Growing up my parents rarely discussed money with me. The valuable advice they gave me was never be late on bills and always save some of my paycheck. I can admit, if I had a trip in mind or something that I really wanted to buy, I’d save for the purchase, beyond that, I only paid attention to my finances when my paycheck was deposited. This blog will share some insight on a few aspects of managing your personal finances before jumping into starting a business. This by no means is an exhaustive list, it’s simply five things that helped me when I first started Lizzmore Womenswear. I am not a financial advisor, and am not a self proclaimed money expert, but these things helped me become serious about my money mindset. I believe that you cannot successfully run a business if your personal finances are in shambles.
I saved $8,000 to launch Lizzmore Womenswear. This covered design meetings, fabric purchases, and sample dresses. Initially, everything came out terrible and I pretty much lost all that money to an unscrupulous factory. Moreover, I realized once I started my business that I had no true financial insight on how to properly manage money and plan. I believe wholeheartedly that my business suffered financially because I did not manage my own personal finances well. Here are a few things to consider in your personal money walk before starting a business.
Picking up my first collection from a factory in NYC, September, 29, 2018.
#1: Set A Budget
I funded Lizzmore Womenswear through my 9-5 as a medical sales representative. It started off as a true side hustle by slowly putting a couple dollars in savings and then my entire bonus checks. I researched and visited factories on the weekends and oftentimes used vacation days to go source fabrics in other cities. I’m sure you’ve heard the saying, “It takes money, to make money,” and although there is some truth to this statement, just having money is not the answer. There’s a naive mindset when starting a business when it is different from what you have knowledge on and it provides your ability to have determination, but it does not ensure making a profit. What’s most important is having a plan and using your resources wisely. There are so many unknowns when starting a business, but knowing how much you want to spend and how to keep your business objectives aligned with your budget is key. Just like the concept of a rainy day fund, you should have extra money saved for unexpected expenses. I constantly peeled a little off of my personal savings to buy unforeseen things and that added up. Unfortunately this kept me from reaching savings goals. In fact, I still have products sitting in storage that were never sold to customers because the fit was not perfect. Unsold merchandise is a direct reflection of spending money and not seeing a return on the investment, that cash was essentially wasted.
I had no idea what I was doing when I started my business in 2017, and over time I’ve been able to build a solid network of professionals and resources to help me achieve my goals, but the first time I turned a profit for Lizzmore was in 2020. This time around, my budget planning was impeccable. I sourced smarter and used all my resources to make sure I did not overspend or waste product. Depending on the sector of business you are in, there will be classes you can take to prepare you for budgeting your business. Courses on Udemy and self help business plan books can provide a wealth of information. One of my favorites is, The Lean Startup, by Eric Ries.
Launching a line of sweatshirts over the 2020 quarantine allowed Lizzmore Womenswear to become profitable for the first time! Sometimes a pivot is the right thing to do for business to see profit.
#2: Pay Off Debt
What’s important to internalize is that you have the power to change your situation. So what, your parents did not teach you about money. Once you realize you are missing that knowledge, commit to changing your ways to better your situation. Consider things like auto-pay to keep your budget tight. I found it necessary to put my $20,000+ credit card debt and over $60,000k in student loans on auto pay to make sure it was being paid down consistently without me thinking about it. In all honesty, lingering debt depressed me. It crippled my ability to see the silver lining of making a payment. Running away from statements made my debt worse! Surrounding myself with friends that took their financial health seriously changed my perspective on money, spending, and debt. Having open and honest money conversations will shift your knowledge but holding yourself accountable is the true test. Try resources like, The Budgetnista and the podcast, Journey to Launch by Jamila Souffrant for more insight on budgeting and debt management.
#3: Check Your Bank Account, EVERYDAYYou may be asking yourself, everyday? really?...YES, everyday! (this worked for me) Remember you are trying to establish good habits and most of all, hold yourself accountable for being better with your money. Instead of waking up and strolling your social media accounts, roll over and check your spending. Check your credit cards and bank accounts and watch how you shift the way you spend. This is also a good way to catch fraudulent activity and unnecessary subscriptions, which surprisingly I discovered a few times. The point of this is to track spending habits. When I started doing this, I made smarter plans with my money. I opened specific savings accounts for goals I wanted to reach and elevated my bottom line. Most people believe the misconception that if you make more money then your financial woes go away...WRONG! The bad habits will be exacerbated because you think you have more money to play with. As your income grows keep your expenses in the same realm of where they were and shift that extra income to savings accounts or investments that bring in more income. My overall net worth officially outweighs my debt and I attribute this to being a hawk over my accounts. There’s a lot of literature out there about living beneath your means, investing, and saving. A fast read with simple steps is, The Richest Man in Babylon, by George Clason. This book was written in 1926, and it's a collection of parables set 4,000 years ago in ancient Babylon, so the language is reminiscent of reading grandma's bible, but the sentiments of classic financial advice remains.
#4: Open Business Accounts
This seems like a no-brainer, but my accountant shared that this is a common mistake that new business owners make. Make sure every single transaction that takes place through your business happens from your business accounts. In addition to a business bank account, having a separate business paypal account, and business credit card will make the organization for filing your taxes so much easier. You should never mix business income and payments with your personal accounts.
#5: Accept Your Journey
In the age of everyone showing us their highlight reel on social media it’s hard not to be a little envious. I struggled big time with watching friends start seemingly successful businesses and brands. I have always envisioned Lizzmore as the go-to for corporate attire, but honestly a lot of women haven't fully shifted back into the workplace. My business is having a lot of growing pains, and with so many women comfortable in loungewear, I really have to consider that pivot as an avenue for continued success.
One thing remains constant, I need to only worry about myself. I truly am my only competition. Consistency is the only thing that will elevate my business, and the same will go for your goals. Being better than you were yesterday should be your only concern. I am nowhere near what I envision but I am grateful to have you all on this journey with me. What makes us all unique is that there truly is no one else like you! Why worry about what others are doing when you can shift that energy into your ideas. Look, social media is tough. Log off for a while if you need to regroup because being envious is a natural emotion, but what you do with that feeling, is all on you. Be inspired by others but don’t dwell on their success, get to work on yours. A great book that shifted my perspective on simply spending more time with my goals was, Finding Your Element, by Ken Robinson.
I hope these five tips provided a clear understanding on how your personal finances are among the first components of ensuring an impactful business. As Lizzmore Womenswear grows, I will continue to share how my experiences of the things I love like family, fashion, film and financial freedom impact my personal and business success.