Money Matters: Financial Basics Every Small Business Owner Should Know

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Business can be a lonely game. But it doesn't have to be. Welcome to Boutique Chat, where we explore community over competition and how to scale your company with the balance and the happiness that we all seek. We'll hear from product based businesses of all types, retailers, e commerce and wholesale brands, along with industry experts shaping the future of our industry. I'm your host Ashley Alderson from the Boutique Hub and I can't wait to chat. Hey guys, welcome back to the podcast. This week it's time for some big questions today. Is that a fair intro? It's time for some big questions, some big conversations. I'm, I'm excited about this, Hillary. You and I happen to be local, which doesn't happen very often for guests of the show. So it's so awesome to have you on today.

Thank you. Yeah, I'm really excited to be here. And it's a rainy Friday morning, so this is just an exciting thing to kind of kick off the long weekend.

Yes, it's perfect. So you guys that are listening today, I'm just going to set it up with this. You're definitely going to want to grab a notebook and take some notes today because we're going to empower you guys with some questions and some food for thought that I think is a conversation we all need to be having, every single person needs to be having. But frankly, we just don't have it enough or sometimes we feel intimidated to have these types of conversations. So I'm excited for the road that we're going to go down. So, Hillary, before we get started and get into all of that, can you just bring me up to speed? Tell me how you got into this line of business, how this all become a spark for you and tell me about your customers.

Yeah, totally. So I'm from, I live in Wisconsin, from the Cooley region area. I actually worked in corporate finance and accounting for about 10 years. And I always tell people that because I think they assume because I worked in corporate finance and accounting that I knew what I was doing with my personal finances. And that was so not the case. So my husband and I, we became clients at Northwestern Mutual. We were introduced to some financial planning strategies and I was like, why has nobody talked to me about this? Like, why is no one talking about this? How have I never been educated on this stuff? It was mind blowing to me. And so that's when we decided, you know, my husband and I kind of talked about it and I decided to make the transition to the private practice side and start my own practice. Because I went to a Tony Robbins conference many moons ago and you know, he said, you're either a doer, like a worker, a leader, or an entrepreneur. And I knew even back then I was an entrepreneur, I just didn't know what I wanted to do with my life. And so now I found that I get to help real people, real people like me, with real things. Because finance is in every facet of our lives. Right. And to get to do something a little bit more fulfilling, but have control. Right. Like I have control over how big my business grows, what type of clients I get to work with.

And when.

I'm spending time with my family and when I'm working. And so that's kind of what led me here. And in regards to what type of clients I would say when I. Another reason why I started here. I was the only female advisor in my office when I started. And up until two weeks ago, I've been the only female. And I'm sure as we all are aware, like more women are becoming the breadwinners, they're having a bigger say in financial decisions, widows, divorcees, and sometimes they just want another woman to talk to. Right. It's just like a comfort level. Yeah. And again, this isn't a man bashing thing. I love my husband, I love, I love men, but it's just a little bit different. And so I was like, there's a whole other population and underrepresented community that I can serve. And, and so I would say I primarily am working with women. I work with a lot of women owned businesses because I know what it's like to be self employed. And so I have a real big passion around that. I'm a farm girl, so I love working with the rural community and families.

Moms.

So I'm a special needs mom and so I work a lot in that community too and just love supporting other people and taking that load off of women and moms because we got a lot going on.

There's a lot of plates spinning, a lot of plates spinning for all of us. I love that because, you know, sometimes, and I love that you said this is not a man bashing thing, but sometimes there are just big differences in relationships and you know, what each side kind of brings to the table. And I find maybe in my circles anyway, or a lot of times in the community here at the Hub, the female entrepreneurs I work with tend to be very creative and definitely like that left side of the brain where a lot of times those who work with their spouse, the spouse is the analytical One. And I think that's probably why in many marriages and in many relationships, the man often has the financial planning side of the household and the future. And sometimes as women, we take a step back and say, oh, he's got it. So we're going to try to flip the script on that today and just bring to light, you know, what do you need to know about this from the ground up? And then what questions do you need to be empowered to ask so you, you understand fully where you're at and where you're headed? So take me here next. Just financial planning as a whole can mean a lot of different things. Just give me an overview of what, what do you see financial planning as meaning for most people?

Yeah. So I think you can Google Finance 101 or financial planning, and you're going to get a million different answers and they're all right or wrong, right? For somebody. And so for me, my thought is, you know, typically I bring somebody in, we're going to sit down and get to know each other. I want to understand your values, your goals. I'm not for everybody, right. Not everybody's for me. But you want your financial advisor to, to click with you. You want to build a really good, trusting relationship where you feel like it's a partnership. And so really we just sit down, get to know each other. What do you want? Where are you? Where are you going? And then from there, we want to start to build out this road map of a financial plan. So, hey, yes, this is where you are, where you've been, this is where you want to go, and this is probably what you need to do to get there. And I find that just starting the conversation is the hardest part because, you know, even though I do this every day, like, I'm not naive to think that this is the most exciting thing to talk about. Like, the psychology of money is an interesting thing. And a lot of us have shame or guilt or fear around money, and not always, but a lot of women choose avoidance because we don't understand it all or we don't know where to start. And so it's kind of like, you know, decision fatigue and you just kind of shut down. And I want to just be there for my clients to kind of guide them and help take some of that off their plate. So it's really just a con, starting the conversation and starting somewhere. Right. Like we don't have to solve all the world's problems or all of your friends financial planning questions in the first meeting or probably even in the first Year. But we'll kind of figure out what's urgent, what can wait. Right. And we can start checking things off the list over time. And it's just a work in, Work in progress over time.

Yeah. So good. And I love the holistic approach of. Really. I know you had mentioned there's six pillars of finance. I would love to hear more about what those are. But the holistic approach of one piece has to feed into the other and they all have to speak in coordination with one another. We can't. It's just like going to the doctor and only addressing one tiny symptom versus the entire issue to try to get to the root of where we're actually going to go. So tell me more about the six pillars of finance.

Yeah, I want to understand everything about someone's finances. Right. My husband does auto body mechanics. So I, I like to use the car analogy. This is about as far into cars.

As I'm going to get.

But it's like looking under your financial hood. Right. We want to look at all the things. We could change your brakes, but you know, if you don't change your oil, you're still going to have problems. So the six pillars, you know, we follow and we look at cash flow management. So, you know, what does it look like on a monthly basis and maybe how much are you investing back into your business? How much are you saving for whatever other goals that may be. Two would be risk, risk management. So insurances, as we're self employed, some of these things, you're on the hook for yourself and you just have to go and make sure you have the proper insurances, whether you're a brick and mortar or if you're an online presence. Investment planning. So I think that's probably the most common thing we think of when we think of financial planning. But investments are definitely just one piece of it. Retirement planning, so that might be distribution planning, tax planning. That's probably one of the biggest pain points we have as being, you know, self employed. It's like taxes and then estate planning. So are you a single, you know, owner of your business? Are you in a partnership? Do we have the right estate planning done? It's not fun to talk about, worst case scenario, but it's really important to have these things taken care of. Hopefully we can talk about the doom and gloom one or two times, get it taken care of and squared away and then we don't really have to worry about it again.

Yeah. And I, I mean, I've got to stop right there and just, I can't overemphasize the importance of what you just said. And I think for a lot of people it feels like that's going to come someday. That'll come down the road, that'll come when I'm old, you know, all the things. But I personally have been through a nightmare of an estate plan gone wrong. I don't remember if I told you about this when we had had coffee, but just our family's farm and ranch. When my dad was diagnosed with brain cancer, he was given 18 months to live. Their estate plan was a nightmare and it ripped our entire family apart. Like people, people not speaking to people for years. And so wherever you are, whether I know a lot of people that are listening, yes they have their own business, but they're in a family of entrepreneurs. Their parents have businesses or siblings have businesses or spouse probably has a business. The earlier you can get ahead of that and while you're all in your right state of mind because once someone gets ill and emotions are high or God forbid somebody end up in a nursing home and the nursing home comes back and takes all of your assets, because they will, it's too late. So you've got to get ahead of that stuff now. So let's dig into each of those six pillars just a little bit deeper if you don't mind. Do you, do you want to work your way backwards? Since we started with estate planning first, if you can just pick out, let's talk about a couple of tips or maybe common struggles you see or things people should know about each of these six, I think that'd be really awesome. So let's start with estate planning. Where do people start and what do they need to think about?

Yeah, I think like you hit the nail on the head. A lot of people assume this is important but not urgent. I'll worry about it later. But you know, for one, if you have any kiddos, right, like that's a big piece just in itself. Even if you're not self employed, making sure you have your estate planning done for your kiddos. For me, with a special needs child, you know, that might look like a special needs trust and you know, some other extra things there. So it can be very specialized, self employed. I mean sometimes with a partnership and it's a buy sell agreement, what happens if there's a death or a divorce or something, you know, in that aspect, what happens with the partnership? I think you touched on it perfectly too. I see that in the farming community a lot with the estate planning, you know, avoiding probate is Huge. It's a long process and it's very expensive. So just having the right beneficiaries on all of your accounts, making sure that both you and your husband are listed on everything and that's all squared away. Yeah. Can just avoid so many issues in the future. And then longer term, right. As we're nearing retirement, it could be long term care, insurance, you know, whether it's a revocable or irrevocable trust, they all can play a. Play a factor. And so I'm not an attorney, I can't draft the documents for you, but we work very closely with our clients attorneys in regards to making sure, you know, we have all the things in place. And you know, some of the things that I do are going to tie together with the attorney. And so it's oftentimes I hear people talking about your board of directors. Right. So you might have your accountant, your financial planner, your attorney, your bookkeeper, you know, these board of directors that can work together to make sure we have all the pieces in place.

So when people think about estate planning and trust. One more thing I just have to hit on quick. This does not mean just having a will, correct? This does not mean just having a will. Because I think people often, oh, I've got a will. I have it all written down. So it'll just execute as I have it written. That's not true.

Right. So yeah, sometimes people will print something off the Internet, right. Or do whatever I've. I mean, how many of us, if we're like, oh, we're going to Mexico on vacation and you didn't have anything done. I've heard this so many times, just could print something off and sign it. Right. And I mean, maybe it's better than nothing, but will it hold up in court? I don't know. Right. None of us know. So when you work with an attorney and getting these, you know, estate planning documents done, there's a will. But depending on your situation, maybe it's power of attorney, maybe it's advanced health directives. Right. Like that can be filed, kept on file at your local hospital or wherever you. Doctor. Yeah, the. Yeah, the beneficiaries, right. How are your accounts set up? Are they set up as TOD, transfer on death or you know, all the extra things. And so actually having it through an attorney, all drafted, your financial planner can have it on file. Right. Your. Whether it's your hospital, it's just gonna make things so much easier. And it's not that crazy expensive. You get it done once and hopefully again you Won't have to make big changes to it. Right.

So helpful to know. And last thing, I just want to mention really briefly to everyone listening, those of you who are listening who have built some, you know, an incredible business, you've got some assets, you have something hopefully to pass on or maybe you've invested in property along the way. Importance of trusts. Like if you are planning someday to pass something on to the next generation and you don't want the government to come in and take half of it or more than half of it, that's the, that's the vehicle that allows you to transfer generational wealth is through trusts. So it's really important to definitely look at that plan with your family and see what you need to set up. Hey, can we meet up in person? It is one of my favorite things to do here at the Boutique Hub to get to meet you face to face, to hear your personal business story and your journey and what you're working on, but also to put you in contact with and to build friendships with some of the most amazing business owners from around the world. Boutique owners, wholesale brands, industry service providers and experts. All of us together in one room. And that's what we do at our annual Boutique Summit event this year. I would love for you to come to Dallas, Texas, of course, on June 8th and 9th for our annual Boutique Summit. Our theme this year is the summit and your business completely reimagined. And I think it's time for that theme to take effect. Right. We have been through some crazy highs and lows in this industry and I think going into 2025 we are all ready to reimagine what's possible in this industry and in your business personally. So get ready for detailed hands on workshops. Not just you listening to speakers, but you actually getting things done, pulling out your Facebook ads account and building some ads together or planning out an entire quarter of content, maybe doing some social media audits with some of our most well listened to experts in the room along with fellow boutique owners. It's time to dig deeper into your business and that's what we're going to do together at Boutique Summit in Dallas, Texas June 8th and 9th. I hope to see you there. It is our biggest and best and favorite event of the year. And it's time to take your business to the next level. Let's do it together.

All right.

The next pillar was, was it invest? Was it investing?

Yeah, yeah. We get, I mean we can go anywhere we want, but tax planning was, was the next one I listed off. So I think that's a really, it's a one that we love to avoid when we're self employed. Right. Because who likes to pay taxes? But it can be a really big pain point. A lot of times when I sit down with business owners and I ask what is the biggest pain point in your business? A lot of times I get that answer. Taxes. I think there's a huge lack of education around tax planning too. And so many of us don't understand it that it's like this kind of big black cloud hanging over us. Yeah. And so finding a really good accountant that you have a good relationship with and a bookkeeper. Right. That you can work with and consult throughout the year is really helpful. Again, we'll usually work really closely with our clients. Accountants on hey, where are you at throughout the year? What types of things should we be doing? You know, just some really easy things of like, hey, how can we reduce your taxable income and still prepare for the future? Whether it's a, you know, a 401k is probably the most common thing we hear about for like larger businesses, but with a lot of, you know, closely held businesses. It might be a SEP ira, a simple ira, an HSA Health Savings Account. Yeah, some of these things that are going to be, you know, reducing your taxable income but also preparing for the future. So I mean, I also work with, you know, some. My husband's in the auto body industry, so I work with some automotive type companies in that industry. And I think the easiest thing is, oh, I'll just buy more equipment. Right. I'm gonna buy another truck or I'm gonna buy more, whatever. And if you need that, I mean, great, do that. But also, is that really building your business? Is that building the worth of your business so that in 30 years when you go to sell your business, right. A truck or a piece of equipment is going to be depreciated. Is that really investing back into your business? So I think there are certain things that can really make sense to scale and grow your business, but other things that maybe aren't really serving you as well.

Yeah, there's definitely a time and place for that conversation of how can I leverage this if I really need to put some cash away before the government takes it? If I had a great year, but also I, again, I grew up on a farm, so, you know, December would roll around and my mom would be standing in the kitchen and a new combine would come rolling in the yard. Like, where did that come from? You know, like, obviously it was a good Year. I guess we're just trying to like save some money in taxes. But, but if you go back to the 80s, there was a lot of people who got completely upside down when interest rates did what they did. So there is definitely, you know, upside and downside to that entire strategy. I love what you said right away. You said, make sure it's your accountant and your bookkeeper. I really have to emphasize that. And those of you who are already members of the hub and you're in the groups, you know, we've got some amazing vetted service providers that offer that, that specialize in retail, but those are often two different people. Sometimes they're from the same business. A bookkeeper is who you have a weekly conversation with about your numbers. They're helping Manage your QuickBooks. They're looking at all the numbers. But the accountant. This is not H and R block on the corner like you said. It has to be somebody who is like a consultant to you that you're having these conversations with, not just at tax time. Please don't show up with a shoebox on April 15th going help me. But it's throughout the entire year to pre plan before you got there. So I love that you, I love that you mentioned that.

All right.

Your next pillar was retirement.

Yeah. So that kind of flows right from the tax planning. Right. I mentioned the 401k, the SEP IRA, the SIMPLE IRA, an HSA, some of those things. Those are tax deductions. Right. They're an above the line tax deduction reducing your taxable income. But they're planning for your retirement, so why not maybe pay a little less in tax and save for retirement?

Yeah.

So that's kind of a dual, dual place there where we can talk about both. And it really just depends on the situation and your family dynamic. Does your spouse also work? Are they self employed? You know, it's looking at the whole picture because we want to make sure that the pieces fit together and are complementing each other. And so, you know, depending on what's the right fit for you. But that's a really big piece with retirement planning. I mean, your business is probably part of your retirement plan, but we talk a lot about being diversified and not having all of your eggs in one basket. So, you know, some people I think, find it where they're just pouring everything back in their business and they're assuming they're just going to be able to sell their business and that's their retirement plan plan and you know, could be part of it. But what happens if, you know, 2008 happens again and people aren't in the market to buy a building or buy a business at that point. And it's a couple years before you're able to sell. Right. We want to have multiple avenues of, and streams of income when you're in retirement.

Yeah. So good. I really appreciate that message and I think that gets overlooked for entrepreneurs often is, oh, this, this business is my asset, that's my retirement. Ah, you're really running some risk if that's what you think is going to happen. So those of you who are doing profit first, and you're really working on paying yourself and setting 10% aside every single month, really part of that 10% should be what's going to go to my IRAs, what's going to go into my retirement, how am I going to save? And then, Hillary, tell me more. You know, people that employ their children. Right. The IRS allows you to employ your children up to a certain, you know, dollar amount under a certain age. I see a lot of people taking those funds and putting those into different types of IRAs for their kids as well.

Yeah, yeah. That can be a great strategy. Really. You just have to. Right. As long as you're. I've seen people, you know, employ their five year old and if they can shred papers and it's like a reasonable job, a reasonable task for that age, you know, you can do that. And you know, I've seen some of our clients that have people on payroll and they have a simple ira and that's a deduction on the business side. But then this, you know, a simple IRA is, you know, you can contribute to that. There are some different age limits on that, but, you know, different things too. If you have a taxable, if you have an income. Right. Let's say you're 15 and you're making $10,000 a year. Yeah. You could contribute to a Roth IRA if you have taxable income. So I just think that there are a lot of strategies as you continue to grow that, you know, to your point, you're creating generational wealth, you're starting to give your kids a little leg up and also just starting to teach them about this stuff.

Yeah.

Because how many of us had no clue about any of this? Also growing up on a farm.

Yeah.

Like no one told me about this until probably a little too late.

Yeah. It's so important. And I feel like in schools anymore, I mean, we really don't talk about this. We really don't teach kids the real world of financial management. Financial well, being so it is a great way to get your kids involved early. Okay, the next conversation. This is a fun one. My father in law is my insurance agent. So I cannot wait to hear you talk about risk management. I love this dinner table conversation.

Oh yeah, it's a good one. So I always say that risk management is really the foundation of financial planning. So again, my husband and I are very different. I, if we were building a house or when we were remodeling, I was like, what color are the countertops going to be? This is what I care about. What color is the paint? And he's like, are we using two by fours or two by sixes? Like how, you know, how strong is the foundation? I didn't care about that. It's not the fun part, but really. Right. If you don't have a strong foundation, does it matter what color the countertops are? Probably not. And so it's the same with financial planning. Risk management is the foundation. If you don't have the right insurances in place, we can talk about all the sexy investments we want, but it's one, one little blip occurs in your financial plan, all that could be thrown out the window. So does it really matter then? So again, it's not the most fun thing to talk about for sure. Hopefully we can talk about it a couple times and then never have to really touch on it again. But whether it's life insurance, disability insurance, you know, what happens if you're unable to work for, you know, a year because you're going through treatments, how are you still paying your mortgage on your business or you know, the lease on your, your location, whatever it may be paying your staff. Property casualty. I don't personally sell property casualty, but you know, we want to make sure you have the right business insurance. Do you have an umbrella policy? Right, all of those things, they're so important. Health insurance, an emergency fund, like those are all still part of your protection. And so again, even though it's not fun, it is really, really important and usually the first place that we look at and start when starting the financial planning conversation.

So good. Such a, such an important topic, one every single business owner should be having and your insurance agent, I mean, that's someone you should be meeting with probably at least twice a year. I would say to continue the conversation, those of you with inventory levels and warehouses and all of that, I mean, you have to also ensure all those pieces and those levels fluctuate throughout the year. So lots of different types of insurance, but huge topic. All right, what was the Last pillar. Which pillar did I miss?

Cash flow. Well, investments. I mean, investments can be retirement planning. They can also be. Right. Like more midterm investments. And I do think that that's really important when you're self employed because there are different types of accounts and they can be utilized in different seasons. So we want to make sure we have enough in retirement planning, but also we might want to make sure that we have some stuff that's liquid and accessible. If you decide to grow your business, open a second location. Right. Like I have a client I know is just opening a second location. And so you may not think like, oh, I don't think I'll ever open a second location. But you don't know five or ten years from now. Right. Most of us that are in business are surprised at kind of how things have progressed. And so we want to make sure you have liquidity as well. So I think that's kind of on the investment side and just making sure that we're in alignment of what are your goals? What's your risk tolerance? How do you feel about it?

Yeah.

Because it really is emotional. And then we try to give you recommendations that align with that. And then on the cash flow side, I think this is a big one, too. The more money we spent, the more money we make, the more money we spend. Right. And so it's. It has to be something that we're consistently managing and looking at because it's a blessing and a curse. But, you know, when I was in college and eating rice and beans, I didn't really have. I was really conscious of how much I was spending at the grocery store.

Yeah.

As many of us have grown and time is really important, there's not enough of it. We're just spending out of convenience. And sometimes that's okay and necessary. But also it's really easy to kind of let that get out of control.

Yeah.

And so I think managing your cash flow, where's your money going? Is it serving you? Is it working for you? How much are you investing back in the business? How much are you putting towards family and. Right. Based on your values and your goals, just making sure all of that aligns.

Yeah. So helpful. All right, so if I'm in a relationship and my spouse, my husband, whatever, is the one managing this conversation on a daily basis, what questions do you think I should be empowered with? Just to have a better understanding of where we are personally with some of these pieces?

Yeah, absolutely. Well, first of all, if you. 1. If you don't know, if you have a Financial advisor. You need to get one. If you think you have one and you don't know their name, you need a new one. It is okay if your husband is handling most of it. I'm all about delegating. You are not going to see me changing my oil. However, I know when I'm due for an oil change and I can let my husband know that. Yeah, right. It's a constant communication. And so I always say that a man is not a plan. Yeah, it is. It is okay if your husband takes the lead, but it's irresponsible if you have no idea what's going on. So you need to know who your advisor is. Right. Who your attorney, your accountants are. And even if you don't enjoy it or you don't love it because you might be more of a creative, you should still attend. Right. Attend the meetings, have a high level idea of what's going on.

Yeah.

You don't have to understand it all and you don't have to get into the weeds of all of it. But you should feel really good about where you're at and where you're going and build that relationship with, you know, the advisor sitting across from you as well as your spouse to make sure that your goals are the same. My husband and I, I mean, we've been together for 17 years, a really long time, but like, we have things that are, you know, he has things that are important to him that are not as important to me. So it's. Sometimes when I'm meeting with couples, it's a. Making sure they're on the same page.

Yeah.

In alignment with how we're spending money. Maybe some strategies to leave, you know, relieve some of that tension too, around finances.

Yeah.

And so starting the conversation. Right. It's not always fun, but just starting can be the first step.

Yeah. So good. I. I totally appreciate that. All right, couple more real quick questions as we wrap up our time together today. I know you had already mentioned, not only are you a business owner, you're a mom, you balance family and all the things you do, and you help many other people, especially your female clients, do the same. So a couple lightning round questions for you. What. Or let me say, how do you set boundaries to allow you to best take care of yourself and your family? Well, not only are you a business owner, you're a mom. You balance family and all the things you do, and you help many other people, especially your female clients, do the same. So a couple lightning round questions for you. What, or let me say, how do you set boundaries to allow you to best take care of yourself and your family while also being.