Welcome to episode 171 of Profit Boss® Radio! In this episode, we’re talking to you business owners about how you can reap the rewards of your blood, sweat, and tears.
I see so many entrepreneurs attempt to successfully manage their money in business to the detriment of their personal net worth and financial future. It’s very easy to have millions of dollars in revenue slip through your fingers when you fail to capture it, make it yours, and put it in your name.
So, are you ready to make a plan to get what you want, take back your power when it comes to money, and figure out the difference between wanting and achieving financial success? If so, today’s episode of Profit Boss® Radio is for you!
PS: After you listen to today’s episode, I want you to go check out my FREE, on-demand video training (only available until October 15, 2020). In it, I expand further on how you as a business owner can make more of your money and share with you a prelude and invitation to participate in my upcoming Wealth MultiplierSM Course. Simply visit HilaryHendershott.com/Wealth to find out more.
Here’s what you’ll find out in this week’s episode of Profit Boss® Radio
- Why businesses are hungry and selfish for your time and your money – and why it’s so hard to build a sustainable business that helps you achieve massive personal wealth.
- How amassing and paying off $300,000 in uncollateralized debt helped me pave my own road to long-term financial success.
- Why operating inside limiting beliefs stops you from growing your revenue and your business.
- How not having a plan for money sets business owners up for failure – and how having a solid plan stops me from getting worried about this year despite the fact that my household and business income is down significantly.
Resources and Related Profit Boss® Content
Call for Listener Stories
Hey Profit Boss® Radio listeners! If you reach a financial goal you’re proud of, tell me about it! I will continue to share listener win stories throughout 2019. Remember, the Profit Boss® community is here to support you and that includes celebrating with you when you accomplish something incredible.
- If you crush a specific financial goal, I want to hear from you.
- If you’re thankful for something that has happened in your financial life or career, I want to hear from you.
- If you are making big financial or career plans, I want to hear from you!
Your financial success is possible and so many of you are already making that a reality! So, don’t keep your wins to yourself! Share them with me so that I can air them throughout the year on Profit Boss® Radio. Email your audio clip to [email protected]. And we’ll be in touch if we plan to air your story. Thanks, ladies!
And let’s not forget that this show is powered by you and your stories and questions. Every month I’ll be doing an #AskHilary episode where I answer listener financial questions.
- So, what’s that top of mind money question that’s been pinging around in your brain?
- Where have you been stopped?
- What have you been arguing with your spouse or significant other about?
- What tip or tool aren’t you sure about?
- Do you have questions about saving? Spending? Budgeting? Investing?
Pick up your mobile phone right now. Yes, right now. And open your voice recorder app. Yep, go ahead and open that app and record yourself asking me that question. Just say your name, first name only is okay, and then what city you’re from, and then ask away. Anything you want to ask. And once you’re done recording, export that beautiful little recording and email it to [email protected]. I can’t wait to hear your questions!
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Hilary Hendershott: Hey, profit boss. Today’s episode is called 3 Money Mistakes Business Owners Should Stop Making. I haven’t spoken directly to my business owner listeners in a while so here we go. This is for you. I’m really committed that hardworking business owners actually get to reap the rewards of your blood, sweat, and tears. So, today we’re going to talk about some of the ways I see people for going successful money management while they’re running their business to, I think, the detriment of your personal net worth, meaning the detriment of your future, honestly. I’m sure you know by now that you can have millions of dollars slipped through your fingers in the form of revenue but if you don’t capture it as personal net worth, it’s not good for much. You got to lock it up, make it yours, put it in your name. This explains the stories of people that you’ve heard make a mountain of money only to find themselves really destitute just a few years later.
Let’s step back for a second. First, I have to say, you know, I have notes in front of me when I podcast, when I record these episodes, and this is the first time I’ve had to put on my reading glasses. So, my 44th birthday is nine days from today, as I record this, eight days. October 1st is my 44th birthday. And this is the first time I’ve had to wear glasses. So, I did all right. I did all right. But it’s official. It’s official. My eyes are going downhill. I have gray roots. It’s happening. It’s happening. There you go, profit boss. And second, you may have noticed a new beginning and a new podcast artwork for this show in your podcast player. We went from dark purple to more whitespace but most importantly, I actually changed the title of the show. Well, I sort of reverted back. Last year my idea was to speak directly to folks who were close to financial independence or retirement. The word retirement is a really valuable keyword on the interwebs so I put it in the title of my show. I thought this was marketing genius. So, we were The Retirement Years on Profit Boss Radio and we started talking about some of the more technical retirement and financial planning topics, such as how to plan for retirement, caring for aging parents, and the like.
And while many of those shows I enjoyed, the truth is I just kept feeling myself coming back to the more empowerment-focused topics. Yes, I am a retirement planning professional. And honestly, what lights me up about that is stewarding my clients through some of the most financially precarious years of their life. So, yes, while I’ve mastered my technical subject matters, it’s the value of the subject matter that I actually love. I found I kept wanting to do interviews with people who have overcome financial adversity. And that really is my voice here. That is why I want to pick up the microphone and talk. When clients are in my office, I can talk about tax minimization and Social Security claiming strategies all day. But on this show, I wanted more freedom of expression to do some of the more human kinds of conversations. So, I’m pivoting back. I removed the phrase, The Retirement Years, and we are now once again going back to our roots as Profit Boss Radio. I think it’s a perfect time for us to change back. After all, what you need now during this crazy year 2020 is more inspiration, more encouragement, and more stories from the trenches to encourage you to overcome your obstacles and achieve your financial goals.
Let’s get to the meat of today’s discussion and I’m not going to be shy here. After you listen to today’s episode, I actually want you to get off your podcast player and go check out my newest, totally free, on-demand video training where I’m going to more fully develop today’s subject matter and go even beyond to help you, if you’re a business owner, make more of your money. So, if you’d like to do that now, you can go to the show notes for today’s episode at HilaryHendershott.com/171 or just go to HilaryHendershott.com/Wealth. And in exchange for your name and email address, I’ll deliver right to your inbox a beautiful video training called 7 Ways Business Owners Can Transform Revenues Into Personal Wealth. And inside that training is a prelude to and an invitation to join my wealth coaching program this year. In the past, that program has been called the 50K Wealth Multiplier Experience for various reasons. And we all know that there have been lots of not so integrous people in the financial space and to make specific promises is something that’s pretty highly regulated. And so, some folks recommended to me that I remove the 50K.
However, it is still my intention that we raise your net worth by at least $50,000 over a 24-month trajectory. So, for your investment, you get back $50,000 of personal net worth. Not only that, but the skills to grow your net worth on a consistent basis for the rest of your life. That program is called The Wealth Multiplayer Course this year. You can find out all about it in the training. But first, just sit back and relax, get your vacuum or do your dishes or you’re on your walk or your hike. Not many of you are commuting in your car. Certainly, none of you are commuting on a train right now. But whatever you’re doing, just sit back and relax and let’s get started with today’s content.
First of all, if you’re a business owner, you know that business ownership can really feel like a treadmill. Your business is a hungry, selfish entity, and it eats two things: time and money. If you’re the only employee of your business, that’s your time, and either your money or your business revenues. It does take something, focused energy and conscious design to push that boulder uphill and create a business with ongoing profitable revenue streams that lead to a sustainable business and massive personal wealth. To get started, though, and I know this might make you uncomfortable, but it is the truth, if you’re thinking about financial independence, you’re probably going to need at least a million dollars in personal net worth to achieve that status. I don’t tell you this to dissuade you or discourage you. And the good news is that if you really get moving towards your number, it can come more and more into focus every week and month and year. It certainly did for me. But for every $30,000 to $40,000 in personal spending you do every year just to live your life that’s including your mortgage and property taxes and spending on clothes and travel and all that, you need about $1 million in a diversified investment portfolio to pay you that and to be sure that your money will outlive you, which of course is the definition of financial independence.
So, if you spend $60,000 to $80,000 a year, not taking Social Security into account, you need about $2 million in personal net worth. And that’s why I’m really committed that we keep these numbers in focus and that we talk about this in a transparent way on this show. I need to normalize these numbers for you. Maybe you have more than a million dollars already or maybe that seems far off for you. Everybody starts somewhere. But, of course, the journey of a million dollars starts with just the first dollar. Your money mindset and your thoughts about that are really the only thing limiting you if you’re limited. The really good news is anyone can attain the skills of wealth as I did. And you probably know my story if you’re listening to my show, but I look out into the world and I see far too many business owners being overworked and underpaid, not building wealth and really not focused on building wealth because running a business is so taxing, no pun intended. And that’s what I’m here to talk about today. I want you to be able to write your own story to be unmessable with, limitless.
And to do that, you’ve got to take back your power about money. And the things I talk about and coach do work, just a few stories from past clients which of course I delve more deeply into in the training. Danica, who we’ve talked about on the show before, went from earning $400,000 a year and spending about $450,000. I think she had $250,000 in debt when I met her to earning over $900,000 every year since we’ve worked together. She’s building her net worth at a rate of $300,000 a year. So, imagine that, being a millionaire in just over three years. Pretty great. Fiona was a successful doctor but she had no plan for her practice. She was behaving more like an employee than a CEO. We created a plan for what she wanted, designed ways to increase her sales and recruiting systems to get good doctors working in her practice. Today, she’s paying herself consistently from the business, fully funding a tax-deferred savings plan, participating for the first time in financial planning conversations with her husband. And she’s worth almost $2.5 million.
Sophia was a struggling service provider. She had a mindset that she needed to work pro bono and at a sliding scale. She had a pretty significant problem because she had some money coming in from her family that completely stopped coming in, and I tell that story again in the training. And what happened with her was I invited her. We actually did the calculations of what it would take for her to be able to pay her rent and live generously now like live a life she enjoyed plus save for a house in Los Angeles, California, which is no small feat and also financial independence. And I said, “Look, if you’re working for $125 an hour, 30 hours a week, if you’re doing sessions at that cost,” we got really clear that she could achieve all of her goals over time at that rate. She got so excited about raising her rates that she actually went from, I think, she was earning $50 an hour average when I met her to $200 an hour. And just a couple of years after completing the program, she’s worth over $300,000. That’s her personal net worth. Okay. So, this program that I’m talking about, The Wealth Multiplier Course, produced a $1.5 million increase in nine participants’ net worth, again, over a 24-month trajectory. Building wealth obviously takes time. So, I’m teaching exactly what we’re talking about today, as well as giving people a map for their money so you can become a magnet for your money. And of course, we have to give every dollar in your ecosystem a job to do that.
Okay. A quick synopsis of my qualifications on the subject. There was a time I was a complete mess financially. I was a huge overspender. I got more joy from getting rid of money than bringing it in. I hated saving money. I loved spending it. And of course, I would spend more than I had and this would make me miserable. And somehow, I hadn’t seen the mistake in my plan. Things really came to a head for me financially. I ran out of money. My credit cards were maxed out. I had something over $300,000 in uncollateralized debt between real estate and credit cards, real estate that had fallen in value, and credit card balances, also student debt I wasn’t able to pay. And I just got completely fed up. I said, “This is the end of this. Whatever I’m doing, I’m never doing this again. I’m going to unravel all of this. I’m going to do everything the opposite of what I’m doing now. I’m going to figure this out.” And I became a student of financial success. I became a student of money psychology and behavioral finance. I learned what the experts already say and already know about the predictors of financial success. Of course, everyone wants financial success. I mean, money is a critical aspect of our lives. You can’t have a totally fulfilled life without financial success. It’s just that desire is as necessary but not a sufficient condition to actually achieve financial success.
So, I said, “Okay. I’m going to figure out the difference between wanting financial success and achieving it.” And I did. And it turns out that the linchpin to all of that is this money mindset stuff that we talk about on this show all the time. And I transformed, I literally changed my own brain. I engaged the principles of neuroplasticity and I changed my behavior, and then my financial reality. And today, my husband and I are financially independent, which means we work because we want to, not because we have to. We live generously. And even this year in 2020, income is significantly down. Our business income is probably down for the year. I mean, the rest of the year remains to be seen. But the point is we keep our expenses so low relative to income that while it’s not great, I mean, nobody loves losing a bunch of income but we know that business is cyclical, and we are not hurting financially. We’re still on track to save per our plan. We are spending as much as we want to spend. We’re taking vacations for Thanksgiving and Christmas in luxury rental homes on the beach and we can do that for short periods of time. We just decided to lean into doing something different this year because I can’t see my family because everybody’s high risk.
So, I had my financial rock-bottom moment and I decided along the way back, along my path back that I was going to teach what I had learned and that’s what this show is all about. And that’s what the training that I’m inviting you to take is all about and that’s what the course, The Wealth Multiplayer Course, is all about. I know that you’re probably sick and tired of working so hard for your money and not being sure that you have much to show for it at the end of the day. Not only that, but when are you supposed to take a vacation? As a business owner, if you’re the product or the service, you can never leave and you’re tied to email and if you have kids at home, it’s just a mess right now if you don’t have childcare, and I totally get it.
Hilary Hendershott: So, let’s talk about three mistakes business owners make when it comes to your money and how you can avoid making those mistakes. So, the number one mistake I see business owners make is not starting with the end in mind. You have to understand how you’re going to finish or complete or be done working in your business. You’re not going to own it forever. You’re not going to run it forever. So, how are you going to manage what I call the lifecycle of the business? I think the big mistake here is that some people and my experience is that it’s because, in the background, there’s a scarcity mindset. You go into business thinking, “I’m just going to make whatever I can make,” or, “I’m lucky if someone does business with me,” or, “I’m lucky if I make six figures,” or, “I’m lucky if I make seven figures.” And there’s this mindset that you’re doing the best you can doing all that you can and there’s a lack of strategy or thinking from the future that goes into the strategizing of your daily calendar and task lists and the processes and procedures that you put in place. The truth of the matter is that the day you exit your business, for some businesses, the day you exit your business can be a very profitable day. When you sell your business, that can be your most profitable day as a business owner. But if it can’t be, so for example, if you’re a real estate agent, you need to know that, okay, because your business doesn’t necessarily have resale value.
And so, you need to strategize to extract a lot of money from that business, while you’re running it to build up that million-dollar nest egg or that $2 million nest egg we were talking about before. So, really taking the time to understand you’re running a product business or a service business, are you systemizing the business completely? Are you running it from behind the scenes? You know, my business is a little bit of a personality brand. I would need to do some reorging and some transitioning if I was going to sell the business, because if I disappear from the business, all of a sudden, there’s the relationships my team has built with our clients, and those would last but there would be no public face of the business right now. So, I need to know that and I need to work that into my planning. And I have in the ways that I think about how much I’m charging now and who I’m hiring. And by the way, I’m already thinking about when I will sell the business. It’s more than a decade away, by the way. That’s my plan. That’s because I love what I do but those conversations are already happening. I’m putting business continuity plans in place and being strategic about having the end in mind. So, that’s the number one mistake that business owners make.
Second mistake, and this might seem a little bit woo to some of you, and that’s okay. It’s a little bit woo but the truth of the matter is a lot of our life is a function of the language that we use about it and to create it and to describe it. So, the second mistake I see business owners making is operating inside limiting beliefs. If you’re a sole proprietor, you’ve literally taken your beliefs about yourself and your worth and your future and money and taken them out of your brain and throw them on the wall, and that is your business. There’s nothing possible inside your business that you can’t currently believe, stand for, conceptualize, or work toward. And some of this stuff might be invisible to you. But when I say it, it probably resonates for you that for you, you can’t imagine that you would ever have the business that some of your business mentors have or some of your friends have, or some of the people in your mastermind have, or maybe some of the podcasters you listen to who talk about their 10 figures of revenue every year. And you think about yourself and you think there’s no way, I can’t, I couldn’t, not for me, not going to happen. And that really is a system of self-limiting beliefs and those self-limiting beliefs are integrated into everything about your business, your practices, your policies, your procedures, how you talk with customers, how you make your offer. It’s just all in there.
And so, really getting underneath, getting very conscious about how you think about money, how you think about yourself in relationship to money can be a very profitable activity. And my experience is some of the people I’ve coached have, when we begin this process of self-discovery, they find that their revenues and their profits just start to go up. It really can be mystical, mysterious. It can seem mysterious, right? It’s happening and it’s like, “Whoa.” I remember the first time I had the thought, you know, I went from being at the beginning of my career really insecure about I’m in a man’s industry and I see all my competitors are men and I had the thought, “Well, Hillary, whenever you call the doctor, you always ask to see a female doctor. I bet there are some women out there who want to see a female financial advisor,” and it was one of the first my experience of having a download from the universe. I was not a very woo person at the time, but this definitely happened. I mean, I took some actions, I leaned into it, but at the time I was working in my dad’s business, his financial planning business and within about three months, I had, I think, tripled my income. So, it was almost like I had the thought and then women started calling me to hire me. It was the most mysterious, most empowering experience. And of course, it was very joyful for me and I was very grateful for it but that’s kind of what I mean when I say that getting outside your limiting beliefs can be a very profitable experience.
The third mistake I see business owners make that I want you to not make is not having a plan for money. There are so many ways in which you can create a map for your money. So, money flows into your business and you can create accounts to pay yourself first and pay Uncle Sam first, which is something none of us love doing but we do have to do it. And if you’re several years in business, and you find tax time to be painful for you, honestly, that’s your responsibility. You know taxes are coming so why would you set yourself up for that kind of failure every year? I speak to business owners in their 40s and 50s, who have IRS debt, and it’s a horrible, horrible kind of debt to have because the IRS can go into your bank account and take your money at any time they want without permission from you. Imagine just having $30,000 or $40,000 or $50,000 removed from your account. And it’s not that $30,000 or $40,000 or $50,000 and if you’re listening to this and saying, “Well, I don’t have that much in IRS debt,” that’s not really the point. The point is if you aren’t planning for the expenses you know are coming, after it happens once, you’re just setting yourself up for failure. So, that’s one way in which you have a plan for money.
Also, for example, for any project or campaign or new revenue stream I work on, I have a complete plan for my expected expenses, including wages for people on my team and advertising and promotion and that way I create a budget. And it never goes exactly the budget, but at least I have some sense as I’m working in the project where I am. You know, you may have budgets for your projects and that’s all good but then the question is how are you pulling money out of your business so that you, the business owner, are actually being paid and compensated and nourished by your business? If you feel overworked and underpaid, you got to pay yourself more or work less, but paying yourself more can solve both of those problems. And if you’re not doing your best or getting good expert consultation on how much money you can save in tax-deferred accounts, you’re literally throwing away money. You’re taking money out of your pocket and giving it to Uncle Sam. You’re paying unnecessary taxes. Congress is willing to give you tax deferrals and you can use that free money to earn free money. You do have to pay back the initial tax deferral, but your saved money, the money that you didn’t give to Uncle Sam will earn compound returns on your behalf inside that tax-deferred account. And I’ve seen business owners be able to defer up to a quarter of a million dollars. That’s a lot of money. And if you can do that year-over-year, you can build a massive nest egg pretty darn quickly. Not only that but then it gets into your personal bank accounts and ecosystem.
What’s your plan there? Are you measuring your annual savings rate? Are you clear with that savings rate given a compound growth rate in your investment portfolio is going to return for you? Do you have any sense of when you’re going to achieve your financial independence number so that you can work less or not work if you want to? And it’s these kinds of things that you can manage by paying attention to it occasionally and then making sure to stay within boundaries so that you can guarantee your success. I mean, nothing is guaranteed in life but, for example, once you build these moats up around your financial castle, by experiences, you know how to get back on the path no matter what. It used to be that any strong breeze would have blown me over financially. And like I said in 2020, my household and business income is down pretty significantly but I’m not worried and it’s only because I have a plan for my money. And this is the kind of plan that we actually build for you on a done-for-you basis. Inside the wealth multiplier course, you get a one-on-one coach to work with you who will assess your business and personal finances.
By the way, I’ve had people ask about personal finances. Some of you are in a financial partnership with a spouse or partner and the course it’s designed to fold that person into the process on the personal side so that all of the personal cash flow management what I call automation is done in cooperation. We’re not here to steamroll anybody. Come on. You guys know me. So, your partner or spouse is welcome to participate. As long as that you actually are a financial partner, if you’ve merged finances, if you’re just living with someone, then you share expenses. It’s not really the same thing. So, that’s the third financial mistake I see business owners make.
Hilary Hendershott: I wanted to give you some sense of what’s really inside this training that I’m offering. I want to encourage you to go grab your copy of the training now. I do need you to get off your podcast player and go over to my website to grab it. It’s at HilaryHendershott.com/171. For this training, I’m really looking for entrepreneurs who are sick and tired of working so hard for the money and not having much to show for it. It really is the trap of business, and I’m here to help you climb out of it and prosper and thrive. I’ve shown hundreds of business owners how to achieve financial independence and I just don’t think this kind of thing should be kept under wraps. So, I’m offering this totally free on-demand training that will be available to you until October 15. The training is called 7 Ways Business Owners Can Transform Revenue Into Personal Wealth and it is actionable and powerful. By the way, it is a preview to my Wealth Multiplayer Course, which launches on October 16. So, don’t wait to grab your training. Really, I wouldn’t go over there any later than say October 7. You want to give yourself some time to really take in the training to look at what this could mean for you and your business and your life and your partnership and your future and your kids and really choose this or not for your family and yourself now.
I actually think you should just go grab it now. Just go now. Just click pause and go to HilaryHendershott.com/171. Forget this October 7 thing. Just go today. Go now. If you’re exhausted and defeated and ready for something new, I want to show you the road to financial freedom. So, inside this training, I will more fully develop the conversation about the three most common money mistakes that we just had, including the ones that led you to have financial uncertainty during the coronavirus pandemic. I really want to have this be the last economic event that takes you out or takes you down. I’m happy to report that my clients and I are thriving personally and financially during this difficult time on the planet and you can too. Also, in the training, I’ll show you how to embody the three habits of highly successful business owners. I’ve literally been studying millionaires and multimillionaires for years. I gave a TEDx talk on unraveling the mysteries of financial success and I’m sharing with you the best of my lessons learned in this training. Finally, you can discover the one commitment you need to make now to transform your financial reality forever. There really are no other trainings like this. This isn’t sales or funnel or advertising lessons. Okay? This is fundamentally altering your relationship to money so that you can create and build generous streams of dollars coming into your accounts at all times.
All right, profit boss, to access this free training, go to HilaryHendershott.com/171. Tell all your business owner friends. Go into your podcast app right now and click share this episode and send it to a couple of friends who you know are struggling with money. Head on over to HilaryHendershott.com/171 to have this video training delivered right to your inbox. Thanks, profit boss. I cannot wait to connect.
Hendershott Wealth Management, LLC and Profit Boss® Radio do not make specific investment recommendations on Profit Boss® Radio or in any public media. Any specific mentions of funds or investments are strictly for illustrative purposes only and should not be taken as investment advice or acted upon by individual investors. The opinions expressed in this episode are those of Hilary Hendershott, CFP®, MBA.