Financial strategies for aspiring entrepreneurs

www.hullfinancialplanning.com

Financial Strategies for Aspiring Entrepreneurs

Jason HullHull Financial Planning

Who Is This Presentation For?

• People who are considering starting up their own companies

• People who have recently started a company• People who are being asked to help fund a

startup (e.g. friends and family)

What Will You Learn?

• How to start preparing for an entrepreneurial life before you ever leave your job

• What is “runway” and how does it improve your chances of succeeding in your business?

• How to research business ideas on the cheap• Friends, family, and fools – to raise or not to

raise?• Making the leap

Who Am I?

• Army veteran• Founded and sold a software development

company• Financial planner, CFP® candidate• Personal finance columnist, U.S. News &

World Report

Why Most People Want to Start a Business

*http://www.sangrea.net/rijidij/pix/bullying_psycho_boss2.jpg

*http://www.sangrea.net/free-cartoons/work_forward-planning.jpg

*http://www.sangrea.net/free-cartoons/social_human-condition.jpg

*http://www.sangrea.net/rijidij/pix/cart_intelligent_design.jpg

The Reality Check Often Bounces

*http://smallbiztrends.com/wp-content/uploads/2012/08/survival-by-sector.png

What Motivates You to Start a Business?

• Passion for something• Escape from cubicle Hades• The dream of getting rich• Independence• Control• …

Simple Formula for Succeeding in Business

• You must…• Provide something…• Which other people will pay you for…• That you can provide or produce…• At a profit…• While giving them value.

Preparing for the Entrepreneurial Life

Keep your day job

Save as much money as you can

Build your network

Generate ideas. EVERY DAY.

Sketch out the plan

Squeeze More Out of Your Budget

Remove recurring costs you don’t need• Do you need cable TV?– Try Netflix, Hulu, PlayOn, and stations’ websites

• Paying for more cell phone than you need?– Lower minutes– Get Google Voice– Remove landline

• Gym membership you don’t use?– Plyometrics, body weight exercise, home Crossfit

Automate your finances• Set up side accounts– Christmas fund– Home/car insurance fund– Roof/car replacement fund

• Have investments automatically withdrawn• Set up automatic bill pays so you don’t have to

remember when to pay them

DEBT SUCKS• KILL YOUR DEBT OR IT WILL KILL YOU• 46.7% of American households carry a credit card

balance• Pay absolutely everything you can towards debt

(credit card, personal loan, car loan, mortgage)• Look at total interest payments first before

deciding which one to pay down/off – combines psychology and math

Make Your Small Business Work

WHY AM I A FINANCIAL PLANNER?

Because I want people to get good advice at a rea-sonable price and not be screwed by unscrupulous salespeople

What's Your Why?

Because …

Who you don’t serve is as important as who you serve

• If you’re everything to everyone, then you’re nothing to anyone

• Trolls should live under the bridge• Create the in-group bias

Small Business and Money

*http://www.flickr.com/photos/84263554@N00/255847189/

Where Do Most People Get Seed $?

• Credit cards• Home equity loans• Bank of Mom & Dad• Anyone who will listen to their great idea• Private equity and venture capital (RARELY)

Where Should You Get Seed $?

• Customers• Grants• Your own savings• Outside investors (RARELY)

Why Not Friends and Family (and Fools)?

• Reciprocity• Changes relationship• Changes business risk profile• Thanksgiving dinner

Researching Business Ideas

• Google Trends: http://www.google.com/trends/

• Google Keyword Tool: https://adwords.google.com/KeywordTool

• Survey Monkey: http://www.surveymonkey.com/

• Set up a “muse page”: http://launchrock.com/

Don’t let self-employment tax kill your runway• Create the right corporate structure• Understand the difference between salary and

distributions• Are you taking all the deductions you can?• Don’t let the tax tail wag the business dog

Making the Leap

*http://www.flickr.com/photos/clickflashphotos/2824142858/

You’re Ready When…

• You’ve saved up 6+ months of expenses (business and personal)

• You can identify enough potential customers to provide 2 months of revenues

• You require less than a month to be ready to start selling to customers.

• Your side gig has provided you enough revenues to replace a significant portion of your income

• You could get more customers if you had extra time

Rules of Thumb

• No entrepreneur has ever said “I saved up too much money before I started.”

• 6 month/$1,000 side gig rule• Your spouse is a shareholder whether or not

you think so• Expect to succeed. Prepare to fail.

How to Reach Me

• http://www.hullfinancialplanning.com• jhull@hullfinancialplanning.com• (817)476-0584

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