By Sydney Tyler
A few weeks ago, Jacqueline Schadeck, award-winning financial planner and author, joined the Entrepreneurship & Innovation Institute (ENI) to discuss the best financial strategies and goals for entrepreneurs.
She began by discussing the 5 Stages of Money: make, save, multiply, maintain, and give. Once one has reached the final stage, the process starts over again, and through this, one can create a steady follow of income and, eventually, a profit. Before an entrepreneur gets to this point, however, they must invest their money. Schadeck suggests using the Triple Threat Investment Strategy™ to do so.
There are three types of investment accounts:
- IRA/401K/SEP – Allows tax reduction today; taxed at withdrawal
- ROTH 401K/IRA – After-tax; not taxed at withdrawal
- Brokerage/Joint – Savings account on steroids; annual taxes
By creating these three accounts, an entrepreneur can make the most of their investments, while saving for that big payout down the line.
Schadeck also encouraged entrepreneurs to understand the “new economy” in which we currently reside, where one no longer has to ask for permission to be successful. Instead, she noted, “The only permission that you need is your own permission. You have to give yourself the internal permission to prosper.” Sometimes, we are the only people holding ourselves back. In this new economy, anything is possible if you allow yourself the freedom to work toward your goals, no matter how big.
In terms of an entrepreneur’s specific business venture, they must consider the revenue and expenses. When looking at one’s revenue, Schadeck suggested that you think about long-term goals AND something you can do once today to create a profit for you in the future. It is also essential to understand the expenses of your business. How much money will it take to get started, and how can I fund my business? This may include formal education, getting a job, or attending conferences; whatever it takes to reinvest in yourself. This will then reflect on your business and its success.
According to Schadeck, one should start a business using their own money, as this builds financial literacy and discipline. Then, when one starts to move towards growing and scaling their business, they can use money from investors or personal loans. To further this discipline, you need five types of accounts to successfully manage the inflow and outflow of money in your business: income, expense, payroll, taxes, and profit. Schadeck stressed that by keeping clean books and properly managing money, when you reach the point of scaling your business, it will be much easier to encourage others to invest in your business.
Schadeck imparted some final advice to a room full of early-stage entrepreneurs: “Raw materials don’t look like the finished product.” It can be challenging to continue building one’s dreams when there is not yet a tangible product. However, one must slow down, take all the different pieces, and figure out how they fit together. This will ultimately help you attain that final goal. Give yourself permission to prosper and anything is possible.
Three lucky students attendees left the event with a copy of Schadeck’s ebook, Money Planning and Positivity, donated by the author.
Learn more and connect with Jacqueline Schadeck on all platforms @jacquelineplans.
The Entrepreneurship & Innovation Institute exists to help you develop your ideas, build your business, and seize opportunities. Visit eni.gsu.edu to find out more.