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I have always considered that I am the opposite of entrepreneurial; I’ve never dreamed of running my own business, the idea of striking out on my own holds no appeal. However, in the last 3 years two things have happened. One is that my husband set up his own business in 2020 and I have been involved in the creation and running of that business, and the other is that I have spoken with and worked with far more business owners than ever before.
In my role as a financial adviser, I work with clients who run their own businesses, those who are self-employed contractors and those who work salaried roles - and I’ve noticed that there is a difference in the way these groups manage and even think about their money.
I noticed that the business owners, even though they were still coming looking for financial advice, tended to be more financially savvy (on average).
So I thought I would reach out to some female business owners I know and respect, and ask for their best tips.
These are snippets of wisdom from business owners across a range of industries, from law and accounting, to hospitality, healthcare, and hairdressing. I asked for something they had learned by being in business, or that they think businesswomen do differently, that anyone could apply to their own finances and I’m excited to share these with you.
It’s ok to ask for help, in fact it’s a necessity.
In any area of our lives, there are going to be aspects we are great at, and areas that we don’t have the skills, knowledge, or time to handle well. This is why the first piece of advice, from Annabel of Scout Hair, is to surround yourself with experts who can take on the parts of the job that are not in your skill set. The specific tasks that need external support may vary, but two professions that would be high on my list are:
Similarly, we know that finances are a huge source of worry to many people, more so for women, and regardless of which aspect of finance you’re dealing with in the moment, each decision has an impact on your overall situation. Having someone you trust that you can call to double check before making a change, or to explain things that have far too much jargon built into them, can be priceless.
Building on the need to ask for help, the next tip is to get good, robust advice early on. When we launch a new project or endeavour, we are often caught up in the excitement and rush forward, not wanting to consider the chance of things going wrong and not pausing to get advice at the start. Gemma of Gem Legal is a lawyer specialising in estate planning. She sees clients too often who haven’t considered how best to protect themselves if the worst should happen. Whether you’re going into business with a partner, or starting a new relationship with someone, understanding the implications of what happens to your assets if the partnership goes wrong (or if one person dies unexpectedly) is crucial. This type of advice is tailored to your specific situation as well, so the importance of seeking it from a professional, rather than Uncle Jim at the barbeque of Saturday, is so key.
We know that not everyone loves talking about money, and for some people even thinking about it makes them anxious. However, Stina from the award winning Graze wine bar says not to fear knowing the numbers. Even if they aren’t what you are hoping to see, it will feel much better just knowing where you’re at. If you avoid finding them out, it won’t change anything for your situation, and you’ll continue to feel anxious!
For many of our clients when we ask them how much money they have left over after each pay, or how much they spend on groceries, or how much they will need to retire at the age they would like, they have no real sense of where their money is going, how much they have, how much they spend and how much they need.
Although sitting down with an adviser may feel scary, not knowing just means that low level anxiety about whether you’re doing ok sticks around for longer.
The next step once you know your numbers is to put structures in place that help you monitor, measure, and manage your cashflow in a way that reduces the anxiety! Nickie from Trio Accounting recommends using the bucket approach, which is how I have personally always preferred setting up my money (though I didn’t have a name for it before!). This is where you set up a range of accounts for different purposes, maybe one is for all your monthly household bills, another for more frequent transactions such as groceries, transport costs, one where you can save up for infrequent costs like Christmas and birthdays, one for the kids’ expenses – the list could go on. The key is to know how much you need to put in each of those accounts every pay period and have automatic payments set up for the day after payday, so it just happens. Even just a few to start with can help you see that you have enough, how much you have available for fun spending, and feel like you have a handle on your finances.
This is less about having your arsenal in order and more about taking a proactive approach rather than a reactive one, whether in business or life in general. Absolutely, for some areas of our lives some spontaneity is great. But when it comes to managing your money? Not so much. Justine from Orange Fox is all about planning and preparation. She points out that so often, planning is the key to success because the more preparation you have done, the better you are able to handle life’s curve balls. This may sound like a very cautious way to approach life, but we all know that those curve balls come out of nowhere, and unless you have great social and financial safety nets by default (most of us don’t) a little planning when things are good just makes life so much less stressful when things are bad.
Catriona, Partner at Tompkins Wake (previously the founder of her own law firm, Lava Law) also talks about being proactive with three different focuses. First, she says always pay IRD first, before anyone including yourself. As someone who knows how easy it is to get IRD payments wrong and end up with a bill, I can definitely see the wisdom in this, even outside a business context!
Secondly, prioritise personal development – this comes back to a career coach being one of the experts you wrap around you to make sure you are investing in yourself, but even without a coach making time for your own development is always valuable.
Lastly, Catriona suggests making sure you accept that ‘life admin’ is a part of life and prioritise getting it done. This sometimes feels challenging, as we are so busy already, so overwhelmed with tasks and conflicting priorities that ticking off even easy tasks gets procrastinated. Catriona’s two tips for helping with this are schedule it for the same time each week so you don’t miss it, and try to make it enjoyable by pairing something with it (fun music? Tasty snack?) which will help you stick with it initially. Afterwards though, you’ll find you feel much better for having ticked things off and over time that will be rewarding.
One thing business owners get used to is constantly assessing the risk/benefit of a given decision. Where those of us in salaried roles can rely on someone else to organise changes to the business process, to determine the number of staff required on shift, to deal with it if Dave from the corner office isn’t pulling his weight etc when you’re the business owner every day could bring significant decisions to be made, and weighing those up is something that takes practice. Louise from Back to Living says that taking calculated risks is one of the best things she has taken from being in business.
This makes sense. Once you have got the right advice, got your cashflow structured correctly, proactively organised your day-to-day, you are able to take some risks – having weighed them up beforehand. We know that this is one of the reasons women make better investors than men on average, because the risks they take have been better researched and considered. A calculated risk could take the form of deciding to purchase a house, start investing or change jobs – but having the confidence in yourself to weigh up the wisdom of making that move at that time is key.
It's also where Velocity come into the picture, because we all have varying levels of confidence, knowledge and even just comfort in talking about money. Sitting down with an adviser should be a relatively pain-free experience, where they can tailor the conversation to your needs and where you’re at in the journey. We can help you implement one, or all the above tips (some of which I’m going to be building into my own repertoire going forward!) and perhaps more importantly keep you on track over time, with the right balance of accountability and hand holding.
Let us help you manage your money like a business owner without having to go into business yourself!
Elizabeth.
Hi, I'm Elizabeth, one of the Financial Advisers here at Velocity Financial. Day-to-day, this involves engaging in conversations with clients about their lives, families, aspirations, and, of course, financial goals. In a big picture sense, though, I'm driven by my perpetual desire to improve outcomes for individuals and, eventually, communities. At Velocity we aim to bolster the financial literacy of Kiwis, helping to alleviate financial anxieties, and opening up the possibilities of what can be achieved. We empower our clients to formulate a plan for the future. I'm particularly passionate about assisting women in reaching their financial goals and feeling confident in managing their money. To aid in this, I write a monthly blog on topics that affect women and maintain an Instagram page @what_would_she_do.vf. This platform provides financial content for those who might not be prepared to consult with an adviser yet but still require and deserve sound advice. In my past life, I was a nurse, so helping people is essentially my modus operandi (I'm also quite resilient and not easily grossed out!). During my spare time, I'm likely attempting to keep up with my energetic kids. If I do manage to find some time for myself, you'll find me curled up with a coffee and a book.
Disclaimer: Elizabeth Tsikanovski (FSP693611) is a Financial Adviser with Velocity Financial (FSP95466). No investment decision should be taken based on the information in this blog alone. Please see Elizabeth’s disclosure statement on our website.
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Elizabeth is the author of the monthly blog What Would She Do? A column for women, by women.
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