TBL Episode 56: How the dream of entrepreneurship can turn into a nightmare

Starting a business has some inherent risks that I think most entrepreneurs are aware of. 

You risk investing your own money in a business that doesn’t end up making a profit.

With online businesses, the initial investment to get them off the ground is so low, that the financial loss of a failed business isn’t that ground shaking. Especially when you compare it to the capital needed to open restaurants, retail stores, and other more classic brick-and-mortar businesses. These businesses usually involve investing your life savings while also taking out thousands of dollars in loans.

Ultimately, if your online business doesn’t work out, you lose some of your savings and then go back to working for someone else. It’s a crummy situation, but it’s rarely a devastating situation. 

What most online entrepreneurs don’t realize is that the real risk comes when you start to make money. 

It seems counterintuitive, right? But the more financially successful your online business becomes, the more it can turn into a nightmare if you aren’t careful. 

That’s why in this episode, we discuss:

• Why the more successful your business becomes, the more risk you take on

• Why not understanding your taxes as a business owner can turn your business into a nightmare

• Why every entrepreneur should be working with an accountant

• How our bookkeeping service helps our clients stay out of trouble with the IRS

• Why understanding your finances becomes more crucial as you make more money

There is something about finance and money that makes entrepreneurs feel like they’re never doing enough.

It’s the same feeling they get when they don’t feel like they’re working out enough or haven’t been eating as healthy as they would like to. Often, these feelings can get so overwhelming that it feels like you’re better off doing nothing than risking the chance you’ll get bad news.

But it’s important as an entrepreneur to understand which numbers are worth looking at a lot and which ones only need occasional attention. The truth is it doesn’t take as much time as you’d think, and the info you gain can make a drastic difference for your online business.

That’s why in this episode, we discuss:

• The different metrics you need to be monitoring in your business

• How often you should be reviewing certain numbers in your business

• Why the right financial reporting can reduce the amount of time you spend analyzing financial data

• The difference between looking at historical financial data vs forecasting and budgeting for the future

• Why you can handle most of your financial planning in just a couple hours a month

• Which numbers you’ll need to keep a closer eye on

• The importance of keeping your finances simple

I don’t know how to say this gently, so I’m just going to say it.

Very few accountants are good at bookkeeping. 

I share this because many entrepreneurs believe that it would make sense to have the person filing their taxes also be the person that’s managing their bookkeeping. 

This arrangement would seem both convenient and logical, right?

Unfortunately for online entrepreneurs, they usually end up disappointed with the experience because they realize that the bookkeeping service they’re receiving is only designed to help the accountant file the tax return. 

Bookkeeping can be so much more valuable and impactful than just preparing for tax season.

So for this episode, we discuss:

• Why you should be keeping your accountant focused just on your taxes

• Why a dedicated bookkeeper is so important once your business hits six figures a year in revenue

• Why bookkeeping services can be so inconsistent and frustrating

• How Evolved Finance uplevels bookkeeping for your business

• What you should be expecting from a bookkeeper as an online business owner

• What we do differently to help you understand your business better

• Why most bookkeeping isn’t up to par

We’re in a unique position at Evolved Finance. We get to see behind the scenes of some of the most successful online businesses in the industry.

After years of serving online entrepreneurs with their bookkeeping, it’s almost inevitable that we’ve started to see patterns in not just our client’s numbers, but also in the decisions they make in their businesses.

While all our clients have reached a level of success that most aspiring entrepreneurs wish to achieve, our most successful clients seem to have some clear commonalities that separate them from the rest of the pack.

That’s why in this episode, we discuss what our most successful clients have in common with each other:

• What they’re each able to do with their product offers

• What makes their marketing strategies so effective

• Why they put so much importance on building the right team

• Why they invest in their personal development as leaders

• Why they take their numbers more seriously than other entrepreneurs

• Why they plan ahead instead of just reacting to what’s happening in their businesses in the present moment

As human beings, our relationships with money can be diverse and complicated, particularly for those of us raised and working in the US.

Regardless of your outlook on money, materialism, consumerism, etc, it’s still important to understand what a healthy relationship with money looks like for you. This is one of those cases where what you don’t know can hurt you. The only thing worse than not knowing about your finances is running into an unexpected “surprise.”

As entrepreneurs, our relationship with money isn’t just about being open to generating more revenue (which is a mind game of its own), but it’s also about feeling comfortable managing money and not feeling intimidated or ashamed about making financial decisions.

That’s why in this episode, we discuss:

• How a lack of financial education in American culture is detrimental to entrepreneurs

• The problem with thinking budgeting is boring or complicated

• The importance of taking responsibility for our financial decisions

• Why your mindset around managing your money can easily be up-leveled

• Why not having a clear picture of your financial situation is like driving with the dashboard covered up

• How our clients are able to change their perceptions about money by pulling their heads out of the sand

• How working with our clients has convinced us that more is possible from our business

We’ve been in the fortunate position to see a lot of online businesses go from moderate success to massive success in less than a year. 

In fact, most of our new clients see their businesses grow after the first 12 months of working with us, so we’ve come to expect some sort of growth for all our clients each year, even if it’s just a little bit.

The one thing that is not guaranteed with a growing business is profit. There are a lot of expenses that come into running an online business that you might not be thinking of, which is why it’s so important to get a clear and accurate picture of your cashflow.

Entrepreneurs can be misled into thinking that an unhealthy business can simply be fixed by making more sales, but that’s not always the case.

That’s why in this episode, we discuss:

• Why profit is easy in the beginning but more difficult as a business grows

• Why low-six-figure businesses need to worry more about cash flow than profit

• When it’s time to consider getting a better picture of your finances

• The limits of a virtual assistant

• Why profit is so important for online businesses

• Why it’s very rare online businesses can be profitable simply by accident

• What it takes to make sure your business is staying profitable as it grows

In last week’s episode, we began our discussion around what it takes to invest in the long-term success of an online business. In today’s episode, we dive deeper into the strategies and actions we’ve seen our clients embrace to build businesses that will be thriving years from now.

Models have changed from even a few years ago, and it’s not just about making a quick buck but building something sustainable. That means that even if your business is reliant on one main offer, you find other ways to deliver value that can synergize with it.

In this episode, we discuss:

• How much savings you should build up to weather bad luck

• Why it’s crucial to adapt to trends in the market place

• Why strong product synergy across your offerings is more important than ever

• Why maximizing the results you’re promising your customers needs to shape your business model and product strategy

• Why financial tracking is non-negotiable for a business that’s going to stay healthy and profitable for years to come

• How Evolved Finance has shaped its business in response to the changing market

Running a business online is still a relatively new frontier. It feels like only 10-15 years ago, people were still uncomfortable typing in their credit card info to buy a used book on Amazon.

Consumers have come a long way when it comes to being comfortable doing business online, but we still see many entrepreneurs operating like they’re trying to make a quick buck and cash out instead of aiming to build sustainable businesses.

Building an online business that’s in it for the long run goes far beyond a couple successful launches or landing a big client. You need to create a foundation for the business that you can build on and grow without the entire machine breaking down.

In part one of this two-part series, we’re going to look at what it takes to invest in the long-term success of your business so you can create a sustainable income for years to come.

• Why getting clear on your main offer is so crucial for growth

• Why less is more when it comes to product strategy

• Why our clients are focusing as much on their operations as they are their marketing and sales

• Why our clients are more dedicated to building out a team of employees instead of just contractors

• How to shift your email marketing strategy

• Why building a strong team is more necessary than ever for online businesses

• Why investing in your lead generation is no longer an option if you want to create a sustainable business

The Chief Financial Officer (CFO) is one of the most important leadership positions in an organization. But are they really necessary for most online businesses?

A CFO, with the help of their finance team, is ultimately responsible for tracking, organizing, reporting, and analyzing all the financial data in a company. A business is only as successful as its profit and loss statement, and when you’re doing things like managing inventory or multiple payments in and out of a business with millions of dollars on the line, you need to have someone constantly keeping track of how you’re doing financially.

But what about for an online business like yours? Do you need a CFO?

The short answer is no…the vast majority of online businesses do not need a monthly CFO involved in their operations. There simply isn’t the same amount of complexity around an online business’ finances that an eight-figure business selling physical products has. There ARE, however, some instances where it makes sense to get some sort of extra help.

That’s why in this episode, we discuss

• How we are able to help our clients master their finances without the need of a CFO or financial consultant

• When a CFO or financial consultant can be helpful for an online business

• What financial roles are non-negotiable in an online business

• Why creating simple financial systems in your business is so important

• Why our clients spend far more money on their marketing, sales, and operations labor than their financial labor

• What we’ve learned over our years working with online businesses of all shapes and sizes

• Why it’s more important for larger organizations to have more robust financial support

• Why some online businesses might benefit from a comptroller or other help instead of a CFO

• When an online business should consider making a transition with how they handle their finances

The decision to go into business with another person is a HUGE one. Mainly because there is so much you must consider when it comes to bringing on a business partner.

When I hear other entrepreneurs talk about business partners, they usually recommend staying solo–and to be honest, I don’t blame them. Being a solo-preneur is just easier in a lot of ways.

My own experience at Evolved Finance, however, has shown me just how powerful a business partnership can be. We can rely on each other in a way that really lets us work to our strengths and shore up each other’s weaknesses.

That being said, I do think it’s super important to know exactly what you’re getting into when you go into business with someone else. There’s a lot more to it than just splitting the revenues, so it’s important to get a handle on how everything works.

That’s why in this episode, we discuss:

• Why you need rock solid financial tracking if you have a business partner.

• Why partners need to have complimentary personalities and skills to succeed.

• Why revenue goals need to be bigger for businesses with two owners.

• What most people overlook about a business partnership.

• Why it’s important to understand the difference between “equal income” vs “equal owner benefit.”

• How your taxes can get trickier with two business partners.

• Why Parker and Corey’s partnership has worked so well for Evolved Finance.

For most business owners, finance might as well be a four-letter word. It can definitely be scary to get a handle on your numbers—after all, what you don’t know can’t hurt you.

The problem is that running your business without knowing what’s going on financially is a little like driving a car with cardboard taped over the dashboard. Sure you can do it for a while, but how will you know if you’re running out of gas? 

Nobody longs to become an entrepreneur so they can crunch numbers and organize financial data, and many financial services companies contribute to this by making it sound more complicated than it is.

The financial side of running a business gets a bad rap, which is why in this episode, we discuss:

• Why every single online business owner can and should understand their own numbers.

• How I came to love numbers even coming from a very creative background.

• Why finance professionals have done a horrible job of making finance an accessible topic.

• How you can get help with the crappy part of finance so you can focus on what matters.

• Why every CEO needs to have a solid understanding of the financial side of the business.

It’s incredibly difficult to find good bookkeeping in an online business. We’ve onboarded 125-150 online businesses over the years and this generally rings true: if a new client signs up to work with Evolved Finance and they had a previous bookkeeper, the books are going to be a hot mess over 90% of the time.

Bookkeepers don’t need any special certification; they don’t have to follow any standardized industry practices, and very few specialize in specific industries so they can become experts.

That’s why in this episode, we discuss:

• Why finding a good bookkeeper is so difficult

• Why bookkeeping options for online businesses are so crappy

• How bookkeeping works and why it’s important for your business

• Why your bookkeeping shouldn’t just be about your taxes

• What you need to understand about what a bookkeeper does for your business

• Why we made the decision to specialize in online businesses at Evolved Finance

Cash Flow is an often overused financial term, but most online entrepreneurs aren’t exactly sure what it means for their own businesses.

The most important thing to know is that it’s the lifeblood of any successful business—mainly because it’s not only related to the profitability of your business, but also to the timing in which money goes into and out of your business.

For larger organizations, cash flow can be complex and time-consuming to manage and analyze.

Thankfully, it’s much simpler for online businesses, but still very important to pay attention to.

That’s why in this episode, I discuss:

• What cash flow really means for an online business

• The difference between cash flow and profitability

• Why ignoring your cash flow can put you in debt or behind on your taxes

• Why cash flow for large corporations, ecommerce businesses, and retail business is much more complicated than the online businesses we serve at Evolved Finance

• Why tracking your finances is vital for keeping your business cash flow positive

• How our FREE forecast and budgeting tool can help you get ahead of your cash flow

Get our free forecast and budgeting tool at https://evolvedfinance.com/salesforecastingtool.

 

Last week, we had our first group call for our bookkeeping clients at Evolved Finance.

It was so exciting to have a handful of our clients together on a call talking about the financial sides of their businesses.

This got me thinking about how important it is to have an entrepreneur community you can connect with and learn from.

So in this episode, I discuss

• Why the majority of our clients are in some sort of master mind or group coaching program

• Why I underestimated the power of being part of an entrepreneur community when I first started working with clients at Evolved Finance

• The benefits I’ve seen our clients get from being connected to other entrepreneurs

• What sort of return on your investment you should expect from being part of paid entrepreneur groups

• What percentage of our client’s revenue we like to see them spend on business education and entrepreneur communities

Debt can be a tricky topic when it’s regarding business.

In startups and corporations, debt can be a tool for jumping on opportunities that demand extra cash the business doesn’t have on hand.

In certain types of small business, a line of credit might be necessary to manage the ups and downs of monthly cash flow.

For online businesses, debt is rarely needed though.

That doesn’t stop many online entrepreneurs from getting into situations where they take on debt due to poor financial management.

That’s why in this episode, we discuss:

– Why it’s not super common for our clients to need loans or credit.
– Why debt happens when online entrepreneurs don’t pay close enough attention to their finances.
– Common situations that force online businesses to take on unwanted debt.