On this week’s podcast, you get to listen in on a typical chat between me and Josh Kreitzman, my friend and business partner. I’ve been frustrated lately listening to some painful stories from business owners and friends. It seems that so many people aren’t listening to advice or even asking for it. Josh and I just sat down and talked, and we invite you to listen in.
A Little Background on Our Relationship
Josh and I met at a local networking event. Josh hired me to coach him, and I hired him as my CFO. We are friends and business partners and have really leaned on each other. We are both money experts, but we have different specific skill sets. Josh is an expert regarding the uncountable pages the IRS publishes with rules and regulations and has helped me save 5% of my gross revenue. I am better with the psychology of money and cash flow management and have helped save Josh roughly $100,000 in one year to pay down a loan.
We share some opinions about self-employment as a fad in recent years and how so much content tells everyone they can be their own boss. But that’s just not the reality. Unless you’re just working a side hustle and have a consistent source of income, you can’t just dabble in your business. You need to go all in. Especially in a recessive economy, there are challenges and things you need to be prepared for. We spent some time chatting about that and some of the benefits of being a business owner. The conversation ends with our advice for all small business owners or anyone considering starting a business. So let’s dive in.
Being a Business Owner Has Benefits
Business Owners have more control over tax decisions.
When you start a business, you’ll have so many decisions to make around taxes. Don’t listen to TikTok. It’s essential to consult with a real expert. Some advice is so bad it can send you to jail or have the FBI knocking. Once you decide whether you’ll be an LLC, an S Corp, or something else, you can take advantage of all the opportunities you have as a business owner. Many tax breaks are available for small business owners and entrepreneurs, so hire an expert to help you navigate this space.
You should call an attorney if you receive something in the mail that looks like a lawsuit. It’s the same idea with your taxes and setting up your business. Consult with an expert. Keep an open line of communication with your CPA or advisors and ask them before making any big decisions. They will ensure that you make the most financially wise decisions and help you avoid any run-ins with the government.
No Bones Days are possible when you are self-employed.
No Bones days are exactly what they sound like, days where you can just be lazy and relax. If you run your own business, you can have more agency in how and when you work. Spend your most productive hours getting things done and then relax. If you work for someone else, there are expectations in how you structure your schedule and when you are available to others. You may want to enjoy a no bones day every other week, you are the boss, and you get to make that decision.
You choose who you want to work with.
The people you partner with or work with can make a significant impact on how you feel about your business every day. If you’re ever in a spot where you want to burn it all down, step back and look at who you are working with. As a business owner, you get to make those decisions, and you can part ways with the people who don’t meet your needs (unless they are investors, and we will address that later.)
Challenges to Consider When Becoming a Business Owner
You must have the chutzpah to run a business.
Being a business owner is not for everyone. Josh shares a story about his wife and the sewing work she does. People want to hand her money for her creations, but she’s not interested in going out on her own and selling. She’s happy just doing it for friends. It comes down to your personality, and you need to handle the pressure and stress of being a business owner.
People who accept rejection and move forward are likely ready to be self-employed. There are many benefits, but you must be able to move on when things fail. It’s not all the freedom of a laptop lifestyle as we see in glorified Hollywood specials.
The internet has changed things for better and for worse.
Technology has improved communication greatly over the last few decades. Each step makes it easier for businesses to communicate, from phone calls to fax machines to emails to text messages. The downside is that it also lowers the barrier to entry.
For example, in the 1990s, if you wanted to work in advertising, you needed a degree and some credentials to get a job. Today, you need an Instagram account and the loudest voice. If you have knowledge of using SEO and hashtags, you can reach millions compared to a brand with a fully trained marketing team. That can be frustrating, but it’s also good to note that in a recessive market, things that are all surface-level with no substance will fail. Expertise still matters.
It’s important to work through these distracted uncertain times.
Small business owners face more mental health issues today than in the past. It’s been a few years of uncertainty, and much fatigue comes from that. Business owners are constantly trying to understand how shifts in the government will impact their businesses. It doesn’t matter if it’s democrat, republican, or a mix of both. I call it distracted uncertain times.
Business owners are either shutting down and not making any decisions, or they are making rash decisions. It feels like things are changing so quickly there is so much pressure to decide. That pressure is causing people to act too soon or shut down.
Understand the Trade-Offs
We mentioned just a few benefits of owning your own business, and it’s important to understand the opportunity cost. Business owners make decisions but don’t fully grasp the long-term effects or don’t take the time to consider what they will be sacrificing in the future.
For example, Josh is working with a restaurant start-up that needs money to get moving. They found an investor who could provide the capital to move forward. Usually, that’s a great thing. However, there was no operating agreement, shareholder agreement, or contract to lay out exactly what that capital meant. Now, two parties are spending money in court to determine whether it’s a loan to be paid back or an investor who now owns a portion of the business. Accepting the money without a plan costs them more in the long run.
Every business costs money to start.
Don’t believe online ads to start a business with zero money down. Even for service businesses, there is some initial investment, and it takes energy and time to make it work. The purpose of business is to make money for investors. If you are an investor, you should be making money on the business down the road. But there will be some challenges initially, and it’s important to communicate with any dependents beforehand to understand the investment.
Set boundaries and know where you need to draw the line. I closed my first business and went bankrupt because I did not want to lose my house and move into my mom’s basement. My rock bottom is keeping my house. Knowing my boundaries helps me to make intelligent decisions and protect myself.
It’s also essential to invest in your business. I took the money that my business has made and put it right back into the business to help it grow. Know what you are willing to contribute and what you will be giving up to do that. If you work through those questions ahead of time, there will be fewer surprises.
Closing Thoughts and Advice on the Benefits and Challenges of Business Ownership
Josh and I mentioned that we work together and are best friends. We help each other manage our businesses and bounce ideas off each other constantly. I wanted to leave you with a few tips to summarize what we’ve chatted about today:
- If you didn’t pick up on this at the beginning of the pod, it’s crucial that you understand that we pay each other. I pay Josh, and he pays me. It’s vital to hire professionals and trust your network. Hire advisors and experts, and seek mentors you can rely on in the business world.
- Lean into the benefits beyond money when running your own business. Enjoy the freedom and the decision-making power.
- Learn how to learn and ask questions, even if you feel stupid or silly.
- No dabbling. Go all in.
I’d love to hear your questions and thoughts about this episode. Find me on Instagram at @thetaranewman. And, don’t forget to get your Revenue Goal Calculator.
