Financial Tips For Getting Through Your First Year Of Business (that no one is talking about!)
We just hit the one year mark in our business and I can confidently say we are not the same people we were a year ago. As much as I knew we were capable of the entrepreneur path and even quite comfortable with the riskiness of it, you truly never know until you are swimming in the deep end. We grew financially and emotionally during the process and absolutely felt like we were pushed to our max at points. I have read a million and one blog posts talking about what people learned in their first year of business, yet I felt like the most practical advice we learned for ourselves wasn’t in any of these posts.
Last year, my husband and I started a consulting company after he got laid off for the second and a half time in 5 years. The half is for a job at a startup where he was only a month in before they realized they didn’t have the budget to support him full time. We were both feeling discouraged and frustrated. At the time, he was our only source of income, and it was a lot of pressure every time he would be faced with a lay off and having to find a new job, knowing its a process that can take months. Every time he started to get adjusted in a new job and we felt good about the stability and routine of it, the rug was pulled from beneath our feet with no notice. We grew quite resentful at times at how much we relied on these jobs and how little it’d seem to take to let him go.
After getting laid off for the 3rd time (2.5), we were having more serious conversations about what our next steps would look like. When we started discussing the idea of starting a business and him becoming an independent consultant in his field, it was super exciting. It felt amazing to feel like we had control over our futures and remove the financial ceiling of a salary. We dove in head first.
There is plenty that we learned in our first year of business. If I were to give a guide to anyone thinking about starting a business or in the thick of the first year, these are the financial tips and words of advice I would give:
Have a Savings
For us, this was crucial since it would be the income we relied on. We needed a savings to fall back on and give us a sense of safety when up against the unknowns of a business. We had an amount that felt good for us with our cost of living. What I learned though, is that we needed more than we had. As soon as we started, I immediately felt super protective of our savings. I realized that even though we had this money there for months that we lower, I didn’t actually want to touch it. We also budgeted for the bare minimum amount of spending in a month, not an amount that is realistic for our sanity. We had our first paying client, but they were not paying enough to support all of our spending for a month, which meant we were pulling from our savings and this made me nervous.
This nervous energy wasn’t good for the risk taking we were wanting to do and we found ourselves in the loop of trying to get quick business. In hindsight, I realize how much room we had to grow still with this way of thinking. It kept us physically and mentally inward instead of opening and expanding into new avenues and options.
We had about 3 full months of savings to rely on and we realistically needed 6months to 1 year to enjoy the first year more. This is with the consideration that it was our only income for the foreseeable future.
Get used to not having guaranteed income
I wish I knew that the feeling of not having guaranteed income is a feeling that will be constant, I’m assuming, for the the whole life of the business. But you do get more comfortable with it and it doesn’t rock you as much. You learn to trust yourself and realize how capable you are of being creative in getting more business. You learn how much you actually need in savings to feel comfortable taking risks or seeing dips in income. At one point I realized, “this feeling isn’t going to go away if our clients paid us more, it is up to us to adjust and take the right actions for us to feel comfortable with this reality”. Once I had this perspective shift, business became so much easier and less strain on our conversations. We shifted our communication from “what if we don’t have business next month?” to “how do we want to tackle this?”.
Get a 0% APR for 12+ months business credit card
This was a huge help in adjusting to the lack of certainty in income when growing our business. The truth is, our business has quite a long customer acquisition time, one we hope to shorten, but building our network and the trust within the network takes time and shouldn’t be rushed. This means lots of networking events, coffees, and lunches. It felt really difficult to spend money on these things knowing we were already at our max for spending, but also knowing these relationships need to be strengthened to strengthen our business. This pressure was relieved when we came across a 0% APR for 12 month business credit card. We were eligible out of the gate and it made it so much easier to say yes to opportunities within our network when we knew we had the extra time to pay it off. This ended up helping us build up our savings again and made it even easier to continue with the business. We can now more confidently pay off the credit card on our time before the 1 year mark when APR increases.
This would also be helpful if you had a course or certification you wanted to invest in for your business but were nervous about the initial investment. Having the flexibility and the time to build up your business before getting hit with interest can relieve a lot of the stress that comes with starting a business.
Get part time work
Even though there is an endless to do list, if you are anything like us, breaking up your day with other part time work helps you feel like you are accomplishing something, and brings in some extra income if it is a slower time. Part time work for us looked like Upwork jobs, and relying on past skills like nannying and teaching swimming. There are many days in business where you ask yourself if its even working, breaking up these longer days with other work not only gets your mind off of it for second, it gives you momentum to get back in the ring and also alleviates some financial pressure as well. You are likely going to be better off taking some part time work then trying to muscle through everyday in your business to pay the bills when you feel stuck. Take the pressure off yourself so you can clear your mind, taking a part time job does not mean you have failed or aren’t taking things seriously enough!
If you have the itch to act on a business idea you have been having, you don’t want money to stop you. But at the same time, it is probably one of the biggest considerations you need to take into account. These three financial tips will help you get through your first year of business, just like it did for us. Prepare yourself and set yourself up for the most success in your business. There is so much that first year business owners go through emotionally, adding the stress of finances can wreak havoc on your mental health and confidence in yourself. It’s about mitigating and removing obstacles where possible. Lay your business on a sturdy foundation with your own safety net so your ideas and efforts have the room they need to grow!
