5 Ways to Take the Fear out of Finances for Entrepreneurs

I’m a late-blooming entrepreneur. For years I worked the system to remain a remote employee of a Fortune 500 company no matter where we were stationed in my spouse’s military journey. I thought that was my best option to maintain some type of career, keep my professional resume current, and bring in extra money to support our family.

In 2018, I began my own business. That change validated what I’d been feeling for years. 

I wanted more flexibility. I wanted to work on projects that really excited me. I wanted a profession that better fit my family’s lifestyle. But, starting a business means money. It means capital funding or “DIY- ing” the things that someone else had always taken care of for me in the corporate world. Consequently, when I jumped feet first into entrepreneurship, I wasn’t really prepared for money matters.

Nothing is scarier to this entrepreneur than the world of financial management. 

Don’t get me wrong - I’m top-notch with personal finances, and I’ve been effectively managing our family finances for years. But when it comes to business finances, my heart starts pumping and my palms get sweaty.

Money is the primary indicator for most business owners to measure whether you are a success story or a sad tale of failure. 

Finances make or break your ability to market and build your product or service. Finances allow you the opportunity to grow. But, there are a lot of rules. We joke about keeping receipts in a shoebox. Maybe you’ve even tried to master Quickbooks to keep track of spending and income. Then, the new year rolls around, and the thought of putting it all together for taxes saps my energy. I shudder at the mention of the IRS, and do you fear the word “audit” as much as I do?

I’m afraid I’m doing it wrong, and with finances doing it wrong means significant consequences. 

To handle my fear of entrepreneurship finance, I started researching best practices and realized that there is a no-nonsense, classic approach that I can implement. I’d love to share these 5 tips that took the fear out of my finances.

1. Make a budget. Seems simple, right?  But, only about half of small business owners make a budget, according to a survey by Clutch. The benefit of a budget is more than just money management. It indicates what you are prioritizing based on where your spending happens. It also sets profit goals and expectations that are realistic for your business. Budgeting forces small business owners to know their numbers, which also means knowing their limits and whether they have the capital to invest when they see an opportunity to grow.

2. Stick to your budget. Entrepreneurs are dreamers and doers, but making ourselves stick to a budget keeps us grounded in reality. Not exactly the most exciting part of being a business owner, but a necessary part of operational success. My best advice is that you find an app that helps with day-to-day tracking, organizing receipts, and creating a big picture snapshot so you know you are on track. Sticking to your budget ensures that you aren’t overspending. When an opportunity arises or an unexpected expense shows up, you will know the best way forward financially.

A budget should be a very fluid document. Don’t expect the budget you made for January 1 each year to be set in stone. In fact, you should be making adjustments based on the reality of your business finances each month. And that’s why tip #3 is so important!

3. Time-block a monthly finance meeting with yourself. Set this in stone. Each month, you need to review what’s happened over the past month with your business finances. Ask yourself these questions:

-Am I on track according to my budget for both profit and expenses?

-Are my budget numbers realistic?

-Where am I overspending?

-Where can I reduce spending?

-What might be coming up over the next month that could affect the budget?

Eventually, these questions become more intuitive and easier to answer. You’ll be able to spot trends in sales and identify issues in your client process that keeps your profit pipeline flowing.

4. Save for a rainy day + retirement. 

As an employee, I didn’t have to worry about retirement savings. I had my 401K and a stock investment with the company that I worked for. When I left that position and started my own business, all that went away.

Data from SCORE shows that ⅓ of self-employed persons do not have a retirement plan. Are you part of that 34%?  Dear fellow entrepreneur...nobody is saving up for your retirement except you.

There are many retirement plans you can invest in. Do your research and start putting away as much as you can. Remember this - it’s never too late to start and even starting with a small amount is better than not investing at all! Do what you can and build it as you go.

5. Reinvest in you. This is my favorite part of entrepreneurship finances. When I decide how to invest in my own business, I get to invest in myself because I am my business. Take a workshop or class that makes you a better person or leader or business owner. Join an organization like AMSE that gives you amazing networking and learning opportunities. Buy that program or app that will make your life just a little easier. I consider my reward system for a job well done with my business finances is an investment itself. 

Putting these 5 simple tips in place allowed me to feel more confident as a business owner in all financial matters.

Want one last tip?  When all else fails or if you are too uncomfortable handling your business finances on your own please look into professional support from a bookkeeper or accountant. There is a list of military spouse entrepreneurs specializing in finance in the MSEG guide that are ready, willing, and expertly able to assist! 

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Want even more tips and tricks to manage your finances?

Check out the Replays section of the AMSE Member Dashboard for classes from experts and professionals on how to manage your business finances successfully. There is a phenomenal class by AMSE Group Coach Joana Linares that will answer so many questions!

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Anna Larson is a 15-year military spouse, entrepreneur, and homeschool mom of 2 amazing kids + 1 fur baby.  She started her own business after nearly 20 years in marketing and program management.  NomadAbout offers comprehensive marketing solutions, website design, copywriting and social media management.  

She contributes monthly to a number of publications, hosts a weekly podcast and livestream business show called 15ish Minute Coffee Chat, sits on a board as the Director of Operations for a non-profit that offers support to cancer patients, and co-leads the Fort Hood chapter of the Association of Military Spouse Entrepreneurs.

In her spare time, she likes to travel the world and have amazing adventures with her family.  She can’t decide if exploring glaciers in Switzerland, standing in the shadow of Burg Khalifa, or zip lining at Victoria Falls is her favorite so far.  You can also find her with her nose in a book or sitting poolside for relaxation.

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What's Your Plan B? Part II of Estate Planning for Business

How many of us have thought about having a Plan B for our business if something unexpected happens?  

I brought up this issue and several other related questions in my interview with Lisa Landry, a Massachusetts and Rhode Island estate planning and business attorney. She had some helpful tips for milspouse entrepreneurs for business and life. Here is Part II of our discussion!

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Dawn: What about military spouses and their residence versus where their business is located? What if it’s not the same place?

Lisa: It gets much more complicated for people in the military because for business purposes generally if you're operating in a state, that's the state where the business is. That's why you have to update it, even though your personal domicile has not changed. If a person has a single-member LLC, that will be taxed in their estate in some cases. But if you have a multi-member LLC, it is considered personal property and not taxable for Massachusetts purposes. So there are ways to plan around it. But if you don't plan, it can end up being very expensive.

Dawn: In the last few years, they've changed the law to where it's not just the service member who can hold on to their home of record but the spouse, too. But it sounds like you can't just leave your business in the home of record. Do you have to register wherever you live?

Lisa: Yes, and that's where it grows confusing for people. It makes sense to think for example, ‘Oh, I'm a resident of New York; therefore, my business is a resident of New York.’ But it's just not how it works. In the military, you have more moves to consider.

Also, people have very different risk tolerance. I've had people who have said, ‘Somebody could sue me tomorrow, but I don't care,’ while others look at something with an objectively low risk of being sued who say, ‘I don't care if it's a low risk, I want to be protected.’

Dawn: When I went to set up my own small business, the standard was you not only protected yourself entity-wise, but you purchased liability insurance as well. I would think for military spouses that move, the insurance would be portable. Is there anything else that's specific to military spouse business owners that is important to know about? For example, they may start out as an active-duty spouse but later become retired spouse.

Lisa: So having general liability insurance and having an entity is kind of a two-prong way to approach it, which is what I recommend to most people. They cover different things in some ways and by having them both, you're fully protected. But I've seen situations where somebody only had insurance and basically had to pay for a lot themselves. 

Again and again, this is about risk tolerance. But for military spouses in particular, I think what's really important is to have a long-term plan. If you start now and you're moving around, make sure that you're registering as is appropriate in each location. Even if you don't have an entity, a lot of locations require that you register as doing business there. 

Where do I want this to bring me? Do I want it so that when my spouse is no longer active-duty, this supports us like a full time job? What is the plan? That is something that your attorney or tax advisor can't decide for you.

But if you know that going into it, the structure that we can make for you is so much better and less expensive because you don't have to update things constantly.

The other thing with moving around a lot is the importance of involving people that know about your business, which gets tricky. During moving or if something happens to you (like an extended illness or hospital stay), you need people who can handle your business operations.

It's a good business practice to have SOPs or something like an operations manual. I tell people that having an actual practical game plan in place helps tremendously. Seeing people who have it versus people who don't-it's such a big difference.

Dawn: The liability is a huge thing because if you didn't have ‘the veil’ separating your business from your personal self, it’s my understanding that a person could go after all your personal assets and possibly your spouse’s. I wonder, could they go after the military pension?

Lisa: I know the military does have some particular protections in place, so I'm not positive about how exactly it would go against it. But it is not worth the risk.

That's one of the things where having that operating agreement, really good books and records, not combining funds, etc. is so important. If you do those things, like an LLC or a Corporation, they will then try to pierce the corporate veil. A court could say that this business entity is really a sham, and then your personal assets are all at risk. 

The corporate structure that you form with your tax and legal personnel is the foundation. The operating agreement and your books and records are like the support of the house. All of the ongoing maintenance - filing your annual reports, paying your taxes, how you keep your bookkeeping - that's like building the rest of the house and filling it in. And that's why it's so important to maintain it.

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Lisa Ann established Landry Law, PLLC with a goal of utilizing proactive planning in a comprehensive, comfortable manner in which clients can confidently make decisions in individualized plans based upon their unique situation and goals. She wanted to offer an alternative to the often intimidating manner of traditional legal practice, designed around a “standard” client and goal, and establish a practice where all are welcome and supported. 

Lisa Ann grew up around business owners and tax and thought she might be interested in working with businesses in a different way. Attending Bentley University, her love of working with businesses grew, as did her interest in working with people around the world. During her time at Boston University School of Law, Lisa Ann studied at Bucerius Law School in Hamburg, Germany in a program focused on international business law. From her first job out of law school, she has focused on her selected practice areas and the overlap between them.

Licensed in Massachusetts and Rhode Island, Lisa Ann works with clients worldwide on trusts and estates, tax, and business law, which includes estate planning, trusts, probate administration, trust administration, tax planning, business establishment, business succession planning, ongoing business and tax advice, and more. Removing as many overwhelming, frightening, and daunting aspects of the client experience as she can, Lisa Ann enjoys the complexities that come in truly individualized legal work and in making the planning and administration accessible to all, including nontraditional clients. By focusing on often underserved communities with complex yet often misunderstood legal needs, Lisa Ann is able to use her skills to work with a variety of clients in areas including multijurisdictional work, special needs planning, childfree planning, nontraditional households, high net worth planning, nontraditional families, minors planning, business owner planning, charitable planning, people who move often, and more. 

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Dawn Torres-Gale is an Accredited Financial Counselor® and the Single Owner-Member of Our Money Goals, LLC. Our Money Goals mission is to help individuals and couples build their household assets through the identification of specific financial goals and the creation of detailed action plans in support of those goals.

In 2008 Ms. Torres-Gale was chosen by the Financial Industry Regulatory Authority (FINRA) Foundation to be part of a select group of military spouses who received FINRA sponsored training from the Association of Financial Counseling, Planning and Education to become an Accredited Financial Counselor®. Ms. Torres-Gale received her certification as an Accredited Financial Counselor® in February 2012.

Since becoming an AFC®, Ms. Torres-Gale has worked as a Personal Financial Counselor with the Massachusetts National Guard and the Naval Operational Support Center in Portland, Oregon. In 2018 she spent three months providing financial education and counseling services to soldiers stationed at US Army Garrison Wiesbaden in Germany.

Ms. Torres-Gale has a Bachelor of Arts degree in Political Science from San Francisco State University and a Master of Public Administration degree from the University of Hawaii, Manoa. Ms. Torres-Gale has served as a district court mediator in Honolulu, Hawaii from 2003-2005 and as an elected member of the Wachusett Regional School Committee representing the Town of Holden, Massachusetts from 2009-2012. She is the spouse of LCDR Christopher A. Gale, USCG (Ret.) and the mother of three daughters, ages 28, 18 and 15 yrs. old.

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Is a Career in Financial Services for You?

Got numbers?

If you tried to make a commercial about the financial services industry in the United States, this might be where you’d start.  It seems like anyone with a laptop and a calculator can call themselves a “financial consultant.”  However, if you need answers to your money questions that you can rely on, it’s vital that the person advising you is the real deal. As an entrepreneur and military spouse, this career may be just what you are looking for as well.

A true financial professional has both the education and the experience necessary to provide you with the specific guidance you need to accomplish your financial goals.  In order to provide a set of standards by which financial professionals can be measured, there are non-profit organizations that have formal financial accreditation programs. Earning an accreditation identifies a financial professional as someone who has completed the courses, exams, and work experience to fully and accurately advise clients on their personal or business finances.

Financial Coach

Financial Coaches’ work with clients is focused on financial education as well as positive behavior skill training. According to the National Financial Educators Council, “a Financial Coach’s role is to provide education, tools, resources, encouragement, and monitoring to help clients work toward developing positive habits that increase their financial well-being and motivation to improve their personal finances.” 

Financial coaching does not offer direct financial guidance or advice; rather they focus on empowering the client to do their own research and make their own informed decisions. They also help clients identify and work on any behavioral obstacles to reaching their financial goals.

To become a certified Financial Coach, you must complete specific educational and experience requirements as well as agree to follow a code of ethics. There are several organizations that offer certifications for Financial Coaching. One organization is Sage Financial Solutions which offers the Financial Fitness Coach® certification.  Another organization is the National Financial Educators Council which provides its own Financial Coach certification.

Accredited Financial Counselor®

Accredited Financial Counselors® provide client-specific financial guidance in areas such as spending and savings plans, debt repayment and credit remediation plans, pre-home mortgage application guidance, and investment and insurance education.  Accredited Financial Counselors® do not recommend or sell financial or insurance products (unless they have requisite separate licensing to do so).  Accredited Financial Counselors work in public, private, and non-profit sectors as well as in private practice. 

The Association for Financial Counseling, Planning and Education® (AFCPE®) is the accrediting organization for Accredited Financial Counselors®.  The accreditation program requires applicants to complete AFCPE® financial counseling coursework (or equivalent coursework from outside organizations), pass the AFC® exam, and then complete 1,000 hours of financial counseling experience.

The Financial Industry Regulatory Authority (FINRA) Investor Foundation is currently accepting applications through April 19 from military spouses for their annual fellowship which covers the fees for the AFC® accreditation program.

Certified Financial Planner®

Certified Financial Planners® (CFP®) create comprehensive financial plans, which include asset and liability management guidance, insurance needs analysis, and retirement, investment, tax, and estate planning. In addition to providing financial plans, some CFP® professionals are also licensed (separate from the accreditation) to sell financial or insurance products.

To earn the CFPⓡ designation, you must have a Bachelor's degree, complete the required coursework through a CFP Board registered program, and pass the CFP exam. You must also complete either 4,000 hours of client-facing work experience under the apprentice program or 6,000 hours of client-facing work experience under the regular program, agree to be a fiduciary, and submit to a background check by the CFP Board as part of the Ethics requirement.

The American College for Financial Services, Penn Mutual Center for Veterans Affairs offers a full-tuition scholarship for their CFP program for veterans and military spouses.

Each of the accreditations or certifications featured here will give you the knowledge and training you need to provide financial services for each of the different client bases. 

As an entrepreneur, you already know how important it is to know your customer, this is definitely true with having a financial service business. Providing credit and debt guidance is different than helping clients with wealth management. Therefore, it is important that before you apply to an accreditation program, you understand which type of program is best suited for your career or business interests as well as understanding the time and financial commitment that each program requires. 

Being a provider of financial services requires a significant level of trustworthiness and knowledge, so adding accreditation to your professional background can only strengthen your overall credibility!

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IMPORTANT: Being accredited does not by itself allow a financial professional to recommend or sell financial or insurance products.  There are specific state or federal licenses that a financial professional must have to lawfully recommend or sell investments or insurance products.

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Did you know that our Premium Members have access to high-touch Masterclasses from our many partners? This is just one of the many benefits of our Premium Membership - find out more and sign up today!

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Dawn Torres-Gale is an Accredited Financial Counselor® and the Single Owner-Member of Our Money Goals, LLC. Our Money Goals mission is to help individuals and couples build their household assets through the identification of specific financial goals and the creation of detailed action plans in support of those goals.

In 2008 Ms. Torres-Gale was chosen by the Financial Industry Regulatory Authority (FINRA) Foundation to be part of a select group of military spouses who received FINRA sponsored training from the Association of Financial Counseling, Planning and Education to become an Accredited Financial Counselor®. Ms. Torres-Gale received her certification as an Accredited Financial Counselor® in February 2012. Since becoming an AFC®, Ms. Torres-Gale has worked as a Personal Financial Counselor with the Massachusetts National Guard and the Naval Operational Support Center in Portland, Oregon. In 2018 she spent three months providing financial education and counseling services to soldiers stationed at US Army Garrison Wiesbaden in Germany.

Ms. Torres-Gale has a Bachelor of Arts degree in Political Science from San Francisco State University and a Master of Public Administration degree from the University of Hawaii, Manoa. Ms. Torres-Gale has served as a district court mediator in Honolulu, Hawaii from 2003-2005 and as an elected member of the Wachusett Regional School Committee representing the Town of Holden, Massachusetts from 2009-2012. She is the spouse of LCDR Christopher A. Gale, USCG (Ret.), and the mother of three daughters, ages 28, 18, and 15 yrs. old.

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Retirement Plan Options For Entrepreneurs

Whether you are just starting up or you are deep in the trenches of a growing business, the day to day operations of any business can be all-consuming.  With a significant amount of time and effort needed to manage all the moving parts of a successful business, it is understandable that you might not yet be thinking about your retirement. 

If this sounds like you, just know you are not alone.

In a recent report by the Federal Reserve, it was noted that one-fourth of all adults surveyed had no retirement savings whatsoever and of those remaining three-fourths of surveyed adults who had retirement savings, 4 out of 10 adults did not feel confident that their retirement savings were going to be enough for their future needs.

When people discuss specific retirement plans, they usually think of employer-sponsored plans like pensions, 401(k)s, and profit-sharing plans. 

However, what if you are both the employer and the only employee? Where can you save for retirement? 

There are several retirement plan options for self-employed people, but three of the simplest to set up and manage are SIMPLE IRA, SEP IRA, and SOLO 401(K) accounts.

A SEP (Simplified Employee Pension) IRA allows you as an employer to contribute the lesser of either $57,000 (for 2020) annually or 25% of your annual net earnings from self-employment (net earnings are reached after you deduct from your gross self-employment earnings, the amount for one-half of self-employment tax paid and your SEP contribution amount) with $285,000 as of the annual maximum earnings (for 2020).

Note: employees are not allowed to self-contribute to the SEP IRA, and there are no catch-up contributions allowed for employees aged 50 years and older.

A SIMPLE (Savings Incentive Match for Employees) IRA requires that you wear your employee and employer hat when choosing this plan. The reason for this is that in addition to voluntary employee contributions, as an employer in a SIMPLE IRA, you are required to match your employee contribution by three percent of annual employee compensation for those employees who contribute to the IRA or contribute two percent of your annual employee compensation to all employees regardless of whether they contribute or not. The annual contribution limit is $13,500 or $16,500 if the employee is 50 years old or over (for 2020).

A SOLO 401(k) is designed for small businesses with no employees other than the business owner. The maximum annual contribution limit is the same as the SEP IRA except that the SOLO 401(k) does allow for annual catch-up contributions of $6,000 (for 2020). There is no required annual reporting to the IRS until the SOLO 401(k) balance reaches $250,000. SOLO 401(k) plans have both Traditional and Roth options just like employer 401(k) plans so you can make your contributions from pre-tax or post-tax earnings.

In comparison to the SEP IRA, SIMPLE IRA or SOLO 401(k), a Traditional or Roth IRA allows maximum annual contributions of only $6,500 or $7,500 if you are 50 years old or older.  With the higher contribution limits of the self-employed retirement plans, you can save and potentially grow more of your earned income than you would with a Traditional or Roth IRA. You can open a SEP IRA, SIMPLE IRA, or SOLO 401 (k) through a bank or investment brokerage firm.

This table helps breakdown each plan:

So now that you know what’s available in the marketplace, how do you decide which plan is right for you? 

You will first need to ask yourself some preliminary questions such as:

• How much income are you going to need in retirement? 

• Is it better for you to have the tax benefits of your contributions now or later when you are retired? 

• What amount of your current self-employment income can you contribute towards your retirement? 

• Do you feel comfortable setting up a plan yourself and picking your own investments or would you want to have an investment company or broker do it for you? 

Once you have made some initial determinations, you can choose to either do more research on your own. These articles from Investopedia and Nerd Wallet may be helpful as well as the retirement planning calculators at Bankrate.  The Internal Revenue Service (IRS) also offers general guidance on choosing a retirement plan and an educational video on SEP and SIMPLE plans) or you can reach out to a fiduciary fee-only financial planner to help guide you. If you don’t already have someone in mind, you can find a list of fee-only planners and advisors at  XY Planning Network or The National Association of Personal Financial Advisors. 

Keep in mind that picking a self-employed retirement plan is only the first step.  You will also need to stay in compliance with the rules and reporting for your plan as long as you have it.  You can find more information about compliance for self-employed retirement plans through the IRS or through your investment company or advisor.

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Dawn Torres-Gale is an Accredited Financial Counselor® and the Single Owner-Member of Our Money Goals, LLC. Our Money Goals mission is to help individuals and couples build their household assets through the identification of specific financial goals and the creation of detailed action plans in support of those goals.

In 2008 Ms. Torres-Gale was chosen by the Financial Industry Regulatory Authority (FINRA) Foundation to be part of a select group of military spouses who received FINRA sponsored training from the Association of Financial Counseling, Planning, and Education to become an Accredited Financial Counselor®. Ms. Torres-Gale received her certification as an Accredited Financial Counselor® in February 2012. Since becoming an AFC®, Ms. Torres-Gale has worked as a Personal Financial Counselor with the Massachusetts National Guard and the Naval Operational Support Center in Portland, Oregon. In 2018 she spent three months providing financial education and counseling services to soldiers stationed at US Army Garrison Wiesbaden in Germany.

Ms. Torres-Gale has a Bachelor of Arts degree in Political Science from San Francisco State University and a Master of Public Administration degree from the University of Hawaii, Manoa. Ms. Torres-Gale has served as a district court mediator in Honolulu, Hawaii from 2003-2005 and as an elected member of the Wachusett Regional School Committee representing the Town of Holden, Massachusetts from 2009-2012. She is the spouse of LCDR Christopher A. Gale, USCG (Ret.) and the mother of three daughters, ages 28, 18, and 15 yrs. old.

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