The only way you can make the right decision is to understand where you are today and where you’ll need to be in three months to still be in business. It also might be a good time to evaluate the business we’re in.
- Impact Payments – https://www.irs.gov/coronavirus/economic-impact-payments
- Paycheck Protection – https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program-ppp
- Coronavirus Small Business Guide (US Chamber of Commerce)
- Guidance for Small Businesses (U.S. Small Business Administration)
- Guidance for Businesses and Employers (CDC)
- Local Assistance (U.S. SBA)
- COVID-19: Implications for Business (The Conference Board)
- New and Small Business Policy Response (Center for American Entrepreneurship)
- Paycheck Protection Program: A loan designed to provide a direct incentive for small businesses to keep workers on the payroll. (U.S. Small Business Administration).
- Disaster Loan Assistance Information: Low-interest loans to businesses of all sizes, private nonprofits, homeowners and renters (U.S. SBA).
- Disaster Loan Assistance Online Application: This online application is the fastest method to receive a decision about your loan eligibility (U.S. SBA).
- Disaster Loan Assistance Application (U.S. SBA)
- Disaster Assistance in Response to Coronavirus (U.S. SBA)
- Coronavirus (COVID-19): Small Business Guidance & Loan Resources (U.S. SBA)
- Coronavirus Tax Relief: The IRS established a section focused on steps to help taxpayers, businesses and others (Internal Revenue Service).
- Pandemic Unemployment Assistance: Pandemic Unemployment Assistance is a federal program for people who are unable to work as a result of COVID-19 and not eligible for regular state unemployment benefits, such as self-employed workers and independent contractors.
Whatever you need to do, please make your decision with as much financial information you can. And please stay healthy and safe!