Mastering the Trapeze of Business Finances: Essential Lessons for Aspiring Entrepreneurs

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Ever thought leaving the corporate grind behind was the hard part of entrepreneurship? Think again. In our latest episode, we promise to transform your understanding of business finances with ten essential lessons that no one teaches in business school. From the critical importance of separating personal and business finances to navigating the choppy waters of cash flow, we're here to shine a light on the common pitfalls many new entrepreneurs face. With a playful yet insightful approach, we liken financial planning to a trapeze act, emphasizing the need for a safety net of savings to provide stability and confidence.

But we're not stopping there. We tackle the myth that revenue is synonymous with profit, highlighting often-ignored expenses that can sneak up on you. We dive into budgeting strategies that align spending with your entrepreneurial vision, laying out why it's crucial to think of expenses not just as costs, but as strategic investments. Plus, we underscore the importance of strategic cash management and planning for taxes, helping you weave through the intricate dance of entrepreneurship with clarity and foresight. Listen in and prepare to see your business finances in a whole new light.

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Episode Transcript

Speaker 1 (00:00):
So you're finally living the dream, took that leap
, left the corporate worldbehind and you're building your
own empire.
It's exhilarating, right, butlet's be real.
That financial tightrope walk.
That can be terrifying.

Speaker 2 (00:13):
Oh, absolutely.
It's a whole new ballgame, likethe rulebook you used in the
corporate world.
Yeah, that's out the window now.

Speaker 1 (00:20):
Totally.
That's why we're diving deeptoday.
We're talking 10 crucialfinancial lessons every
entrepreneur needs to know, andwe're not just skimming the
surface.
We're going deep on the whybehind the what, so you can
build a rock solid foundation.

Speaker 2 (00:36):
Exactly.
We're talking about the kind ofstuff that they don't teach you
in business school.

Speaker 1 (00:40):
Okay.

Speaker 2 (01:00):
So first up, this source went straight for it.
Lesson one separate yourpersonal and business, right
Like do I invest in this newequipment, do I hire someone,
but you can't even tell if thatdeposit in your account was that
a client payment or was that arefund for those shoes you
definitely didn't need?

Speaker 1 (01:18):
Ooh, yeah, guilty as charged.

Speaker 2 (01:20):
It's a mess and not just a.
You need a new accountant.
Mess Like a legal and taxnightmare waiting to happen.

Speaker 1 (01:27):
Okay, convinced, separate accounts.
It is Next up.
The source hits hard oncashflow.
We hear it everywhere right,cashflow is king.
But what does that really meanwhen you're starting out and
every single penny counts?

Speaker 2 (01:39):
So cashflow isn't just about making money.
It's about having the actualcash in hand to pay your bills,
to invest in your growth and tohandle those surprise expenses
that always seem to pop up.

Speaker 1 (01:49):
Because they always do.

Speaker 2 (01:58):
Always Think of it like this Cash flow is the
lifeblood of your business.
Even if your business model isamazing and you're eventually
going to be super profitable,running out of cash before then
is like having a restaurant fullof hungry customers but your
kitchens run out of food.

Speaker 1 (02:08):
Ouch, yeah, that's game over.

Speaker 2 (02:09):
Exactly.

Speaker 1 (02:10):
So it's not enough to just be sending invoices.
You've got to make sure thatmoney is actually flowing into
your account at the right time,right.

Speaker 2 (02:17):
And that you're managing it strategically.

Speaker 1 (02:19):
Which actually leads to the next point Savings.
This source recommends havingsix to 12 months of living
expenses saved up.
Now, that's a scary number fora lot of people, especially when
you're just starting out.
Is that really necessary?

Speaker 2 (02:34):
Okay, imagine this You're a trapeze artist, right,
and you're launching yourselfinto the air.
Now would you rather have asafety net below you or just you
know, the hope and a prayer.

Speaker 1 (02:44):
Safety net please.

Speaker 2 (02:45):
Exactly that's what those savings are.
It's your entrepreneurialsafety net.
It gives you that breathingroom to make smart, strategic
decisions for your business, notjust panic-driven reactions
when you have a slow month.

Speaker 1 (02:58):
Okay, so it's about having the freedom to play the
long game.

Speaker 2 (03:00):
Exactly.
Maybe you can take a chance ona marketing campaign that might
take a while to pay off, ormaybe you can finally invest in
that new equipment that willstreamline your process.

Speaker 1 (03:13):
That safety net, that's what gives you the power
to make those moves.
Got it.
But let's be honest buildingthat kind of safety net that
requires some serious planning,some budgeting right.

Speaker 2 (03:20):
Oh, absolutely.

Speaker 1 (03:21):
Yeah.

Speaker 2 (03:21):
Budgeting isn't just about tracking where your money
goes.
It's about aligning yourspending, both personal and
business, with yourentrepreneurial vision.

Speaker 1 (03:28):
It's like you're playing financial chess,
thinking several moves ahead.

Speaker 2 (03:31):
Exactly, it's a mindset shift.

Speaker 1 (03:34):
Speaking of mindset shifts, there's this I don't
know this myth that revenueequals profit, and this source
really dug into that.
Why do you think that's such aneasy trap to fall into,
especially for new businessowners?

Speaker 2 (03:46):
It's so easy to get caught up in the excitement of
those early sales right.

Speaker 1 (03:49):
Yeah.

Speaker 2 (03:50):
You see that money coming in and you're like I made
it she made it Right.
But the thing is, revenue isjust one piece of the puzzle.
You have to factor in all ofyour expenses, the cost of the
goods, marketing, that softwaresubscription you forgot you had.

Speaker 1 (04:06):
Yeah.

Speaker 2 (04:06):
The coffee, the snacks, everything.

Speaker 1 (04:08):
Oh, and don't even get me started on taxes.
Our source was really adamantabout this.

Speaker 2 (04:16):
Entrepreneurs need a complete mindset shift when it
comes to taxes.
Oh for sure, taxes.
They're like that one friendwho never RSVPs but then always
shows up expecting a full meal.

Speaker 1 (04:23):
Every time.

Speaker 2 (04:24):
Every single time, and ignoring them is not going
to make them disappear.
The key is set aside apercentage of every sale for
taxes right off the bat.
Keep really good records andhonestly talk to a tax
professional sooner rather thanlater.

Speaker 1 (04:37):
So it's not just about doing your taxes, it's
about building those good habitsfrom day one.
And speaking of investing inyourself, the Source they really
stressed financial education.
Now, obviously, hiring a goodaccountant, that's crucial, but
what about educating yourself?

Speaker 2 (04:52):
Think of it like this you have GPS on your phone,
right Amazing tool, but it'sstill useful to be able to read
a map yourself, just in case.

Speaker 1 (05:00):
Love that analogy.

Speaker 2 (05:02):
So take an online course, go to a workshop, listen
to podcasts like this one,whatever works for you.
Get comfortable with the basicfinancial concepts of your
business, because when youunderstand the numbers, you're
in control 100%.

Speaker 1 (05:16):
Now let's talk about something that I know makes a
lot of new entrepreneurs reallyuncomfortable Pricing for profit
.
Do you have any tips forovercoming that fear and
actually setting prices thatreflect the value you're
providing?

Speaker 2 (05:29):
I see it all the time Entrepreneurs, especially when
they're starting out, theyundervalue what they bring to
the table.
They set the prices way too lowbecause they're afraid of
scaring away clients.

Speaker 1 (05:38):
Right, you want to be competitive.

Speaker 2 (05:40):
Exactly, but you also need to value your time, your
expertise and your worth.
Value your time, your expertiseand your worth.
Remember your pricing needs tocover all of your costs and
leave you with a profit marginthat actually makes this whole
thing worthwhile.

Speaker 1 (05:52):
So how do you find that sweet spot?

Speaker 2 (05:54):
Research.
Explore different pricingmodels like cost plus pricing,
value-based pricing.
Look at your competitors anddon't be scared to experiment a
little.

Speaker 1 (06:03):
Okay, so find what works for you.

Speaker 2 (06:04):
Yes.

Speaker 1 (06:05):
And finally, this source made a great point about
not being afraid to ask a little.
Okay, so find what works foryou, yes.
And finally, this source made agreat point about not being
afraid to ask for help.
What advice would you give tosomeone who is hesitant to
delegate or to bring inprofessionals?

Speaker 2 (06:16):
Look, trying to be the superhero who does
everything themselves.
That's a recipe for burnout andhonestly costly mistakes.
Don't be afraid to delegate.

Speaker 1 (06:25):
Build relationships with an accountant a lawyer, a

(06:46):
financial advisor, other expertsin your field, people you trust
.
Think of it like building yourown personal board of directors.

Speaker 2 (06:52):
I love that Surround yourself with a team that you
trust.
This has been such aninsightful conversation.
Thank you so much for divingdeep with us today.
My pleasure, my pleasure.
Now, before we wrap up, I haveone last question for you.
If you could go back in timeand give your younger self the
one who was just starting out ontime on your calendar to work
on your business, not just in it.
Trust me, those investments,they pay off big time in the
long run.

(07:12):
Building a successful businesstakes time, it takes effort and
it takes a bit of financialsavvy.

Speaker 1 (07:18):
Words to live by.
Thanks again, and to everyonelistening, remember
entrepreneurship is a journey,not a race.
No-transcript.