Are you a self-employed professional finally ready to build absolute financial security? We recently spoke with Chartered Financial Adviser Lisa Conway Hughes, and her message is clear: the path to freedom starts with financial discipline. Here are the three non-negotiable foundations for sustainable small business money management.
1. Build the Financial Firewall (Immediately!): The single most prominent mistake entrepreneurs make? Mixing personal and business accounts. This is a massive legal and tracking hazard. From day one, you must open separate bank accounts for your business. Then, pay yourself a regular salary from your business account into your personal one. This simple step professionalizes your operation and creates a legal “firewall” that protects your personal assets.
2. Master the Feast-or-Famine Cycle: Entrepreneur cash flow is rarely linear. To survive the unpredictable nature of sales, you need a substantial buffer. Lisa advocates for an aggressive approach: aim to build a business emergency fund (or “War Chest”) equivalent to 2–4 years of operating income. While this is a long-term goal, start with a 6-month reserve and consistently grow it to insulate your business from economic shocks or prolonged client payment cycles.
3. The 15-Minute Tax Discipline: Don’t let tax season be a massive, terrifying surprise. Treat tax planning as an ongoing, weekly task. Dedicate just 15 minutes to setting aside funds. A smart benchmark? Save 25% of all income for taxes, and save another 25% into a separate Profit Account. This proactive approach ensures you always have the capital you need, eliminating cash-flow crises and setting you up for scalable growth.
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