1. You have to love wearing many hats!
You will be doing that thing you love – painting, writing, photography, coaching—but you will also be the business manager, accountant, marketer and salesperson. Each of these skills requires time to develop, which typically costs money. One of the biggest mistakes I see is not recognizing the importance of building business skills, having business advisors, and setting aside time for running the business.
2. Your income will be all over the map.
Being an entrepreneur requires vision and discipline. Most have the vision, and few of us have the discipline. There is no regular paycheck unless you set it up that way (which I highly recommend!). No one will give you access to a 401k or stock purchase plan—you have to do this for yourself, and it’s VERY easy to push retirement planning to the bottom of the priority list. Managing erratic income requires strategy and thoughtfulness. How can you step back, observe how income comes in to your business, and build some structure around it so that you create more regularity and constancy?
3. Your personal relationship with money will follow you everywhere.
In other words if you do rocking job with money on the personal front, you’ll bring that into your business, and if you resent, ignore, or abuse your relationship with money at home, then it’s likely to cause you heartache as an entrepreneur. What’s the solution? Decide to actively work on healing your relationship with money. If you are married or partnered, this is even more critical, because business finances can add stress and complication to your home life. You might work with a financial therapist, money coach, or financial planner. Each has a different focus and level of expertise. Do this work and you’ll be building your business on solid ground.
4. Run your business like a business.
This means you have separate bank and credit card accounts and ALL business transactions go through these accounts. It means you have your records, receipts, and accounting organized and separated from your personal financial life. If the IRS knocked on your door and said, “Surprise! We’re here to audit your business”, you would smile, open the door, make a cup of tea and calmly say, “Great! What records would you like to see?” I use a binder for this purpose- I keep all bank and credit card statements along with tax payment information and business receipts separated by month. This way if I need something from 2012, I just pull out the binder and look it up.
5. Work/Life Balance is a myth when starting a business.
I remember one of my mentors telling me that I’ll be seriously underpaid and overworked for the first three years of my business, and then it would reverse and I’d be overpaid and have time on my hands. I’ve found this to be true, and having this expectation helped me to stay the course even when I felt discouraged or afraid.
What do you wish you had known before starting your business? What kind of support or resources did you need?
Luna Jaffe, CFP®, MA is the author of Wild Money: A Creative Journey to Financial Wisdom. She is CEO of Lunaria Financial, a financial planning firm in Portland, Oregon. She was a professional artist and owner of LunaSilks for over a decade and a professional dancer with Do Jump! Movement Theater. She holds a Master’s degree Depth Psychology from Pacifica Graduate Institute and is a Certified Financial Planner™.
Securities and advisory services offered through KMS Financial Services, Inc.