Bank: An Outsider's Guide to Managing Small Business Finance Without Losing Your Shirt or Your Mind

By Donna Stewart

For anyone considering launching a small business (no matter how small) or for current entrepreneurs seeking a better experience, this book is both inspiring and eye-opening. Donna Stewart doesn’t sugarcoat the challenges you’ll face as she shows you how to be savvy and disciplined in your money skills. But more importantly, she shows you how to maintain your integrity and joy as you pour yourself into your startup. There is a lot of humanity tucked in this little business book that takes into account your business's effect on your community, on your family, and on your own life as a multi-faceted human being.

• Language: English
• Publisher: BookBaby
• Release date: Sep 1, 2015
• ISBN: 9780996527026

Donna Stewart

Donna Stewart was born in Memphis, Tennessee where she soaked up the best of the South, before heading to Colorado, where she actually grew up--in every sense of the words. In Colorado, she learned to combine her Southern-born love of art, music, creativity, and writing with wild, outdoor adventures. Donna loves rock climbing, mountain biking, snowboarding, hiking...if it's done outside, she's probably given it a whirl. She also loves punk rock, mozart, and yoga...sometimes all at the same time. An absolute knowledge junkie, Stewart blends research, personal experience and humor into her writing.

Book preview

Conclusion

PREFACE

Bank (noun):

1. a mound, pile or ridge raised above the surrounding level

2. a steep slope

3. a protective or cushioning rim or piece

Bank (verb):

1. to heap or pile in a bank

2. to bounce off a surface into or toward a goal

Bank (noun):

1. an establishment for the custody, loan, exchange, or issue of money, for the extension of credit, and for facilitating the transmission of funds

2. a supply of something held in reserves

Bank (verb):

1. to deposit money or have an account in a bank

2. to depend or rely on

Source: Merriam-Webster.com

Bank. Such a beautiful, useful, versatile word. As I write this book, I marvel at how appropriate the word is to the life of an entrepreneur. We work with all of these definitions of bank. We work to create a cushion that protects ourselves and our businesses. We scramble up steep slopes, and rely on our skills, our wits, and our luck. Bank is indeed the right word to put on the cover of a book about money management for small business entrepreneurs.

Why did I write this book when there are so many books about finance already?

Many books about personal finance assume you bring home the same amount of money every week and have relatively fixed expenses. Those books assure you that all that stands between you and financial security is the discipline to stick to a budget and the willingness to work a little harder.

That advice falls short when you are self-employed, work on a temporary or contract basis, or otherwise have wild fluctuations in your income and expenses. You can write a budget that says you will put $200 toward the credit card debt every month, but what happens when this month no accounts were paid and you can’t send the money? The books I have read on personal money management fail to address the needs of people whose weekly or monthly income can fluctuate by hundreds, or even thousands of dollars.

Most small business books miss the mark because they are focused on the nuts and bolts of building a business. They cover things like advertising, networking, hiring employees, attracting customers and managing growth. They don’t usually explain how to make sure you have enough money to cover the rent, and how not to be blindsided by the natural ebbs and flows in revenue.

When I talk about the struggles of money management, my entrepreneur friends respond with the laughter of recognition, and many give a deep sigh. We all had to learn as we went, trying, failing, then trying and succeeding. Those lessons of business building cut across fields and industries, and while the particulars may vary, the concepts stay the same.

I wrote this book for a group whose needs are seldom addressed: business owners who are themselves the bulk of the business. They, with a handful of employees or no help at all, run the entire business themselves. They are hairdressers, counselors, mechanics, bakers, day care providers, dog walkers, cafe owners, artists, antique store owners, acupuncturists, bike mechanics, and all sorts of other people who love doing something and are having a go at earning a living doing it. If only loving what you do was enough! Alas, it isn’t, and this book is an attempt to fill in some of those gaps.

In this book, you will get a quick review of money basics if you need it, the differences between regular and irregular earning, and tools to determine your financial temperament. I will go over essential money skills for entrepreneurs, the life and money goals of a business, common money mistakes, and how to respond to financial pitfalls.

Throughout the book you will find suggested exercises designed to bring money management concepts down to your specific situation. I encourage you to try them, and hope you find them valuable. I have also included a few interviews with entrepreneurs so you can hear some different perspectives.

Onward!

CHAPTER 1

Case in point: Mine

This is the story of my transition from regular to irregular earning. Throughout the process of building an acupuncture practice, then making the decision to get smaller, moving the clinic and weathering the recession, I had to deal with my own panic over my constantly shifting financial fortunes. It has been a crazy journey, but I know without doubt that I am cut out for self-employment. I say yes to all the wild income fluctuations, intense pressure, incessant decision-making and periodic doubt in trade for the ultimate personal authority, empowerment, freedom and satisfaction.

My transition started when I lost my job as a physical therapist after the government changed how it pays for rehabilitation services for seniors in nursing homes. Throughout the nursing home industry, about a third of us in rehabilitation lost our jobs.

I found another job pretty quickly, but I was a contractor rather than an employee. The pay was fair, so I wasn’t really hurting. Still, the whole thing shook me up. The rehab job market wasn’t going to recover for at least five years, so I was locked in where I was. Generally disliking confinement, I started to think about doing something else. I decided to go to acupuncture school. After graduating, I took a part-time job doing physical therapy while I worked on opening my acupuncture clinic and building my practice.

I started off in a commercial space in my neighborhood. I didn’t know it at the time, but I was really blessed by how quickly the business took off. I kept my part-time job for nearly three years to keep some supplemental income flowing. Finally, I had to concede that the business was supporting me, I was really tired, and I wanted my free time back. I quit my hospital job and was flying completely solo for the first time in my life.

Things were cruising right along (meaning periods of exhilaration punctuated with periods of total panic) when a significant confluence of events occurred. One, my practice was getting really busy. I was working hard, seeing lots of patients, and still keeping up on administrative tasks, housekeeping, laundry, and everything else that goes into running a clinic. It was starting to make me cranky. I am someone who needs some time for things like lying on the couch, watching cat videos, taking a walk, or just wasting time.

The second thing that happened is I got a fairly sizable rent increase, in addition to all the rent increases I had every year since taking the space—the increases were built into the lease. The landlord said he said he would be happy to renegotiate if I would sign on for ten years. I like my freedom, so a ten-year lease was not appealing.

I was at a crossroads. I could no longer support the size of my growing business in a healthy manner, and I was annoyed by the prospect of ever-increasing rent. I either needed to commit to the space, negotiate that longterm lease, and hire some office help, or I needed to leave the space, get smaller, and be a one woman shop. I chose option two.

Moving my business is one of the scariest things I have ever done. I had to buy a house, and that happened right before the market crashed. I had to shut the door on the high-volume, high-revenue practice model to which so many of my colleagues aspire. I bought a house that was too expensive for me on the faith that my business could pay for it, and I moved the clinic and myself into it. It was absolutely the right decision, although at the time I felt like I had jumped off a cliff.

The next challenge was the recession, which resulted in a 40 percent reduction in business, and a slow recovery. I held on, essentially going through a second start-up phase of rebuilding the practice. Things are fine now, but good grief, that was hard.

I come from a background of responsibility, frugality, and conservative financial choices. Starting my own business is contrary to the family financial principles. I had no family role models for self-employment, so I had to draw on my personal experiences and the advice of kind mentors.

I am a business outsider. I never went to business school, I don’t have an MBA, and that is just the same as many of the people out there running businesses. I believe what qualifies me to write this book is all of my experiences, combined with the lessons I’ve learned from my teachers, mentors and peers. I wish we all spoke more openly about the challenges of irregular income, and this book is my contribution to that wish. I will tell you what I have learned about how to work your money when it flows not like a river, but in fits, starts, and gushes.

CHAPTER 2

Money can’t buy happiness? I call bullshit

Think about it. If you are behind on rent, can’t buy groceries until Friday, and can’t remember the last time you had something nice, don’t you think some money could buy some happiness? I admit, happy and sour people occur across the entire spectrum of wealth, and if you are fundamentally unhappy on the inside, money can’t change that. But if constant stress from money prevents you from experiencing and expressing your joyful nature and innate happiness, then get your hands on some money and you can absolutely buy happiness!

What is the meaning of money?

First, money is a tool. Money is something you use to get work done, any kind of work, such as feeding your family, or fixing your house, or attending a meeting. For many basic, modern tasks, money is a very useful tool. Money can also change your life for the better. For example, if you want to change careers, money is a tool that will get you through school. If you never have enough money, you will find in many situations you are lacking the specific tool you require to accomplish something you want or need.

Money also represents freedom. I have often reflected, All I really need is plenty of money and a passport. The more money you have, the more choices you have, and hence, the more freedom you enjoy. If I am wealthy, for example, I can choose from any number of living situations. Freedom is very important to me, so I place a high priority on having enough money to feel like I have some choices. Even if I choose to change nothing, it matters a lot to me that if I wanted to, I could.

Money represents value. This is its original meaning. We use money to symbolically represent the value of something. If I agree to pay you $100,000 for your vintage car, I am making a statement that I believe your car to be very valuable. If you try to sell me a broken appliance for $5 and I offer you 25 cents, I am saying I disagree with you about the value of the appliance. Thus, money represents a communication of value. When people pay you for your product or service, they are acknowledging and agreeing with the value you have placed on it (even if grudgingly). Money allows for a swift, continuous circuit of value that permits the existence of our modern economy.

Money is a vehicle for self-expression. Money can help us wear clothes that feel right, drive the car we feel fits us best, and engage in personal development. After basic needs and obligations are met, this function of money becomes important in attaining happiness.

Money is fun. That new gadget? That trek in Nepal? The rubber boots your daughter adores? All brought to you by money. Money is fun!

Those functions of money sound like pretty good ways to increase happiness to me! Carefully making, spending and growing your money can indeed increase your happiness.

Exercise: Take a few minutes to reflect and write down