TBL Episode 65: Tips for a successful business partnership

It’s probably not surprising, but most business coaches would not recommend starting your business with a business partner. Do I feel the same way?

Yes and no.

Yes, in that we’ve seen several business partnerships go sour due to the relationship complexities that come from running a business together. 

No, in that my personal experience of participating in a business partnership has been extremely positive. So much so that I can’t imagine ever starting a business without a partner.

So for this episode, we discuss:

• How Corey and I made the decision to go into business together

• What made our situation different than most other business partnerships

• The importance of having a shared vision and alignment

• Why having different sets of skills and strengths improves your chances of success

• How to structure your partnership so it’s fair and balanced

• Why you should talk to a lawyer or accountant when creating a business entity together

• Why communication in a business partnership is very similar to communication in a romantic relationship

If you’ve been listening to our podcast for a while, then you know how much I talk about how profit is underrated while revenue is overrated.

Going into 2020, I still stand by that sentiment. 

However, with the online business space changing so much with each passing year, what will it take to make your business as profitable as possible in 2020?

That’s why in this episode, we discuss:

• The key expenses all entrepreneurs will need to watch closely in 2020

• Why your business model is going to have a huge effect on how much profit you can expect

• The advantage our highly profitable clients have over the ones that struggle with their margins

• How your product strategy will become more important than ever

• Why doing “just enough” isn’t going to be enough to keep cash flow positive for the long haul

• How more competition is going to affect how much you have to spend to find new leads

• Why keeping up with your financial data is only going to become more important as you grow

I recently joined a Facebook group that one of our new clients hosts (a group for course creators), and one of the top posts was a Youtube video from an entrepreneur named Alex Becker (apparently he’s pretty well known, but I’m not familiar with him).

In this particular video, Alex shares his thoughts on why he thinks the online business industry is collapsing and why it’s going to get worse. 

I thought Alex made some good points, but I also feel it’s a bit extreme to say the online business world is collapsing.

We have a very unique view of the online business landscape because it’s our job to look at the numbers behind many of the more well-known online businesses in the space, so I wanted to share my thoughts on this topic and, hopefully, ease your mind about online entrepreneurship.

In this episode, we’ll discuss:

• The state of the online business space and why I don’t feel it’s collapsing

• The new challenges online business owners face with growing competition

• Why drop shippers and affiliate marketers are facing bigger challenges than course creators

• Why online businesses still have a major profit advantage over classic business models

• Why online business owners need to take their numbers more seriously than ever before to have long-term success

Everyone wants to grow their businesses. It’s kind of the point of entrepreneurship. 

We’re also always looking for easier ways to drive revenue for our businesses. If we’re going to make more sales, why not take the easiest route possible?

That’s where revenue sharing relationships can come into play.

It can seem like an easy way to create a new revenue stream or grow a revenue stream that already exists without having to do all the work yourself, but based on what we’ve seen with our clients, you need to be careful about what kind of agreement you’re getting into.

Unsure what I mean by this? Then you need to listen to this episode.

We discuss:

• What a revenue sharing partnership looks like

• Why profit sharing is preferred over revenue sharing

• Why revenue/profit sharing is usually not a fair deal for the business owner?

• Why having accurate and strong financial data s is so important for revenue/profit sharing partnerships

• Why we prefer classic business partnerships where revenue and risk are shared equally

It’s been a great year for Evolved Finance. 

Our business has grown, our clients’ businesses have grown, and our podcast has grown… so much growth! As we’ve grown, one challenge that has emerged is figuring out how to hire the right people to expand our team and scale our bookkeeping business.

Doing the books for so many online businesses, we also see patterns in how our clients are approaching their own growth and what investments they’re making as they look to the future.

For this episode, I wanted to:

• Reflect on what we’ve learned running our own business for 2019

• The challenges of adding new people to your team

• How Corey and I have grown as leaders in 2019

• The trends we’ve seen with our clients’ businesses

• What we predict 2020 will look like for online businesses as a whole

The more experience I get as an entrepreneur, the more I realize that I’m playing a weird and complicated game. And while it can be a frustrating and scary game, it can also be highly rewarding and lucrative if played properly. If we break down the core functions involved in running a business of any kind, then we’re actually playing two games at once. 

• Game #1 is all about generating revenue and income.

• Game #2 is all about managing and utilizing that revenue as effectively as possible. 

All entrepreneurs must stay focused on playing Game #1. If played poorly, the business will cease to exist.

What most people don’t realize, however, is that the better an entrepreneur becomes at playing Game #1, the more important being good at playing Game #2 becomes. To the point that paying attention to Game #2 becomes just as important as generating revenue. That’s why if you don’t learn how to play both games well, your business won’t fully achieve the results you want. 

That’s why in this episode, we discuss:

• Why most online businesses only focus on driving revenue for as long as they can (Game #1)

• Why so many entrepreneurs ignore and neglect managing their cash flow (Game #2)

• What happens if you ignore Game #2, even if you’re amazing at generating revenue

• Why consistent, predictable profitability is especially important for online business owners

• How good bookkeeping can help with Game #2

• What you need to get better at playing both games at once

I’m getting down to brass tacks this week.

We’re already into December, which means a new year is around the corner. And with the end of the old year, tax season is just around the corner. As we step into 2020, NOW is the time to start prepping for your 2019 taxes.

For this episode, I wanted to urge everyone listening to take action on their tax prep NOW:

• Why you should be reaching out to your current accountant NOW

• Why you need to get your books in order NOW

• Why you need to find a new accountant NOW if you don’t have one

• Why you won’t get the time and attention you need from your accountant if you don’t set up a meeting NOW

• Why you need to get the right financial professionals in your business NOW

Notice the key word here? If you missed it, it’s NOW! That’s because getting started NOW will save you so many headaches in 2020. Start your new year off right by closing the books on the old one NOW.

It’s getting close to the end of the year, which means business owners across the country are freaking out about their tax bills. 

When it comes to taxes, there is a misconception in the entrepreneur community that you should spend a bunch of money at the end of the year to reduce your tax bill. That somehow getting a bunch of new stuff you don’t need is better because you’re maximizing your deductions.

We are not a fan of this strategy at all, but for reasons that we think every online entrepreneur should understand.

So for today’s episode, we discuss:

• Why being prepared for your tax bill throughout the year can help you avoid having to create unneeded deductions

• Why unnecessary deductions are counterproductive to a successful online business that creates wealth for its owner

• How to never be surprised by your tax bill

• Why pulling expenses from January into December is a futile system that only hurts you the next year

• Why big tax bills are a sign of a successful business

Bookkeepers for entrepreneurs are a lot like mechanics for people that don’t know anything about cars. 

As a car owner, you trust that your mechanic is doing the work they say they’re doing because you don’t really have an easy way to double-check it.

Bookkeeping is ultimately pretty similar. Your bookkeeper tells you they’ve done the work each month, but you don’t know if it’s been done properly or if they’re even working on the right things at all. 

In our experience, the work we see other bookkeepers do is usually pretty disappointing. It’s not until the client works with us that they realize how little value they were getting from their previous bookkeeper’s efforts. 

That’s why in this episode, we discuss:

• The common issues business owners have with their bookkeepers

• The most important things your bookkeeper should be doing for your business

• Why the old idea of what a bookkeeper should be doing for your business has changed (and for the better!)

• Why we reconcile on a monthly basis and what that means for you

• Why our bookkeeping service at Evolved Finance  is significantly different from our competition’s

• How we format profit and loss statements to help you run your business

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