by Crystal
When you are a solopreneur, it can be easy to get stuck in a rut of constant work, work, work with no real progress or happiness. However, there are 5 easy steps to get out of this rut, achieve success, and find joy! In this video, I go over these five steps that will help you make more money, work less, and have more fun.
Topics Discussed:
5 Steps to…
You can watch this video and others on the Solopreneur Money YouTube channel.
by Crystal
In this video, Principal and Founder of Gabe Nelson Financial, Inc. shares the 10 best practices when it comes to budgeting for solopreneurs.
Topics Discussed:
You can watch this video and others on the Gabe Nelson Financial YouTube channel.
by Crystal
Do you have an A-team built for your solopreneur business? An A-Team consists of an accountant, an attorney, and a financial advisor that will be there to help you and take care of your business. As your solopreneur business’s complexities begin to grow, your A-Team will help you through the necessary business processes every step of the way.
Topics Discussed
You can watch this video and others on the Solopreneur Money YouTube channel.
by Crystal
When asking world-renowned leaders, entrepreneurs, or self-transformational coaches, “what is the key to success,” the one message they most have in common is that it can all be traced back to the mindset you carry. Having a growth mindset, meaning having an openness to change and new experiences is what sets you up for success.
On the other hand, having a fixed mindset will hold you back and prevent you from creating the life you want to live.
You may not be aware of this, but there are scripts that play out in your mind that directly affect the way success plays out in your own life. What do your scripts look like? Are they positive? Are they negative? Do you feel as though most days you have no control over your mind? These scripts reflect your mindset, and every story of success is tied to a specific type—a winning mindset.
Before we go any further, I want to make sure you understand what mindset is. It’s your thoughts and beliefs that shape your habits—thoughts and beliefs revolving around success, around money, or maybe even about yourself.
These beliefs comprise the scripts or stories you play out in your mind: the stories you tell yourself about success – good or bad, the stories about money – good or bad, the stories about yourself and your life in general – good or bad.
Do the stories you tell yourself sound like this?
“I can’t be successful and honest and spend quality time with my children.”
“I can’t be a great parent and a successful business owner.”
“I’ve never been responsible with my money, so why start now.”
“I can’t do that. I don’t have the experience or knowledge I need.”
My response: Says who? Where do those stories or narratives come from?
Your mindset is developed over the years based on your culture, experiences, and education. But your stories aren’t etched in stone. The great thing about mindset is that you can change these narratives and, in turn, change your beliefs to revolve around a more positive outlook.
In Carol Dweck’s book, Mindset: The New Psychology of Success, she explains that there are two kinds of mindset:
To change these stories, you need to understand the two types of mindset and what kinds of thoughts and behaviors are rooted in them.
A fixed mindset is one that will hold back your success if you let it. When you have a fixed mindset, the stories you tell yourself and how you view the world centers around the belief that you will never be more than or better than what you are right now.
Having a fixed mindset leads to a desire to look smart over actually making progress and impacting your life. This plays out in avoiding challenges, getting defensive or giving up easily, seeing effort as fruitless or worse, ignoring constructive feedback, and feeling threatened by others’ success.
As a result of having a fixed mindset, you would be likely to plateau early in your life and career and achieve less than your full potential.
What you want to have is the opposite of a fixed mindset. Successful solopreneurs have a growth mindset, meaning the stories they tell themselves and how they view the world centers around the belief that they can change and improve themselves over time with intentional action.
Having a growth mindset leads to having a desire to learn and strive toward success. Therefore, those with a growth mindset tend to embrace challenges, persist in the face of setbacks, see effort as a path to mastery, learn from criticism, and find lessons of inspiration in others’ success.
As a result, someone with a growth mindset will reach ever-higher levels of achievement.
If you recognize that you have a fixed mindset, either in general or about a particular aspect of life, it’s important to know that this isn’t a life sentence. You can change and evolve; in fact, merely accepting this to be true is a growth mindset shift.
So if you want to change your ways, I have six steps to share with you to shift from having a fixed mindset to a growth mindset.
Go from saying to yourself, “I can’t be successful and honest and spend quality time with my children,” to saying instead, “I can be successful, honest, and know my children.”
Go from saying, “I can’t be a great mom and a successful business owner,” to instead telling yourself, “I am a great mom and a successful business owner. #BossMom!”
Questions lead to answers, so they help drive the narrative. What you are putting out is what you are getting back. So it’s important to ask positive, generative questions, such as:
That last question contains a clue. If you are caught in a negative, fixed mindset thinking cycle, seek out a mentor and ask them how they are able to do what you want to achieve. The trick is to find a story that your mind finds plausible. Ask them for specifics about what they are doing right, and details about their mistakes. Even if their circumstances don’t match your own, you can still take away gems to move your thinking forward, rather than staying stuck.
Remember, a fixed mindset is one that’s stuck and causes you to stay stuck. The opposite of this is progress; it’s a growth mindset, meaning you need to get moving and take action.
Start by determining what habits and actions you want to start doing. Make a list that you can refer back to and begin modeling those specific behaviors and actions.
When my oldest daughter went to college, I wanted to make sure that I did not lose touch with her, as I know I am not the best at staying in touch. So I set up a reminder to go off in my calendar every Wednesday to remind me to reach out to her to see how she was doing. Otherwise, I could’ve fallen into the trap of believing the story I was telling myself—that I wasn’t good at staying in touch.
Consider the behaviors that you want to change or new behaviors you want to adopt. Take action, learn, adjust, and keep growing.
Before you click away and dismiss this advice, just know that I felt the same way. I imagined someone sitting on a mountaintop somewhere in complete silence. It seemed way “out there” and not something I could see myself doing. But that was a fixed mindset perspective. The best advice I can give you is just to try it.
I have been meditating daily for nearly two years now. My experience has been, and even mainstream science confirms, that it will rewire your brain for the better. As a result of giving meditation a try and sticking with it, and liking the results, I am now a huge fan.
I highly recommend finding an app to help you meditate. Because we have a Peleton bike, I use the guided meditations on their app. There are different types and lengths of meditations, but just start simple, and you’ll begin to see a shift into more positive, expansive thinking about life and business.
Adopting a growth mindset means being open to learning. Gaining new knowledge opens up new perspectives and possibilities.
Commit to reading at least ten pages of a good book every day. Find self-help books, mindset books, motivational books, or different genres you enjoy reading. Whatever works for you to get you into a growth mindset. Just read. Fill your mind with good positive energy every day. You will be surprised by how your mind will begin to change in a very short time.
There are all kinds of books out there, but one of my favorites is You are a Badass by Jen Sincero. It’s all about getting your mind right and going for it—whatever “it” is!
You can change from having a fixed to a growth mindset; anything is possible! You simply have to find out what those negative stories are that you’re telling yourself and begin making mindful habits to shift into the story you’d rather be telling.
You can be successful, honest, and know your children.
You can be a great parent and a successful business owner.
You may not have been responsible with your money in the past, so why not start now?
You can do that thing even if you don’t have the experience or knowledge you need.
Whatever story you’re telling yourself, is it serving you and the life you want to create? If not, don’t be afraid to make changes.
If you need help mastering your finances, including cultivating a growth mindset around your finances so that you can create the freedom to build the life you want, schedule a complimentary consultation appointment.
Gabe Nelson, CFP®, is the principal and founder Gabe Nelson Financial, Inc. (GNF) is a Registered Investment Advisory firm based in Sioux Falls, SD. GNF offers fee-based financial planning and investment advisory services to solopreneurs and self-employed professionals. Clients receive personal attention from a financial planner dedicated to helping them reach short and long term financial goals with specialized insight into the particular challenges and opportunities that arise in entrepreneurship. Gabe can be reached at 605.553.9180, via email at ga**@ga*****************.com, or on the web at gabenelsonfinancial.com.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
by Crystal
Going from employee to solopreneur isn’t a transition you should enter into lightly. Whether you’re eager to put in your resignation, worried about giving up a regular paycheck, or a little bit of both, chances are you haven’t considered everything you need to know to make a smooth transition. If you truly want to have the freedom to build the life you want, you need to start by getting your ducks in a row and making sure that you and your family are prepared financially.
If you’re not sure if you’re really ready, keep reading to learn about the seven steps every aspiring solopreneur should take to know if the time is right to make the leap.
My grandfather has long since passed away, but Grandpa Lloyd was a very successful small business owner. When I was a kid, he owned a farm supply and seed store in Harlan, IA.
Looking back, I remember that my family always had pictures of exotic vacations, but what I didn’t realize until a few years ago was that my grandpa was a badass business owner. All those exotic trips were rewards for his stellar business performance in serving his clients. I’d like to think I inherited a lot of who I am from him. He was a tremendous family man, very successful, and always had time to help out a neighbor.
My grandpa is my inspiration for building the life I want, which is why I always use the name Lloyd in honor of him when telling my client stories. My clients have their own inspiration, and they inspire me too.
So, enter Lloyd – a client of mine. He wanted to make the transition from worker to owner but needed to make sure that his family’s standard of living didn’t change. I find it so exciting to help clients see the possibilities of solopreneurship and then make the transition, ultimately creating the freedom to live the life they want.
So Lloyd and I started with a discussion of 7 areas of solopreneurship, as follows:
By walking through each area below, you’ll see what you need to assess in your personal and business finances to determine if you’re ready to make the transition from employee to solopreneur.
Cash flow is a measurement of how much money moves into and out of your business during a specified period. And understanding your cash flow is critical to knowing whether or not your business is viable and sustainable. You need to know if you’re bringing in enough to cover operations, pay yourself, and make a profit.
Do you have the ability to create sufficient revenues? If you’re turning a side hustle into a small business, you’ll need to know if it can create enough revenue to replace your paycheck. If you have clients just waiting for you to go out on your own and start working with them, you should know what to charge to make your efforts worthwhile and cover your expenses.
You’ll need to get clear on the amount of revenue you can realistically expect to pull in versus your business and personal expenses. What are your current or estimated revenues for the next 12 months? What are your existing and estimated business and personal expenses for the next 12 months?
The question of cash flow will be your first test in the process. Can you make the transition from employee to solopreneur and have the revenues coming in to match or exceed your expenses? If yes, carry on and keep working through the process. If not, carry on, albeit a bit more carefully, because we don’t have enough information yet.
In the case of my client Lloyd, he did indeed have more revenues than his expenses. So we moved on to discuss the next item.
An emergency savings fund is a stash specifically used to cover or offset any expenses related to an unforeseen situation. Stuff happens, and when something unexpected comes up as a solopreneur, you can’t always depend on a regular paycheck. Deals fall through, clients take forever to pay an invoice, and meanwhile, your car breaks down and your kid’s tuition is due. You need enough savings to keep yourself afloat and cover costs when things don’t go as planned.
Take a close look at your personal and business cash reserves. How much emergency savings do you have in place in case ramping up your business takes longer than you expect or you have a down season? I recommend six to 12 months of living expenses, leaning more towards 12 to be safe.
Having access to credit can help too. When I left management in 2003, with my wife and oldest daughter at home and a second child on the way, I went to the bank and opened a line of credit just in case. Some other options include taking out a home equity line of credit or, as a last resort, using credit cards.
Lloyd had his emergency savings covered, so we moved on to the next step.
Since Lloyd had a 401(k) with his employer, we talked about the retirement options available to him upon leaving and moving forward. We discussed the following options with his retirement assets and his goals regarding retirement planning.
Each one of them would work, and they each have different benefits that may or may not be of interest.
Since Lloyd wanted the ultimate flexibility and control, he went with the third option and chose the Solo 401(k). With this, there was a Roth 401(k) option that was a good fit for him. This allowed for the highest limits if his business were to be successful. Plus, he would have 401(k) loans available as an option just in case he ran into a major cash crunch.
As you’re exploring retirement options, keep in mind that these plans should not be a major expense for you. Be sure to ask your advisor about the annual expenses of having any of these plans in place. Still, the bottom line is, it’s essential to not neglect your retirement planning as you transition into self-employment.
Since Lloyd was on the right track, we moved on to the next step in the process.
When you go into business for yourself, a lot can happen to derail your progress. No matter how optimistic you are, it’s important to recognize and address potential threats proactively with appropriate risk management. In other words, you need to make sure you’re adequately insured.
A critical expense you can’t afford to skip is health Insurance to protect your family from the financial ruin of excessive medical bills. If your spouse has employer-sponsored benefits, this is often the best choice. If not, there are other options.
You may be able to take advantage of COBRA, which can last up to 36 months in some circumstances. In simple terms, COBRA is the continuation of your plan from your employer, but at the full price that your employer was paying, which can be expensive. Keep in mind, if you’re considering COBRA, you need to elect it within 60 days of leaving your plan. Otherwise, you may need to find private insurance, and there are many relatively affordable options available in the marketplace.
It’s also important to ensure you have adequate life insurance coverage in place. All too often, people let this slide when they become self-employed because they’re accustomed to having the employer-based policy.
As a rule of thumb, I recommend having five to 10 times your annual pay in life insurance before going out on your own. The policy you held through your job may be portable and easy to maintain. If not, get a policy in place and account for the cost in your budget.
You’ll also want to make sure you have disability income insurance. If you become disabled while employed, the insurance can soften the blow; however, many solopreneurs neglect to get coverage, leaving themselves exposed to significant risk.
Because most employer policies are not portable, and because disability insurance companies will want to see two years of tax returns before writing a policy to someone who is self-employed, you should apply for benefits before quitting your job. So my advice is to explore your options before going out on your own.
Look at the total monthly cost for health, life, and disability insurance, and be sure to include these costs in your transition expenses.
Lloyd and I made sure he was adequately covered with insurance and moved on to the next step in the process.
I spend a fair share of my time helping my clients reduce their tax burdens and bills. I find that most people don’t mind paying what they owe but do not want to leave the IRS a tip.
My advice is always to hire a good CPA or accountant. Find someone who specializes in working with small business owners, and even better if you can find one that works specifically with solopreneurs.
You’ll also need to know about self-employment taxes. You may already have some familiarity with it, but you should be aware that you’re responsible for the full 15.3% self-employment tax on your bottom line if you’re a sole proprietor.
Even if you’re organized as an S-Corp, you’ll still have to pay the 15.3% total; it will just be split between the corporate payroll taxes and then the amount to be taken out of your paychecks. You’ll also be paying ordinary income taxes, which you’re already paying, in addition to your self-employment tax.
You might be thinking, “holy crap, that is a lot!” Yes, it is, but if you work with a good CPA in conjunction with tax planning with your financial advisor, you’ll be able to reduce taxes as much as possible. Still, it’s important to take your overall liability into account.
One last thing regarding taxes: when you become a solopreneur, be sure to set up a special tax account. Make regular deposits to it so that it doesn’t hurt so bad when it comes time to pay your taxes. I have seen many great businesses shut down because of poor money management around taxes.
I hooked Lloyd up with my CPA, and we were ready to move on to the next step.
I am a big fan of filing taxes as an S-Corporation for solopreneurs, especially successful ones. This means you’re going to want to organize your business in one of the following manners.
I personally am set up as an S-Corp and have been ever since 2008, when I formed Gabe Nelson Financial, Inc. I knew that is the type of firm that I wanted to be from the very beginning.
Like a lot of things in business, especially when starting a new one or making a transition from W-2 to solo, you’ll want to begin with the end in mind. I wanted to have the ability to take advantage of paying myself a salary and then taking distributions to help reduce my tax liability each year.
In simple terms, with an S-Corp or an LLC filing as an S-Corp, you have the ability to pay yourself a salary – let’s say $100,000, of which you’ll then be subject to payroll taxes and ordinary income taxes. But let’s say you’re planning to pay yourself another $100,000 in distributions. That amount is only subject to ordinary income taxes. The $100,000 distribution would not be subject to payroll taxes and would provide additional income to your household free of payroll taxes.
The options to you are as follows:
You’ll also want to make sure you have your Last Will and Testament and Powers of Attorney in place. I have an attorney that I send most of my clients to who does a fantastic job with the formation of companies and estate planning. I shared her name with Lloyd, and we moved on to the last item.
If you’re serious about making the transition from employee to solopreneur, you will need a support system. These are the people who will cheer you on and keep you going when things get crazy. And they will.
One of my clients just made the transition from employee to solopreneur. He started to tell people what he was doing and, sure enough, someone got in his head. As he shared his plan, he got pushback from those who don’t have what it takes to go out on their own. I called him to check in on his transition, and he told me about the concerns people were bringing up and how he was starting to doubt himself. I assured him that those concerns were just their opinion, and they were most likely projecting their fears onto him. He needed to find a way to get past it.
Like this client, I told Lloyd to find his people, and I recommend you do the same. Seek out mentors who have been there and done that and model what they do to be successful.
Now it’s your turn to take the next step! To make this transition simple for you, I created a worksheet to help walk you through the seven steps I went through with Lloyd.
This worksheet will help you understand and dig into your Cash Flow, Savings, Retirement, Risk Management, Taxes, Legal, and Support System. You can download it now at gabenelsonfinancial.com/resources.
If you need help mastering your finances so that you can create the freedom to build the life you want, schedule a consultation appointment with me here.
Gabe Nelson, CFP®, is the principal and founder Gabe Nelson Financial, Inc. (GNF) is a Registered Investment Advisory firm based in Sioux Falls, SD. GNF offers fee-based financial planning and investment advisory services to solopreneurs and self-employed professionals. Clients receive personal attention from a financial planner dedicated to helping them reach short and long term financial goals with specialized insight into the particular challenges and opportunities that arise in entrepreneurship. Gabe can be reached at 605.553.9180, via email at ga**@ga*****************.com, or on the web at gabenelsonfinancial.com.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
by eric
Until recently, concerns about cybersecurity were largely limited to IT departments. But over the past decade, and especially in the past few years, public concern about cybersecurity is on the rise — and rightfully so. The vulnerability of our personal data is a legitimate cause for alarm and it’s something that needs to be taken seriously by everyone.
We’ve all seen the headlines about major data breaches at companies such as Facebook and Equifax. We’ve heard the stories about identity theft or experienced it ourselves. Cybersecurity isn’t something anyone can afford to ignore anymore. The reality is your private data is valuable to hackers, and although cybersecurity experts are working around the clock to keep criminals at bay, no company cares more about your privacy than you do.
Unfortunately, it is true that we never have total control of our data once it is shared, but we can be careful to follow best practices and take simple precautions to stay as cyber secure as possible.
To understand what you need to know about cybersecurity as an individual, you need to first understand the cyberattack threats you are facing.
Think of each place where you share data on the internet as a rental home. You feel comfortable storing your valuables, such as your passwords and social security number; and when you leave, you’re careful to lock the front and back doors. Because you trust the landlord, you assume the locks are in working order and expect the house to be secure.
But then, you may discover an intruder has picked the locks, climbed through the windows, or tunneled a hole through the basement floor. As soon as one entryway is blocked another one can always be created. So no matter what the owner does to secure the home, someone can always get in. This gives you an idea of what you are up against.
Not only do you need to be careful to protect your bank accounts and investment accounts, but you also need to be careful with your email login, health insurance information, social networking accounts, and even apps such as games you play on your phone.
From a company’s perspective, cybersecurity is about protecting customer or employee data from ever-evolving threats of cyberattacks, and recovering networks, programs, and devices if an attack occurs. From your perspective as a consumer, cybersecurity is about being careful to minimize your exposure.
No matter how challenging it is to remember a long list of complex passwords, it’s worth it. At a minimum, use a combination of at least 10 letters, numbers, and symbols. Avoid repeating passwords on different sites and be sure to change your passwords regularly.
Be proactive about updating your software and never ignore prompts letting you know an update is available. Allowing outdated versions of applications and programs to run on your systems or devices leaves you open to attacks. Updates are often patching known flaws and potential exploits that have been discovered.
Encrypt your computer so your data is protected in case it is lost or stolen. Strengthen your home network, or any public Wi-Fi network you use, by having a strong encryption password on a virtual private network (VPN). This way, if your communication line is hacked, the cybercriminals will only be able to see the encrypted data.
Small mistakes can cause big problems if you are not careful.
Be discreet when entering your pin at a register or ATM, and check for card skimmers before swiping. Avoid sharing personal information on social media—something as seemingly minor as sharing your mother’s maiden name or a pet’s name could be the key a hacker needs to access your account. When you open emails, use good judgment before clicking on links or attachments, which could contain malware or lead you to a phishing scheme.
A comprehensive computer security suite, such as Norton or McAfee, will provide a layered defense against common threats, providing safe browsing, firewall capabilities, anti-virus, and anti-phishing protection, automated updates, and more.
Start using the real-time notifications and monitoring services offered by your banks and credit card companies, so that they will contact you in the event of any purchase attempt that they deem unusual. For a fee, professional identity protection companies will monitor your credit cards, Social Security number, and other data for unusual activity.
Keeping a close eye on your accounts will go a long way toward limiting any damage that can be done by cybercriminals.
Talk with your children and elderly parents about how to protect against cyber threats, as they tend to be particularly susceptible to mistakes that can lead to problems.
Also, look around your house to take your personal Internet of Things (IoTs) into consideration — anything that connects to the internet, such as televisions, gaming systems, home security systems, appliances, thermostats, and voice-controlled personal assistants. These devices are particularly vulnerable to attacks, so be sure to unplug them when not in use, change passwords regularly, configure the highest possible privacy settings, and if possible segment them from your home networks.
If you do become a victim of cybercrime, contact the companies and banks involved and alert your local police, who may also recommend you report the crime to the FBI or the Federal Trade Commission.
Most importantly, remain vigilant and never let your guard down. It may seem overwhelming at first, but once you learn how to make simple changes and stay abreast of new threats, staying cyber secure will become as second nature as locking your doors.
