You are listening to My Freedom Grove podcast with Gretchen Hernandez, episode 84.

Welcome to My Freedom Grove podcast. The all inclusive podcast that teaches mindset and business tools. We'll help you rise as your authentic self. Be unshakable with your emotional freedom and unstoppable in achieving any goal and living your purpose. I'm your host, Gretchen Hernandez. If you want to put your mental health first in life, relationships and business, you've come to the right place.

------------------------------------------------------------------------------------------

Hi, my strong friends. Hey, it is been a wonderful last like four or five months. I was fully booked with all of my one-on-one clients plus running my two group membership programs. I like to provide different containers for people to come and work with me. So some people like to have a lot more time with me in one-on-ones. They get as much as two hours a week with me, we can get so much done.

And in the group coaching programs, it gives a more affordable and long-sustaining way of having access to me. When we're doing any kind of business, we know that life is always going to come inside ways. Things are going to come up. Sometimes we can focus on business every single session and make a whole lot of progress. And sometimes life comes in and it's like having that extra support of someone that can help you with all of the life stuff also become so incredibly important.

Trying to do everything on your own can be really hard. I know you're strong. I know you're very strong. You're capable of doing this, but sometimes that extra weight on your shoulders makes it so much more difficult. Having someone that you can talk to about any of your stuff helps to lighten that load so that you can make it through and you don't give up and you keep going.

The last four or five months with the wave of one-on-one clients that I had has been great. Some of them are going to continue on and keep going. Others are complete with what they needed for the time being. This is going to open up a couple more spots for people in October, which is really great. Make sure that you reach out and you contact me so that I know that you're interested in that.

Every Phase of the Entrepreneur's Journey Needs Support

So what makes it great is that I get to work with people that are at all different spots along the entrepreneurial journey. I have some people that are just now thinking about becoming a coach and also having their own business. I get to teach them a lot of the coaching tools that I already know, help them to develop their capability, their skill to be able to do that. And then start to show them, okay, now here is the business side of it.

Those journeys are going to be a lot longer than some people that already have had all of the formal training. Maybe they've already been certified as a coach or a healer, or they have an education background where they've already been a teacher for a long time. I get to help to develop people, both in their application skills and in their business skills.

And then I have some folks that are already doing both. They're already a teacher or healer as an employee, and now they're starting to build up their side business. We get to balance both of those. So work stress comes up. I help them with work stress. And then when they have time for business, then we work on building up their business.

I have other people that have taken the full leap into entrepreneurship, and it's like, okay, now what, what does my day-to-day work look like? Because when we're working for another company, we already know what it is. And our job is very constrained. We don't have to do everything for the whole company. We usually just have a portion of it.

Well, as a solopreneur, you've got everything on your plate. Trying to figure out how do you do this thing? I get to help people with that to figure out what are all of the nuts and bolts of a business? What will their schedule look like? How does that schedule evolve over time?

And then I have folks that have been doing it for a while, they know a lot of the information already. Now it's just the practical application. So we're building up their processes. We're flushing out all of their business models. We're making sure that they have their metrics dashboards set up. We're also creating some customized financial calculators.

The Top 3 Money Questions All Entrepreneurs Ask

You gotta be able to make the money work. That's what this whole podcast is about.

No matter where you are on your entrepreneur journey, you have to figure out how to make the money work. Because we all have a roof to keep over our head. We whole need to pay our bills. We'll need to eat. And ideally, we'd like to have a business that's profitable. So not only can we meet all of our basic necessities, but we can go on to earn more and to be able to either reinvest that into our business or go on vacation at some time.

How do you make the money work? In this episode, I'm going to go over three different questions, big questions that my entrepreneur clients have had for me. And I'm going to talk about some specific tools that I have created over the years that helps with all of it.

The three questions.

1. How do I afford to leave my job and start a business?
2. How much do I charge for my products and services? And this could be in the very beginning. This could be anywhere along the journey.
3. How do I ensure my business is sustainable and profitable?

All right, the very first one. How do I afford to leave my job to start a business? Okay.

Q1: How Do I Afford To Leave My Job and Start a Business?

Number one, the concept that I want to teach you is a minimum math number. What is your minimum math number that you need month to month to be able to keep a roof over your head, keep your bills paid and continue going forward? This number is going to become very, very important to you because you're going to freak out. That's just normal stuff. You're starting something new, something unknown, something you probably haven't done before.

You need to have an idea of what is your very basics because if you don't have your basics covered, it's going to add a lot of extra stress onto you. Your minimum math number is the smallest amount of money that you need to have available to you so that you can cover your bare minimum expenses and be able to survive.

You might want to do a little bit more than survive, you know so that you're not just like feeling destitute the whole time. Now, the way that you can figure this out is to look at all of the stuff that you're spending money on now. Take a look at your bank account. A lot of times your bank account will also have tools available to tell you how you've been spending your money.

There are two times in life that I decided to do a full assessment of what I was spending money on. And then I set a target for that. Those two times in life were when I first decided that I wanted to buy my very first home. And then also when I wanted to go a hundred percent all in on my business. Each time I created a calculator for myself.

First, I started with what are all of my current expenses wrote it all out. Sometimes I didn't like the answer. Even writing them all out can bring up triggers and shame and judgment on how I was spending the money. But it's important to write them out. It's just data, just to show where everything is. You might be a little surprised when you write it all down to realize, oh, Hey, there's extra subscriptions and things that I'm paying for services that I don't really use.

Okay. So one of the things that you're going to do is to evaluate is that really the minimum math number after you add up all of those monthly expenses? Or is there anything in there that you can trim out? If you can minimize what your minimum monthly math number is, it's going to be a lot easier to hit it.

When I was trying to buy my very first house, I was 25 years old and I had a ton of credit card debt. I think I had eight credit cards back then. I had fallen into the trap of thinking, oh, I only have to pay my minimum amount every month on those credit cards. And I'll be fine. Oh, I can afford the minimums. Problem is that interest keeps adding in. And so your balances keep going up, not down.

One of those things, when you're looking at everything you're spending money on are all of your debt and the interest rate that you're paying on it. Getting those whittled down to zero is going to be great. If you can get to a point where you only pay cash for things. That's pretty much so where I'm at. I only have two credit cards. They have very, very tiny balances on them. I do that just so that I can keep my credit rating up. If you can keep your balances under 30% on your credit card and you're making routine payments on it, your credit score keeps going up. And having a good credit score sets you up for a lot of opportunities in the future if you ever need them.

When I was trying to buy my first house, I realized I had way too much debt.I created a calculator using a spreadsheet to try to plan, how can I pay this down in what sequence so that I can pay it off the fastest. I decided I was going to pay off all of it in eight months' time, which I did. And then all of the money that I would normally put towards paying on the credit card, now I use to save up for a down payment on a house.

For my minimum math number, it still stayed the same every single month. It's just now instead of paying towards credit card bills and interest rates, I was putting money away for a house. When I first set out that goal of buying a house within one year, my fiance at the time thought that I was crazy in coming up with that goal. But I knew it was doable because I knew what my math numbers were.

Sure enough in a year's time bought my very first house, it was pretty amazing.

Okay. So then making the leap into full-time entrepreneurship, you have to know that you're not going to make money right away. I had the false impression that I'd be able to make all of my monthly income within four months. I got caught up in the hype of listening to some very good webinars. And I'm not going to name names because I don't want it to seem like I'm talking bad about them because they're really great at what they do. But I definitely got swept up in all of their success stories of their clients in thinking that, oh, I could totally replace my income in four months.

Well, that wasn't true. Not for me anyway, maybe for some people they can, but it wasn't true for me. Later on, I found that most entrepreneurs don't start making money until 18 months in. That number was accurate for me.

But I had figured out what my minimum math number was. I reduced that number down as much as I could before I left my corporate job. And then I figured out what are all of the sources that I could use to come up with that?

Again, I created a spreadsheet calculator because one of the things we were looking at were house prices and what we could afford. I got pretty creative with coming up with a financial source. I sold my house and I used that equity to live on for a while. I was able to plug in that equity into this calculator. And I had all of the different houses that we could live at and what those amounts would be. Plus I knew what all of the other expenses were. I was able to calculate out how long could we go without me making any income and still be able to make it.

I also knew what are some alternatives that I could fall back on if I couldn't come up with that revenue. Right? I mean, there's a lot of stuff to learn when you're a brand new entrepreneur. What are all of the different things? Well, I had my 401k, like the break glass in case of emergency. And I also knew that I could go and get a side job.

Now, this was an interesting thing. We're so used to jobs, being a career because we've had these corporate careers for so long and we think, okay, well, if I apply for something, it has to be in this career that I've already been doing, because I'm so good at it. It's going to pay me a lot. And then we go and we get into it and we treat it like it's a career. And like, we have to do all of this stuff to prove ourselves and climb up the ladder.

This is where the shift comes. If your goal really is to become an entrepreneur, your job, whatever it is, where someone else is doing most of the other roles, your hired for a specific task and you get paid for it, it's no longer a career thing. That job becomes your side hustle. Your entrepreneur job becomes your career job. That's where you're going to put most of your focus.

If you have to do a side hustle job for a little bit to earn some money, to make sure that you're covering that minimum math number, then do it. It's okay. Take that extra strain off of yourself because you're going to be building your entrepreneur business for the long haul. You want to make sure that you're creating really good bones, that you understand how to run and operate a business. And it's okay to have slow growth.

Get folks into things that are going to be your long-term sustainable revenue. So that eventually you don't have to worry about emergency funds or going and getting a side hustle job, but calm yourself down in the beginning. It's okay. If you need to take that side hustle job.

Let me share a couple of the other sources that I've heard people share with me. So either my clients or other entrepreneurs that I am friends with, they've shared a bunch of different things. Some of them actually took out education loans so that they could invest in all of the stuff that they have to learn for their business.

Other people have taken out home equity lines of credit. Some people already had savings ready to go. For folks that got laid off of jobs, their unemployment was enough to cover them while they were building everything up. There have been a few that have been on social security disability, either for a mental health challenge or for a physical health challenge, or maybe their kids had social security.

And so some of us do have kids with special needs and we're trying to create businesses so that we have flexibility so that we can be there and help support our kids. That extra social security that is provided for them helps to compensate for the time we can't put into our business, that we're there helping our kiddos. And that also can contribute towards all of the household expenses, because it really is legitimately taking care of your kids.

Some people have gotten grants, so there's lots of nonprofits that are out there and they can apply for grants. You might set your business up as a nonprofit, and then you can get grants. Grants can help to provide a paycheck to you as you're doing the rest of the stuff.

Or if you offer a service that a non-profit could really use, they can apply for grants on your behalf to pay you for those services.

I've also encountered a couple of clients where they've retired from their original profession. They already have a pension or a 401k they're already at the age where they're able to tap into those, but they're not quite ready to retire. They want to still contribute to the world so they can have their minimum math number covered by their regular retirement benefits and still work on creating a business.

Minimum math number, create some kind of spreadsheet calculator for yourself. Seeing the numbers just out on a piece of paper makes it so much easier. We spend so much time judging ourselves when it really is just a math number. Math numbers don't mean anything about us. It's either we have the money to meet that minimum math number, or we don't. And if we don't, where else can we get it so that we can have that?

Okay. So that's your answer for number one. How will I be able to afford to leave my job and start a business?

Q2: How Much Do I Charge For My Products and Services?

Let's move into question number two. How much do I charge for my products and services? I already did a whole podcast episode on price drama. That was getting wrapped up in all of the things, price-related. How much do you charge for your products and services?

One of the things that I have done with my clients lately is to create a revenue tracker. A revenue tracker allows you to put in all of your different products and services that you're thinking about, the prices that you're thinking about. It shows over the months, how many of each of those products and services you have sold, or you would like to sell, and then it calculates it for you of what your monthly revenue would be and what your yearly revenue would be.

We're also evolving that calculator to include how much of your time gets taken up. Because some folks out in the entrepreneur world they've had multiple coaches and some coaches are all about making huge amounts of money, like come out and make a hundred thousand immediately, then go on and make millions. Then I get clients that come to me that have these huge dollar ideas in their head. They're really excited about it. They're pumped up.

And then when we pull out this revenue calculator, we start typing it in. It's like, yeah, you could make that much money, but either you're going to have to charge huge amounts of prices for the products and services that you're offering, or you're going to have to do so many of them at a reasonable price. How many hours of that is your time per week?

Because it's not just the delivery time, the face-to-face time with your clients. There's all of the backend business stuff that supports the customer service plus the marketing plus the sales time. We're creating custom-made calculators for each of them so that they can really get a sense. When you can see the numbers, it helps you to make better choices.

Finding the sweet spot is what you really want to do. The sweet spot is what is it that meets the demand for your customers? It's your offering some kind of product or service that they actually want, they're willing to pay for. And it's at a price that they're willing to pay because everybody's got budgets. And some of our products and services are necessary. Things in their life. Some of it is not necessary. It's a luxury.

How much are they willing to pay for it? Then you balance that out with how much revenue you want to generate for yourself and how much of your time is available.

When you have these custom-made calculators, you can play around with the numbers so that you can see what that effect is. If a customer comes to you and they're willing to pay something really low, it's like, yay. This is so exciting. Someone's willing to pay for my product and service, sure, a little bit lower, but okay, I can do this. Okay. But then when you plug it into this calculator, is this something that's going to help you first make your minimum math number and then second help you to go past your minimum math number.

A lot of the clients that I'm working with are still not there yet at making their minimum math number. This helps us to get grounded in reality, and to make some really good choices for the long haul.

Q3: How Do I Ensure My Business is Sustainable and Profitable?

Okay. Now we're going to move on to the third and final question.

How do I ensure my business is sustainable and profitable? When you first get into business, it's going to take a while for you to figure out all of the nuts and bolts. How do all of the pieces fit together? What is the pricing? How does this fit into my life? What is my schedule?

Eventually, you're gonna figure out all of those pieces. You're going to do enough experiments. You're gonna find the stuff that works for you. Now you're getting into the part where it's like, okay, how do I make sure that I'm always in business? You want to be in business for life, right? Like you didn't go through all of this to get to a point where you're like, okay, yeah, I made enough money. Okay. Now I'm done. That's not it. You want to make sure that this is what your new normal is.

I mean, when you were working in a career job, you got a paycheck. And so your paycheck, you would take that money and you would do stuff with it. Sometimes you'd just cover all of your expenses. Well, when you're in a business, you want to make sure that you have that, right? You have your own paycheck, but there's a lot of other stuff that you need to cover too.

I want you to go back and think about that paycheck that you got when you were still working as an employee, there was a gross amount of income. They're you usually either a salary or a per hour rate, you don't get to bring that full amount home with you. There are other things that were pulled out before you got your paycheck.

Well, when you're an entrepreneur, when you get paid for your product and service, that revenue is basically like your gross income.

Other stuff needs to come out of it. In the beginning, you're going to see the revenue and be like, oh my gosh, thank God I can pay my bills. But for the long haul, we have to get into a different practice.

Think about that original paycheck. When you were an employee, things that were put aside, money was taken out of it and put into other accounts for you. Some of that was your taxes. Money was taken right out of the top, put aside for your taxes. Then when it was time for you to do your yearly taxes, you would report that you had already paid in this much. And if you had overpaid, you'd get a refund. That always felt great. I always had them take out the most that they could in taxes because I loved getting a refund every single March.

I couldn't wait to do my taxes. So now, as an entrepreneur, I need to make sure that I'm putting away enough money for taxes so that when I do taxes, I don't owe any money. And in fact, I can look forward to having a refund because it always feels so good to get a refund. And then it's like, yay. I can take a vacation or whatever, right?

It's it's not free money. It's your own money. It's just, it had been put aside for you.

Okay. Other things on your paycheck, you also had your insurance. You had your health insurance. If you had life insurance that would already get taken out before you took your final net pay. You're going to have to figure that one out also as a solopreneur.

So write that down. It's like, you can create your own spreadsheet again on this.

You might even want to consider creating separate bank accounts. You get your revenue. Let's say all of everybody pays you through PayPal or Stripe or something. Can you send certain percentages of that money to these different accounts?

One of the other line items when you were an employee, hopefully you're putting money away into a retirement account. So I had two. I had a 401k and I also had 529 plans. 529 are the college savings plans. All of that money was like out of sight, out of mind. And then when it came time to need that money, there was plenty of money there.

And in fact, since I had put it into investment accounts, that money was growing. That was even better. I was fortunate enough to work at a company that allowed stock options. Some of my money I would divert right into purchasing stocks that I could sell at any time.

As an entrepreneur, you can do the same thing with your revenue. You can divert it to all of these different places so that it's already pooling. And some of it is growing your money as some type of an investment. Other parts are putting away specifically for things that need to get paid. Then when those bills come due, the money is already there.

When I was employee, once I would have my net pay. After we've taken all of the other stuff out, I had net pay. I could choose to either take all of that net pay and just put it right into my checking account or do other stuff with it. I actually sent part of that money over into a credit union account because I had a car payment and I got a much better rate on my car payment because it came from a credit union account. I would just automatically send a set amount of money over to that credit union. And all of my car payments were set up on auto-pay.

I didn't even have to think about it out of sight, out of mind, everything was taken care of. And in fact, I had decided to send a little bit more than what I needed so that I could start earning some interest on that. Or I could have that build up and then eventually pay an extra payment that just went straight to principal, get that car paid off as soon as possible.

I also have extra savings accounts. So when it did come into my checking account, it would also divert into two savings accounts so that when my kids needed stuff for school, like school clothes, or any extra activity that was unplanned, there was already money set aside for that.

Then what I'd have left was what was basically my minimum math number.

I had enough to cover all of my expenses. When I got used to living on less, it was so much easier. And just like our day-to-day stuff, it's like, okay, I don't need to be totally extravagant with stuff, but it was comfortable. It was just enough. And all of the rest of my money was working exactly as I needed it to. That's how I was able to take care of a family of seven just by my own income.

As an entrepreneur, I am getting set up to do the same thing, to make sure that my business goes for the long haul. I don't have an employer. Who's going to separate out my money for me. It's up to me to separate it out. I have all of my revenue coming in. I decide what are the different pools that this money needs to go to divide it all out and then plan accordingly.

Putting Your Profits First

I recently started listening to the audio book profit first by Mike, oh, his last name starts with an M. It's a really long one. [Profits First by Mike Michalowicz] But if you were to do a Google search for profits first, you'll find his name. So it's Mike something, it starts with an M really long on, but he talks about also creating a profit account.

You know, I talked about these separate bank accounts. He's talking about creating a profit account and that you start off with just sending 1% of your revenue to it and have it be an out of sight out of mind account so that it's there and it's just building. Because at the end of a full year in business, when you look back, you're going to look at all of your profits and loss statements.

You're going to see that you made a profit and then you'll be all excited. And then you're going to look and go, okay. So where is it like I'm looking at my bank accounts, where's all that profit? He's saying that if you put this over into a specific profit account that you don't touch when you're doing your profits and loss, at the end of the year, you'll have a place you can go look and the money will actually be there.

Because we tend to start spending money as soon as it comes in, that's a habit that we can change. We can choose how much of the immediate profit do we want to use? How much of it do we want to put aside? Because there might be something you want to do with that profit, like reinvest that into the next product that you want to create. Or reinvest that into paying an employee so that you don't have to do all of the work yourself.

It might be reinvesting it into getting a replacement car. If you need that, it's your profit. You get to choose what you want to do with it.

I know I threw a lot of different things at you today. Having visuals of this is so much more helpful than just the audio. I have some of these different calculators that I could show to you. If you're interested, I'd like to invite you to take me up on a free consultation. During a free consultation we can talk about where it is that you're at in your business.

Are you at the very beginning, right at the leap off point where you're fresh as an entrepreneur, you've got the whole thing ahead of you, or you further down, have you been doing it for a while? And now you just want to refine what it is that you're doing.

Set up a time for us to talk. I can even show you some of these tools that I use some of these calculators, because when you can see a visual, it changes everything. And then you can start to move it all around. It helps your business to become about the numbers and not about you as a person. It helps you to find that calm in your business.

It's definitely possible that you can get your business to be a well-oiled machine with plan predictable income for you, and that it can be sustainable for the long haul. It would be my honor to help you in any way possible. I do have a couple of one-on-one spots opening up in October. If that's something that you'd like to do together, I would love to be that partner for you to sign up for a no-obligation consultation call, just go to my website. You can go to the contact me page, and there's a button there to sign up for a time.

All right. My strong friends, I hope that you have a wonderful week. Get anchored on your numbers. Everything's going to be okay. I'll talk with you next week. Bye-bye.

------------------------------------------------------------------------------------------

Thank you for listening to My Freedom Grove Podcast. I can't wait to work with you directly. I'll help you to be your authentic self, to have amazing relationships, and to live your purpose. I invite you to check out Unshakable Men and Unshakable Women. The unshakable programs will give you all of the tools, coaching, and the community to help you rise in life, relationships, and business. To learn more, go to my MyFreedomGrove.com/workwithme. I can't wait to see you there.