Discover Similarities Between Entrepreneurial & Personal Finance

We talked a lot about entrepreneurial finance, but what Clara and I really like is this concept that after all entrepreneurial finance and personal finance really isn’t that different, there are a lot of similarities.

And if we stop for a minute and engage in a little bit of an experiment, we can think of ourselves as a company, right? So when you graduated [from] university, you were 23, 24, maybe you were a startup. Now let’s say you have eight years of experience, maybe you’re a bit more mature startup now, more like a company. So let’s think about a company, like what kind of products does a company sell and how does a company generate revenue? So one potential revenue stream, and it doesn’t have to be only one – in fact, it shouldn’t – is your income, the salary that you make with your day job.

A good example is: I used to work in consulting and let’s say that I was offered a pretty neat salary of €80,000 prior to taxes per year. It sounds like a lot, but if we actually engage in a little experiment and think it through and say, okay, I worked 60 hours, that was a total of 2520 hours. If you really divide that and think €80,000 divided by 2,520 hours per year, that’s an hourly wage of 31 euros before taxes. So maybe it’s not that much. And maybe Clara would say: hey, Carol, why don’t you just get a nine to six job? And then you just have a side hustle and make money on the side. And maybe that’s a better lifestyle and even good for you to diversify your revenue streams.

It’s [a] really good idea to think of yourself as a company and also to adopt that sort of mindset when it comes to personal finance.

There are certain concepts that you should be aware of with respect to personal finance. We already talked about cash flow, liquidity, really important that you understand your net worth. So how much do you own, how much do you owe? And we encourage everybody to actually write it down on a piece of paper – and actually Finelles has a great, great exercise sheet for that, super helpful – where you basically, write: Okay, I own a car and, I have a monthly net income of, let’s say €2,000, but then I have student debt. So every month I owe the government or somebody money, maybe that’s like €200 and then I have rent to pay, et cetera. So it’s really important that you have a very structured approach to personal finances and a very, very healthy money mindset.

And as we said, [in] at the beginning, you have to be comfortable with numbers. Eventually, you’ll have to learn it. And you will see that that really empowers you and it gives you a lot of confidence. For women it’s really essential to be comfortable with numbers and with money, doesn’t matter whether you’re a startup entrepreneur or whether you consider yourself as your own little Carol-Clara company and treat yourself as such.

Your personal finances and the way you manage your personal money, have a huge impact on how you go and run your entrepreneurial finances because essentially you need the same aptitude and attitude towards your entrepreneurial finances as to your personal finances.

It’s really important that you are comfortable with numbers or learn how to get comfortable with them by any means possible. It could also be a super creative way, right? Maybe you want to have a vision board with money written on it and like look at it every day. We’re big fans of using nice little Excel overview sheets that help you understand your cash flow, liquidity, net worth all of these super basic, very important concepts.

And you have to have a healthy money mindset. That means when you know that you’re worth a certain amount of money and have learned how to ask for the money you’re worth, that will also translate to your entrepreneurial finances. And you’ll be able to ask for a slightly higher sum for your products, or, you know, take into consideration inflation and add that to the product cost or come up with different ways of selling your products, thinking different product packages, et cetera. So personal finances and your attitudes towards your personal finances and having a healthy mindset really is the foundation.