Overcoming Fears of Starting & Having Your Own Business

Fear is a part of life. Whether that’s the scary new roller coaster you want to ride or narrowly missing an accident, fear is an emotion that most of us feel. When it comes to work, fear is no stranger either. Starting and running your own business can be the scariest part of it all! Understanding your fears and how to conquer them can help you grow tremendously.

Common fears when starting a business

It’s normal to have fear when it comes to starting and running your own business. There are many different types of fears you might face. Arguably the most common type of fear is the fear of failure. You may feel stopped by the thought of what if you lose it all or what you do isn’t enough. For some, they may be weary of success and if it changes them as a person. Some other types of fear include: rejection, being judged, financial insecurity, stress, and not having a good enough idea. Even with all these different types of fears, there are ways to overcome them and be the best business owner you can be!

Navigating fears to be successful in your business

For some, they may fear not being able to come up with an idea or one that’s good enough. If you can’t come up with an idea, start with thinking about yourself. What do you like/love, what do you do with your free time? Then consider what means a lot to you and what you are passionate about. After you’ve put together a list of all those things, you can look at those things and think what problems you can solve or at least help? Maybe you love knitting and working with kids.Then, a good idea might be opening your own clothing shop for kids. If you already have an idea (or you feel more confident in what you want to do), money may be the next worrisome part of starting and running a new business. Having a solid financial plan in place can help you feel less anxious about money. Ensure you are saving and budgeting for your business and be open to the idea of getting a loan, finding investors, and even using crowdfunding. Looking at the rewards vs. risk of having a business may make it less daunting to put your own money on the line. Although there are many fears one may have in business, there is always a way to work through them.

Now that you’ve recognized your fear(s) in starting and/or running a business, it’s time to figure out what you can do about it. For all fears, it may be extremely helpful to write them out. A process used by Tim Ferris from this TedTalk is extremely helpful here. Begin with “Define.” Define means writing down all the worst possible things you can imagine happening if you go forward with whatever is you’re afraid of. Next, we move to “Prevent.” For every worst case scenario, you are going to write down what you can do to prevent that thing from happening or decrease the chances of it happening. Then we move to “Repair.” Here you are laying out if the worst case scenarios were to happen, what could you do to fix the problem? After all the issues are laid out, you are going to write out what the benefits of success could be. Consider if it would help build skills or even confidence. Finally, think about the cost of inaction. This means thinking about how life would be if you didn’t do anything at all. This in-depth writing may seem like a lot but if fear is holding you back, this can help you see every step clearly along the way.

When it comes to the fear of failure, one way to navigate this fear is by redefining what failure means. Redefining failure works by framing goals to be more achievable and reduce anxiety. An example of this may be you are looking for your first job in a new industry. You set your goal to being hired, so in your terms, if you don’t get hired you failed. Redefining failure could look like changing your goal to being able to answer all questions with confidence. Often, there are circumstances out of our control and pressuring yourself with a goal to be hired just furthers your fears. In addition to redefining failure, it’s beneficial to learn to set approach goals instead of avoidance goals. An avoidant goal is you making a goal for something you don’t want to happen whereas an approach goal is setting a goal for something you would like to do. A simple example of this is that you want to be more social at an upcoming party. The approach goal would be “to be more friendly and outgoing at the party.” The avoidant goal would be “stop being so shy at the party.” Setting approach goals can encourage self-positivity and helps you break away from feeling like you failed with avoidant goals. Learning to reframe fear is also helpful for those who are afraid of the future. Instead of thinking if you’ll ever be able to handle 1000 customers, for example, think about how many customers you can handle now. Focusing on now and redirecting yourself can help keep you grounded.

Conquer your fears and be powerful!

Overall, there are many different ways to approach your fears and learn how to deal with them best. Remember that life is full of trial and error. You can not fully learn anything without making mistakes and that is okay. Stay kind to yourself because having fear is completely normal; and as they say, if you never step outside of your comfort zone, you’ll never grow!

Financial Reports – P/L & Balance Sheet

When it comes to the world of accounting, some of the most common reports include the profit and loss report and the balance sheet. Whether you are working with someone or trying to figure out your finances on your own, knowing all about these reports can be beneficial to improving your finances.

What is a P/L and Balance Sheet Report?

A profit and loss (P/L) report can capture how much money you’re making (or losing) within a certain time period. (A month, quarterly, a year, etc.) A P/L report may also be known as an income statement, statement of earnings, or statement of operations. Some key components of a P/L report are revenue, cost of goods sold (COGS), Gross profit, Expenses, and Net profit(loss). Revenue is how much money you’ve made without including any COGS or expenses. COGS are the costs for your business to deliver goods and services. This includes things like materials, labor, and shipping. Gross profit is the money you’ve made by subtracting COGS from your Revenue. Expenses are split into two categories: Direct & Indirect. Direct expenses are typically COGS as they are the items needed to make/deliver the service. Indirect expenses include things like utilities, rent, and fuel. Indirect expenses will never be counted as COGS. Net profit is the remaining money after you have subtracted COGS & expenses from your revenue. Net profit would be the actual profit (or loss) for your business in said time period. nn The balance sheet is the overall financial position of the business. It shows what you owe as well as what you own. This is determined by assets and liabilities. An asset is something you own. There are two types of assets: Current and noncurrent. Current assets are anything that can be converted into cash within a year whereas noncurrent is anything that takes longer than a year. There are also current and noncurrent liabilities as well. With current liabilities being items due within a year and noncurrent due after a year.

How do these reports help me determine my finances? How do I use them effectively?

The P/L report is a clear way to see whether you have gained or lost money that month. Additionally, the P/L report allows you to see what expenses are costing more and see how often money is coming through. This is beneficial because it can make predicting future revenue trends more accurate, thus allowing you to budget better and stay on track with your goals. nn The balance sheet is helpful for quite a few reasons. For one, it can help you decide if you are able to expand your business by knowing if you can manage the money that floats in and out or if you need to focus on receiving more cash. Another way the balance sheet is useful is by helping the company see if they are prospering or failing. This can give way to a company changing its policies, correcting more mistakes, and refocusing its goals to better align with the state of the business. Additionally, the balance sheet is important to potential investors or those looking to buy your company because it allows them to see whether the business is worth the investment since you can see everything due, paid, and what the business is like without these things.

Financial reports are helpful

Although there are many ways to look at financials in a business, knowing the fundamentals of the P/L report and the balance sheet is a very helpful step in knowing the state of your business

Accountant Lingo & Finding the Right Accountant

In last month’s blog, we covered the benefits of having an accountant and what the difference is between CPAs, accountants, and bookkeepers. Now the question is “Where do I even start when looking for the right accountant?” Everything in the accounting realm can be confusing at first or it may simply take up too much of your time. Gaining an understanding of basic terms in accounting may help you feel more secure in your business and even help you find the right accountant.

Finding the right Accountant

If you’re considering an accountant, you may have no idea where to start. A good place to start is overall communication and guidance. Having an accountant should be a vital part of your team and they should be willing to work with you and help you really understand the money side of your business. This means detailing the explanations for any questions you may have and teaching you aspects of money handling so you are able to do some things on your own later on (if needed/desired.) Having good communication goes in hand with availability. Having someone you can never get ahold of can make it frustrating for you in the long run. Remember that relationships are a two way street and everyone should have a good relationship that works for both parties.

Although there are many questions to consider asking an accountant before you hire them; we are only going to review a few that will aid in finding the right accountant for you. Are they willing to teach you about finances and do they offer additional consulting if needed? Do they offer standard packages or can they customize services based on your needs? Are they able to help with 1099s and any further subcontractor needs? Do they have any specialities? When looking at bigger firms it may also be worthwhile to ask if they outsource any of their work or if they perform it personally and if they don’t perform it personally, will the person you deal with change? Will you get a regular person to discuss your finances with?

After hiring an accountant, you’ll want to really dig deep and work towards the best financial plan you can for your business. Here are some things to think about when deciding what you need. For one, contemplate what taxes you’ll need done and what records you need to keep for filing and in case of audits. Whether you do or don’t know what taxes need to be done for your business, an accountant can help you figure it out or even file for you (in most cases.) Next, you’ll want to work with them to better manage your cash flow and know your breakeven point. A break-even point is when sales and expenses are equal. It’s essential to know your break-even point because it can help you figure out a pricing strategy and make your budget more accurate. Working with an accountant should improve your business by figuring out what changes your business needs.

Understanding common terms in Accounting

When you’re new to the accounting world, there are many terms that you may be lost on. Although your accountant should be willing and able to review any terminology you don’t understand, learning some of the basic accountant lingo for yourself can be beneficial to helping you grasp more of the financials of your business. Let’s begin with assets and liabilities. Assets and liabilities show how much your business is worth. Assets are property (either tangible or intangible) that adds value to your business. Assets could include things like inventory, (paid off) vehicles, and even your brand value. Liabilities are any long-term or short-term monies your business owes. Examples of liabilities include credit card payments, bank fees, and loans. Additionally, accounts receivable is an asset while your accounts payable is a liability. Accounts receivable (AR) is the money you owe to any person/vendor while accounts payable (AP) is the exact opposite (so money owed to you by people/vendors).

Another thing you’re going to see or hear about a lot is P/L reports and the balance sheet. P/L stands for Profit and Loss. A P/L report is a report showing all the expenses and income you had in a certain period of time. The balance sheet shows the business as it currently stands including all assets, liabilities, and equity. Equity is money remaining after all liabilities are gone and all assets sold. It basically shows the owner(s)/investor(s) stake in the company. Just like there are different types of assets and liabilities, there are also different types of equity in a business. You can run both P/L reports and balance sheet reports by month, week, yearly, or any other custom setting to find a time you’re looking for.

Accountants and all their terms

Knowing what you’re looking for in an accountant can elevate your business even higher. Don’t forget to check out last month’s blog for all the reasons why having an accountant is valuable in your business! Additionally, having a basic understanding of frequently used accounting terms helps you better understand the money going through your business and further your involvement in your finances with your accountant.