Entrepreneurs and Spouses: Part II
January 30, 2008
In part one I talked about how my spouse made it possible for me to be an entrepreneur. I highly recommend that you make certain that you spouse is on board before you even consider taking the leap. In part two I thought it might be helpful to talk about the ‘one thing‘ that I learned very early on ~ entrepreneurs should have their spouses handle their financial affairs!
Why? Entrepreneurs quickly lose context for money. When I started my first business I was in my twenties. I had millions of dollars in the bank (other people’s money) and I was signing all of the checks.
Quick Tip - until you are doing $100MM in revenue, sign every check. My Dad gave me this advice before I raised a dime. He was right and I have stuck to this advice until this day (still not doing $100MM). It is very helpful to see where your money is going.
It became commonplace for me to sign a check for $5,000 for repairs to HVAC systems or $20,000 for rent. Before that, our biggest expense was our mortgage and I think it was $1,500 or so. When I would come home I wouldn’t think twice about the lawn guy suggesting $500 was a reasonable fee for mowing our yard each month and at that rate we would be out of money. Very quickly I realized that it would be smart for Michele to handle our personal finances. It was one of the best ideas I ever had.
Most entrepreneurs are type A, right brain thinkers. Rarely are we well suited to financial management (that is why we all have controllers and CPAs). By turning it over to Michele:
- I relinquished control to my spouse, something she lost when I started the business. She couldn’t control turmoil in the equity markets or terrorist attacks, but she could control our budget and our money. She knows were we stand each month and can make plans accordingly.
- Our bills were paid on time, every time. Managing cash flow in a business is important. Managing cash flow in your personal life simply ruins your credit. Our credit rating became stellar.
- We spent less. Michele is far more frugal than I am. It isn’t that I am a spendthrift, but the context of my spending (writing hundreds of thousands of dollars per month in payroll and other expenses) is out of scope to our personal spending (thousands of dollars per month in expenses).
- We have a sizable retirement fund. I didn’t think a 401K or IRA was important, but Michele religiously contributed the maximum to our accounts. I assumed (and still do) that the rewards generated by our businesses will eclipse anything we could possibly save in our retirement accounts and that having the extra cash flow now would be of far greater benefit than a few marginal dollars will after I am 65. Of course having a retirement fund is one more way Michele can offset the uncertainty that entrepreneurship brings.
At the end of the day, you need to realize that being an entrepreneur is hard on your spouse. The hours, the highs, the lows, the uncertainty, the money ~ it takes a toll on your marriage. Stop, take a breath, and thank your spouse because you are impossible to live with (you would have divorced yourself long ago…).
