What I’ve learned about money as a business owner in the last ten years.
Money, money, money. The source of all evil or simply a constantly-circulating abstract concept to which we attach a load of emotion?
Whatever your perspective, it’s impossible to run a business without having to confront your relationship with money and make some choices about how you want to manage money.
In the second of ten newsletters I’m writing after ten years in business, I want to share what I’ve learned about money, and what I’m still learning. Then, in the next email, I’ll share exactly how I manage my finances, as a 43-year old self-employed coach with irregular income.
What I’ve learned about money in ten years of self-employment
1/ Figure out your own tolerance for uncertainty.
I start most months saying to my husband ‘I’ve got nothing booked in this month, you’ll have to cover the mortgage’, and then there’s been many times I finish with a five-figure month. I could spend energy securing more stable associate roles, but I really value the creativity and freedom I have working under my own brands. As long as I have the right financial safety net, I can deal with a lot of uncertainty. But it’s certainly not for everyone.
2/ Hold it lightly.
Money is SUPPOSED to come and go. One of the biggest influences on my relationship with money has been a book I read years ago by Tosha Silver. called ‘It’s Not My Money’. It’s very ‘woo woo’; essentially, it presents money as energy that needs to flow in order to survive. While I’m probably a bit more pragmatic than that, I have learned that when we hold on tightly to money, we’re telling ourselves it’s limited and we don’t have enough. And then, we don’t.
3/ Money doesn’t need to be complicated, and everyone deserves to understand it.
Other big influences in the last few years have been Ramit Sethi and Simran Kaur, educators on personal finance and investing. I now actually understand how wealth grows, and have a simple system for spending, saving and investing even with an irregular income.
4/ Be clear on what matters to you.
I think this might be the biggest shift in my money mindset in the last decade. Ramit Sethi (yes I am a fan girl) says ‘spend wildly on things you love, and cut mercilessly on things you don’t’.
I DO care about security (savings), convenience (a taxi home if my kid is exhausted) and adventures with my family (holidays, meals out, experiences). I DON’T care about home decor (our house has multiple bare lightbulbs after five years here), status symbols (we don’t own a car or anything worth more than a laptop) or clothes (shopping gives me rage 😂).
5/ Always put aside for tax.
Honestly, I could NOT deal with the stress of having to just ‘find’ £20k at the end of a tax year.
6/ Investing in yourself tends to reap rewards.
I know many coaches who always seem to be on a new training course or doing a new business coaching programme. That’s not me. I’m quite sceptical about much of the ‘coach development’ industry, But I’ve also noticed that the times I HAVE spent large sums of money on myself or my business - investing in a designer, getting my own coach, joining a business mastermind, learning to launch online courses properly - my business has grown and I’ve felt more confident.
7/ Spread the risk (and the opportunity).
Investment experts advise clients to invest in lots of different geographies, sectors and types of asset to manage your risk. I think the same might be true of running a business. The industries of learning & development and personal coaching are changing rapidly, and I have found that having multiple income streams helps me stay open to different opportunities AND stay energised by my work, So I have three brands - VSM Executive Coaching (121 coaching and corporate workshops), Leading Deeply (leadership development programmes) and Tarot & Transformation (Tarot training and mentorship).
What I’m still learning (and probably will until I retire)
A business HAS to invest to grow. I have to constantly remind myself of point #6 above…
Ignore the noise. There are (seemingly) zillions of people who are earning 7-figures by posting on Instagram and wafting around Bali all day teaching other people how to make 7-figures. I have to remind myself to stay connected to the work I want to be doing, work on MY beliefs around money, and focus on MY journey of running a business, and ignore all the bullshit on the internet.
Does the money serve the work? This is from a new money teacher I have discovered, Tim Malnick, who experiments with different ways of charging for his services. He talks about fees that ‘serve the work’ - that might look like flexible pricing, or client-selected pricing. I’m still figuring out what this means for my business, but I know I can be rigid around money and I would like to become more playful and expansive.
That’s it!! Which of these lessons particularly jumps out to you, whether you’re self-employed or in the corporate world?
Watch out of part two of this topic, where I’ll share the details of how I manage my money month to month.