One of the biggest roadblocks holding us all back from that awesome business idea is the belief that we don’t have enough money. Enough money to kickstart the project, enough money to keep it going and enough money in profits to make it worthwhile. We asked an expert about how to overcome the financial pitfalls that often face budding entrepreneurs.
The thing is, even if you do manage to start a successful project you might find money worries creeping up to sabotage you just as you’re gaining momentum. With more of us than ever becoming creators, doing away with the 9-to-5 and building our dreams in our bedrooms, it’s never been a better time to get savvy about our financial realities and put ourselves in a position where we can actually start making money – and feel really great about it.
We spoke with Ebonie Allard, a certified life and business coach and author who dedicates her days to inspiring and enabling misfit freelancers, business owners and entrepreneurs. We asked her what financial tips she’d share with budding young entrepreneurs and she gave us her advice based on working with all kinds of clients from all kinds of backgrounds.
#1 What are some of the common financial mistakes entrepreneurs you’ve worked with have made?
There are two common financial mistakes I see entrepreneurs making all the time!
The first is burying their head in the sand and hoping things will change, these are the people who don’t know their survival rate from their burn rate or their thrive rate. Quite simply they don’t know how much they need to survive (survival rate) – to keep a roof over their heads and food in their belly. When you start out you need to keep it simple, eliminate anything that you don’t need. What you consider ‘surviving’ is up to you, but know exactly how much you need.
They also don’t know how much it costs to keep their business alive (this is the burn rate, how much cash you need flowing through your business each month – which will grow as you increase capacity.)
Lastly, they’ve not decided how much would make them happy or financially free (thrive rate). Oh, and financial freedom sounds all fancy and BIG, but it is quite simple: when your survival rate and your burn rate are coming in each month passively then you are financially free!
The second mistake is believing it is ever about the money. I know that sounds odd, but money is currency meaning “condition of flowing,” from the Latin currens – it is the flow of energy and somehow so many of us have decided that we don’t deserve this energy, or that this energy is bad or that if we have a lot of this energy then someone else will have less. Simply put, when we address all the beliefs and attitude we have about wealth and ourselves money starts flowing easier.
#2 Why is it so important for entrepreneurs to stay on top of their finances?
According to the stats about how many businesses fail, it’s a bleak picture. But the truth is that when someone decides that his or her business is going to succeed no matter what, then it will.
That said, money makes it all easier. It’s easier to get help and support with money. It’s easier to get the right person for the right job with money. It’s easier to take time off with money. It’s easier to put systems and processes in place with money.
Staying on top of your finances gives you information about your position and this knowledge enables you to make informed decisions. Having cash flow through your business is your first aim and deciding what to do with that cash can only happen if you know where it is coming from, where it might go and how much we’re talking about.
#3 Tell us some of your top tips for overcoming financial meltdown
Make it less personal. The amount of money in your business is no reflection on your self worth, it’s a reflection of the amount of energy and space your business is currently taking up.
Look at increasing your business capacity rather than being greedy or needing more money. Make friends with your cash. Take some time each week or each month to spend time with your money. Look at it. Thank it for enabling you to get this far. Think about all the things you have done as a result of having this currency in your business and in your life. Appreciate it like you would a super talented colleague. Get some help with your mindset.
So much of our relationship with our finances has nothing to do with our financial literacy and everything to do with our mindset.
#4 What steps can people take to change their financial mindset for good?
- Get really clear on what you want money for.
- Be appreciative of the money you have already.
- Increase your own personal self-worth and make a commitment to have your financial status reflect how you are showing up in the world.
This article originally appeared on Lifehacker UK