<p>I'm sure you've heard (and might even follow) the sage advice to "keep business and personal expenses separate." You might have a separate checking account, a "business-only" credit card, debit card, a separate office space, even a designated business vehicle.</p>
<p>There's only one problem with the idea of keeping business and personal expenses "separate."</p>
<p>It is, essentially, a myth.</p>
<p>While it works from an accounting standpoint, and streamlines all sorts of matters at tax time, it's a conceptual myth that the two can somehow be "separate" in reality, as if one doesn't affect the other. </p>
<p>It's the financial equivalent of believing that you can keep your spouse and your lover separate. Marriage over here, affair over there. Keep ‘em separate, and one won't affect the other. If divorce comes, was the problem the marriage itself, or the affair that drained energy and resources away from it? If the business fails, was the problem the business itself, or the overzealous personal spending that siphoned off cashflow? </p>
<p>I used to work out at a gym where I could observe several small business storefronts from my favorite treadmill. I watched the habits of the entrepreneurs and independent contractors who came and went in the mall. Some business owners remained in their stores, busy or slow. Some only came in to meet clients. Some brought lunches. Some ate out. </p>
<p>One in particular would leave his store to spend money every chance he got. A latte and a scone in the morning. Lunch to go at noon. A pack of cigarettes (or two) from the store. Another latte in the afternoon... add a Happy Hour drink (or two) on the way home... The guy was easily spending $30 more a day, over and above "necessities." And he was there 6 days a week, let's say 50 weeks a year... That's $9,000 a year in unnecessary expenses! If his business operated at a 20% profit margin, that would require an extra $45,000 in sales from his fledgling business to pay for the ways he coped with his boredom! </p>
<p>If you own a small business, your personal expenses cannot help but affect your business. After all, what is the financial responsibility of your business (or, put another way, your financial hope and expectation for your business) but to support you in your desired lifestyle? Your business must ultimately </p>
<ul>
<li>pay your bills and taxes</li>
<li>cover your vacations</li>
<li>support all habits, from the morning latte to your weekend recreation and entertainment</li>
<li>raise your kids until they are self-sufficient</li>
<li>pay your insurance and medical needs</li>
<li>fund investments and your eventual financial freedom, and</li>
<li>provide for all spending done for any reason.</li></ul>
<p>Your personal spending is the reason your business exists (besides of course the joy and satisfaction of doing what you do), and your spending determines what numbers your business plan must aim for. If Einstein had been a financial coach, he might have said that E=mc2 means the Energy the business must exert equals the Mass of Money spent in one's personal life, multiplied by the speed of light squared (the time, effort, and technology necessary to turn a potential Customer into Cash).</p>
<p>Spending is not necessarily an evil to be avoided in all circumstances. But don't fool yourself. </p>
<p><strong>Be Alert to the Dangers of Overspending:</strong></p>
<p><em>1. We can put our business and ourselves under unnessary pressure.</em></p>
<p>Many business owners, perhaps especially women, who are particularly susceptible (and often culturally conditioned) towards emotional spending, get caught in this cycle. It's a cycle of stress, depression, boredom, worry... perhaps the only time we feel "abundant" is when we leave behind our stress for an hour or two of shopping (whether with cash or credit). Then, in order to replace the money we've spent to catch up, we have to generate the product or service sales that will give us an after-tax profit of what we've just spent!</p>
<p><em>2. We fall prey to "Because you're Worth It!" advertising and needless emotional spending.</em> </p>
<p>Let's call it what it is - Entitlement. Emotional spending enforced by years of advertising messages. We spend because we're celebrating, we spend because we need a pick-me up, we spend because we want to impress some clients, we spend because we want to spoil ourselves, because it's a habit, heck, we spend because it's been a <em>tradition</em> for somebody to buy us something to cheer us up since we were four years old anyways, so why change now?</p>
<p>Perhaps we are "worth" more than the collection of small and large impulse items items beckoning to us. What if we're actually "entitled" to nurture, care for, and love ourselves, not skin deep, but on a soul level? Because you see, ironically...</p>
<p><em>3. We don't get the satisfaction and fulfillment we really want, which leads to more overspending...</em></p>
<p>If our spending is a habitual cycle misaligned with our values and intentions for our lives and businesses, then it provides little real relief from the stress and boredom that encourages it. We've eaten some fast food, and soon we're hungry again.</p>
<p>Perhaps we spend to satisfy unconscious emotional needs, but those needs are still screaming for attention. Do we truly want another latte, another happy hour drink, another outfit? Or are we <em>really</em> craving...</p>
<p>A day without our cell phone...</p>
<p>A walk around Greenlake in the sunshine...</p>
<p>A night at home with a good book...</p>
<p>A phone call to a good friend...</p>
<p>A chance to watch the sunset with our sweetie...</p>
<p>A long hike through an old growth forest...</p>
<p>A game of cards with an old buddy...</p>
<p>A bubble bath set to the soundtrack of a long lost favorite album.</p>
<p>We don't need to spend more money, we need to spend more <em>time and attention</em> with ourselves, our <em>souls</em>, and the things and people who remind us who we really are, apart from our role as "Business Owner." That is why we work for ourselves - to have the freedom to be who we are, both in our business, and apart from it.</p>
<p>So if your personal spending might be affecting your business (and your life),<strong> try these Five Solutions:</strong></p>
<p><em>1. Get Real about your Expenses</em> </p>
<p>I've had biz owners and independent saleswomen tell me that although they "can't" save for retirement, they "have to" get their nails done and their hair colored (professionally and often), or they "have to" drive a car with a $550/month payment...</p>
<p>Really!? Is this true? (If your clients only work with you because you have leather seats in your new car and great hair, maybe you need new clients!)</p>
<p><em>2. Get Perspective on the Role of Money in Your Life</em> </p>
<p>You've heard the story, "When you're lying on your deathbed, are you going to wish you had spent more time at the office?" (chorus of "Hell No!'s" please)</p>
<p>I ask an equally important question (considering that time can equate directly to money): "When you're lying on your deathbed, are you going to wish that you had updated your wardrobe more often, driven a newer car, or regret that you're going shamefully to your grave with your natural nails, instead of painted acrylics?" (Can I have another chorus of "Hell No!'s"?)</p>
<p><em>3. Sabotage and Shortcut your Emotional Spending Habits</em> </p>
<p>Make yourself wait 48 hours to buy that blouse you "have to" have. Recycle away all your catalogues (and don't forget to call and cancel them). Block eBay from your internet. Drive a different way home to avoid a favorite spending stop. Observe the instances each day where you habitually spend out of boredom, habit, or for a pick-me-up, and develop new, healthier habits.</p>
<p><em>4. Get a Coach</em> </p>
<p>The money you save could more than cover your coaching, and the savings will continue long afterward. And if you absolutely can't afford a coach, perhaps you know someone in the same boat who will be a committed accountability partner for you. (Don't even <em>think</em> about trying this alone unless you DID finally lose "those last ten pounds" and get in shape without a trainer or a workout buddy!)</p>
<p><em>5. Get REALLY Satisfied</em> </p>
<p>Go ahead, make a list. List all of the things you LOVE to do that are free (or nearly free). Then next time you want to go binge on something spendy to calm your nerves, appease your inner bored teenager or the child begging for attention, look at that list. Rent that old movie. Leave a message on your cell and turn it off for a few hours. (I dare you!) Grab some tealights for a candlelight bubble bath. Pick up the phone and set a date to meet an old friend for a walk in a park you haven't been to since... before you started your business. Play catch with your kids. Pick some fresh flowers. Go to a farmer's market, savor the sights and sounds. </p>
<p>Prove Mick Jagger wrong. Revel in pure, unadulterated, budget-friendly <strong><em>sat-is-fac-tion!</em></strong> Then dance to a bit of James Brown, cause you feeeeel GOOD, just like you knew you would!</p>
<p>Kate Phillips, Total Wealth Coaching</p>
2008-09-06T12:16:29Z
2008-09-08T23:58:03Z
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2008-09-08T23:57:40Z
2008-09-08T23:57:40Z
Perhaps you think you keep your personal and business expenses "separate," just like your accountant instructed you. But consider the real impact of your spending habits. Gain control over your spending or it may sabotage your business.
How Personal Spending Can Impact Your Business (and your Life)
0
2009-04-12T08:47:42Z