Around one in three small business owners in the U.S. are moms, a recent study showed. As an e-commerce business owner, I can easily understand why. It’s one of the best careers for busy moms. Flexibility is hands-down the best part of owning my own business—it’s what allows me to achieve a semblance of work-life balance. But beyond flexibility, making smart financial moves to help mompreneurs thrive is just as crucial. From managing cash flow to maximizing profits, the right financial strategies can make all the difference in building a sustainable business while balancing family life.
However, I’ve found that managing kids and a home plus running a business, though affording me lots of flexibility, is definitely not a cake walk. Some weeks I feel like I’m on top of my game and I’ve got things under control. Other weeks I feel like I’m barely surviving. But I will say this: I’ve found that one of the key factors in reducing my stress as a busy mompreneur is getting my finances in order. Mind you, I am not someone who loves spreadsheets and numbers.
Even if you’re not a numbers fan like me, there’s plenty of simple financial moves to help mompreneurs lessen stress and improve work-life balance. Read on to learn about my top four!
#1: Keep your personal and business finances separate
Keeping your personal and business finances separate can help reduce stress, especially during tax season. With separate records, it’s easy to look back at your business expenses and see exactly how much you spent and on what. Tax returns can then be filed quickly and with fewer headaches, so you can focus on what matters most—spending more time with family.
In addition, keeping separate business and personal finances also increases the likelihood of you being
approved for a business loan. If you want to scale your operations to boost revenue and improve your family’s quality of life while simultaneously needing financial assistance, separate finances are the way to go!
The first step is to open a business bank account and use it for all your business spending. Research your options, and compare account fees and interest rates before you go with a certain provider. Know that fees between accounts can vary widely. Some providers may charge monthly fees on the account, while others charge monthly fees only for extra services used.
#2: Make room in your budget for self-care
Studies show that over 40% of small business owners have experienced burnout in the past month. Again, I can include myself in that statistic. I am constantly trying to figure out ways to manage burnout. The reality of being a small business owner is that I don’t have any designated “off time.” My business is always open. There are always projects that need to be completed. The to do list is never-ending. Add on the stress of also raising kids and it can quickly become almost impossible to juggle.
I have been trying to schedule massages at least once a month. In the past I didn’t prioritize my self-care and I definitely did not put aside room in our family budget or my business budget for self-care. But I’ve come to realize it’s incredibly important. And nobody will do it for me. I’ve got to be the one to make it happen.
You may not have hundreds of dollars to invest in self-care, particularly in the early days of your business. However, self-care doesn’t have to require spending hundreds of dollars. For example, you can budget an extra $10 per week to get your favorite latte, or purchase your favorite magazine to sit down and enjoy reading. These little things can be enough to raise your spirits and give you motivation.
#3: Choose a business structure that simplifies finances
It’s also useful to simplify your financial responsibilities where possible, so you have less to do,
less to worry about, and more free time to spend with your family. Your choice of business
structure plays a role because it influences how much you’re taxed as well as how much paperwork
you file.
For example, although there are a few different options to choose from, an LLC (limited liability company) is a popular choice for small businesses for various reasons. For one, LLCs are great for taxes. Unlike with other legal structures, you don’t have to pay corporate income tax. Instead, you pay personal income tax on the company profits, which means you’re taxed just once. An LLC will also provide you with personal liability protection—which means your family’s assets are legally kept separate from your business assets.
If your business gets involved in a lawsuit or owes money, creditors can’t access your personal finances to take payment. I chose to go the LLC route, and it has given my husband and I tremendous peace of mind. It’s fairly straightforward to form an LLC—although the exact details depend on the requirements in your state. You can also use a registered agent service to set up your LLC on your behalf, which simplifies the process even further. For example, Northwest Registered Agent has offices in all fifty states, and they can handle all the paperwork involved in LLC formation in your state. And, to make LLC formation easier to fit into your budget, you can also access a discount for 60% off the $100 fee, plus state fees you typically have to pay for this process.
#4: Build up your emergency savings account
As entrepreneurship is unpredictable, it’s also important you have a safety net to protect your
family and cover expenses when economic conditions get tough. This cushion can also allow
you the freedom to take breaks when needed to avoid burnout. Finance experts recommend
entrepreneurs build up a savings account with between three to six months of living expenses. However, if you can save enough to cover a year’s-worth of expenses, that’s even better.
The easiest way to start an emergency savings account is to set realistic savings goals. Look
at your monthly income and expenditures, and work out how much you can afford to put away
each month. For example, if you make a little more than usual one month, you can also use this extra income give your savings a boost. It’s best to set up regular automatic payments to a separate savings
account where you won’t be tempted to spend it. This makes it easier to build up your savings at
a slow, steady rate. Over time, your account will grow—along with your peace of mind.
In summary
Taking charge of your finances can improve your work-life balance as a successful
mompreneur. If you are feeling overwhelmed or you’re wondering where to start, my advice is to pick one thing and start there. Don’t try to make too many changes all at once. If your stress level is crazy high, start with putting aside money each month for self-care. If you’re stressed about a potential lawsuit, start with forming an LLC. It’s all about the baby steps. You got this, mama!
