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Financial Resolve

We will give you some handy tips and tricks to build up your financial resolve, which you will need for your business to become a success.
So now I want to take a look at some challenges that I’ve seen in entrepreneurs over many years of working with entrepreneurs. And I want to make sure, do you see this in yourself? And if you do, let me give you some skills and some ideas on how to manage against it. So the first challenge is lack of knowledge or no financial planning skills at all. So people who start businesses tend to have skills in the area of their expertise, so what their business is actually in. It might be cooking, art, fitness, law, or even tech. But not finance. Most people don’t start financial businesses necessarily.
So this is kind of normal that you don’t come in with a financial background. You’re just like every other entrepreneur. Here’s the good news. Almost all financial planning is pretty standardised, that meaning you don’t reinvent the wheel here. And it’s pretty easy to learn as you get used to it. And by the way, you can always adjust. Nothing is set in stone, so don’t worry so much about, oh my goodness, if I get it wrong the first time it’s locked in. It’s locked in, and people are going to hold me to it. Because you know what? It’s better just to adjust as your business starts running.
And a couple other things that you can do– hire a consultant that can guide you through the process about building your models. If you do have a very complex revenue model or financial model, you can hire a consultant to get through this. But work with them. I want to make sure you participate in the process like I’ve been saying and learn alongside those professionals. That’s going to be the most important thing. Now the second challenge is overly optimistic. By definition, entrepreneurs are overly optimistic about their businesses. So as a rule of thumb, any projects that you encounter or any business that you start always takes twice as long and costs twice as much as you originally estimated.
So just keep that in mind. I’ve actually lived by that rule, and I kind of– every time I’m planning something and I budget for something, I always kind of double it in my head and I say it’s going to take twice as long. It’s just because that’s been my experience over 25 years in business. So believe it or not, this absolutely defines me. I am the quintessential entrepreneur with all the bad traits– some of the good traits, but all the bad traits, which is I’m overly optimistic. It’s funny that when I had at MarketLive when I used to work with my CFO, I would always see the glass as half full.
I would always see all this rosiness– oh, everything’s great. And my CFO would see everything– that’s a glass that’s half empty. And I just could not understand. And we used to fight over it– well, we didn’t fight, but we kind of fought– over and over again about why don’t you see in my perspective. I’ve got to tell you. It was a very healthy balance, and I’m really good friends with my former CFO today because we understood each other. He understood my optimism, and I tried to understand, although it was hard, his pessimism. Together we balanced it out. So I’ve got some solutions to this problem of being overly optimistic because I’ve lived with it all my life.
First of all, fight the urge by putting in some extra padding in your estimates. Don’t go crazy now, but maybe it’s 1 and 1/2 x of what you were thinking of putting into. Next I want you to understand the problems that could arise in your business so that you can understand them and put them into your financials or at least the probability that something bad might happen so you’re not always optimistic. Continually revise. This is really important because I want to make sure that you get into this habit of, as your business is growing and as you’re getting feedback about your business, conditions change. So make sure that your financial plan changes along with those conditions.
Run your plan by somebody who is not an entrepreneur, who is not necessarily overly optimistic. Maybe it’s another financial person that you know. Maybe somebody– you know that person that always has their finances under control and is maybe a little pessimistic. That’s more like my CFO. You might want to check that out. And finally, make sure you keep an open mind, especially if you know you’re an optimistic-type person. You’ve got to consider this. Or potentially the same goes for a pessimistic-type person. You just do the opposite. All right, our third challenge I call ready, fire, aim. This is also known as lack of planning. So entrepreneurs are notorious for ready, fire, aim.
What they do is they ready themselves, they fire, and then they go, ah, maybe I should do some planning after they’ve already executed, right? So we want to make sure this doesn’t happen to you as well. And this happens when you’re actually building your financial plan, you forget to aim accordingly. Some entrepreneurs might have the urge to just scribble their financials on the back of a napkin, right? That’s probably not a good strategy. I would say if that’s you, then you might actually want to consider not starting a business because you’re just not serious enough about financial planning. But I don’t believe that. I think that you can get very serious about financial planning.
So, a couple things I want to do to get you to not ready, fire, aim but ready, aim, fire. Assess the type of person that you are so that you can prevent this from happening. If you know that you’re– you kind of just fly off and you kind of do things at will and at random, which is one of the great things about an entrepreneur– they just kind of do things that pop into their head– that’s fine. But then understand what you’re doing and then compensate according for it. So don’t allow yourself to start a business or spend a bunch of money on product development until you have your financial set in place.
Make sure you do your financials first before you start investing in money. So surround yourself with people that can actually spot this in you and can catch you so that you make sure that you take the time to plan things out before you actually execute them. Force yourself to review your financials monthly. Just create that discipline in your business going forward so you can avoid this lack of planning situation that you can find yourself in. So the last challenge I want to talk about is financial fear. Many entrepreneurs have fear of dealing with a financial planner– anything about financials in their company at all. And I’ve seen this over and over and over again with the entrepreneurs that I mentor.
So I want to ask you some questions here. First, do you find yourself avoiding this topic completely? Anything that deals with financials you avoid. Do you push off financial planning to do other things? Do you hate dealing with finances in your personal life? I don’t like finances. I can tell you personally. I try to avoid these sometimes as well. But I’ve had to conquer my fear over running a business for the last 25 years. So you might have these issues too. Don’t worry, but I want to get– I want you to acknowledge them so that we can resolve them, right? There’s nothing bad about having this fear.
So I want you to look inside yourself and figure out where the fear comes from. Here’s a couple of ideas. First, lack of knowledge– you might actually have a lack of knowledge, and that’s creating the fear. You don’t really understand financials. Another is that you have a fear of facing the facts. You’re kind of worried about, god, you know, maybe my business isn’t feasible after all, and I don’t want to look at my financials. I don’t want to know that my business really isn’t going to work. Or maybe I thought I had more money than I thought, right? And that’s not good.
I don’t want to dig into things and realise something that’s scary or that I have to deal with, so I just push it off. Also there are deep– a lot of people have deep-seeded money issues. They have anxiety around dealing with money. This comes from early childhood, where– or it comes from your parents and it’s just embedded in who you are. It’s embedded in your DNA. It’s OK because we can get around it. Don’t worry. Or you have a fear of losing money. A lot of us have a fear of losing or going backwards. So again, we avoid it. We just ignore it, right?

We will give you some handy tips and tricks to build up your financial resolve, which you will need for your business to become a success.

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Complete Guide to Financial Planning for Your Business

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