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18 min read

Financial Planning Dos and Don'ts for Solopreneurs

Financial Planning Dos and Don'ts for Solopreneurs

Hunter Boyd - Solopreneur FinancialGrowing up in a family of entrepreneurs, Hunter Boyd witnessed the inevitable highs and lows that entrepreneurs face on their journey to building successful businesses.

After years of watching his family work around the clock, he started to wonder what he could do to help them reach the financial freedom they were working so hard to achieve.

After studying entrepreneurship in college and his career in the financial planning world,  he realized what had held his parents back all those years. They were working harder instead of working smarter.

This is why he started Solopreneur Financial, to help the entrepreneurs who are masters of their craft but need someone to cover their financial blind spots.

What you'll learn in this episode

  • Benefits solopreneurs can receive by working with a financial advisor
  • How financial advice for solopreneurs may differ from other types of work setups
  • When to start looking for a financial advisor
  • What to look for in a financial advisor
  • The top three questions Hunter Boyd gets from solopreneurs in regards to finances

Connect with Hunter Boyd

Resources Mentioned in the Episode

Favorite Quote: "Time is money."

There is so much the goes into a successful solopreneurship. Be sure to check out The Solopreneur Success Cycle to make sure you're on the right track!

Like this show? Click on over and give us a review on Apple Podcasts Thanks!

Full Episode Transcript

Hunter Boyd (00:00):

This is the number one thing he said he wished he would've done differently.

Intro (00:06):

Bigger doesn't always mean better. Welcome to the One-Person Business podcast where people who are flying solo in business come for specific tips and advice to find success as a company of one. Here are your hosts, Joe Rando and Carly Ries.

Carly Ries (00:23):

Welcome to the One-Person Business podcast. I'm one of your hosts, Carly Ries.

Joe Rando (00:28):

And I'm Joe Rando.

Carly Ries (00:29):

And today we're diving into financial advising for solopreneurs with none other than the face of solopreneur financial, Hunter Boyd. Growing up in a family of entrepreneurs, Hunter witnessed inevitable highs and lows that entrepreneurs face on their journey to building successful businesses. After years of watching his family work around the clock, he started to wonder what he could do to help them reach their financial freedom they were working so hard to achieve. After studying entrepreneurship in college and his career in the financial planning world, he realized what had held his parents back all those years, and that was they were working harder instead of working smarter. This is why Hunter started Solopreneur Financial, to help the entrepreneurs who are masters of their craft and need someone to cover their financial blind spots. So Hunter, hopefully I did that justice. Welcome to the show.

Hunter Boyd (01:17):

Thanks for having me. I'm excited. This is going to be a good one.

Carly Ries (01:20):

We're excited for you to be here and let's just dive in.  Let's start with the basics. What benefits can solopreneurs receive by working with a financial advisor?

Hunter Boyd (01:29):

Yeah, so you'll probably hear me say this more than once today, but it kind of depends. And the reason I say it depends is because different financial advisors, financial planners, they do things a little bit differently. They might specialize in working with different people. So, the experience you get with working with an advisor who specializes in working with retirees might be a bit different than working with a financial planner who works with solopreneurs. So I'll kind of put that disclaimer out there, that it kind of depends. Generally speaking, I think the main benefits that solopreneurs can look forward to with working with a financial advisor or planner that specializes in working with maybe those one-person businesses or just business owners in general, I think some of the top things would be tax planning.


You know, taxes are a pain, No one that I've ever met enjoys paying them. So that's some low hanging fruit that I think most, so solopreneurs, one-person business owners, can take advantage of. Then, I think, who was it? Some famous serial entrepreneur said, a quote that's like, keep your eye on the cash flow of the business cuz it's the lifeblood. I don't think that could be more true. I think if you look at statistics, it's like 82% of businesses that fail, fail because of cash flow problems. So having someone who can really help you map out and plan that cash flow, I think that is one of the most important benefits that a solopreneur, one-person business owner can get out of working with an advisor.

Joe Rando (03:20):

Can I just second that? You are so right on with that. I mean that has been the case forever. Companies fail because of cash flow. But one of the things that I think is fascinating and in a sense I lived through this, not with a one-person business, but with a software company started with a partner. You think of cash flow as being a problem when you're doing poorly, but cash flow can kill you when you're succeeding.

Hunter Boyd (03:48):

100 percent.

Joe Rando (03:49):

And that's what people I think don't realize. I think I just want to second what you're saying. It's so important to look at that and track it really carefully.

Hunter Boyd (03:58):

Yeah, and going off of that too, you can be a profitable business and still have cash flow problems. I think that's actually where, at least these smaller one man or one woman businesses get into trouble. They might look at their profit and loss statements say, Hey look, I'm making a profit. Cool, that's good. That means I'm gonna survive. And then, maybe they get a little ahead of themselves and end up running into cash flow issues despite having a profitable business. So yeah, cash flow is tricky and you gotta stay on top of it. I think it's particularly a problem for one-person businesses because not all the time, but I think a lot of times, at least for my clients, whether it's seasonal, they have swings in revenue or just kind of variable. Whether seasonal plays a part or not, they have variable incomes. And so, when you know you don't have a steady revenue, you really have to pay attention because you can get into a cash crunch pretty quick.

Joe Rando (05:12):

I think you're right on, on that point as well because, I think the phenomenon that I've seen, especially with one-person businesses in very small companies is that when they're busy, they're busy and they're working and doing and producing. Then it gets slow and they go out and sell, and start looking for clients. So you get this wave of stuff coming in that you're actually billing on and then times when you're not and you're lining up the next deals. So yeah. I did not expect the conversation to go in this direction, but I'm excited that this is right on.

Hunter Boyd (05:49):

Yes, I'm a financial advisor. I do financial planning for folks, but it's funny because, to your point, sometimes I might have an hour long conversation with a client and it has nothing to do with the actual numbers. It's like, hey, it looks like over the past six months we've had some hills and valleys, some fluctuating revenue, and it's exactly to the point that you just said. They get a couple of jobs or whatever, they work them, they see the revenue and then, no more business in the pipeline. So they have to market, market, market, sell, sell, sell, and then they fill that pipeline again and they start to go up the hill and then the cycle just repeats itself. So it's not all just dollars and cents sometimes. It's like, hey, let's look at the real root of the problems here.

Carly Ries (06:46):

Those are such great points. And just talking about your clients, I want to circle back on something you said. You were saying that there would be a difference between how a financial advisor would approach, solopreneurs versus another type of client. How would your advice for one-person businesses differ from advice you would give to another person?

Hunter Boyd (07:05):

So for me personally, that's all I'll speak to. I know of other advisors and planners out there who do focus in on this same niche. I don't know their businesses that well, so I'll just speak to what I do if that's fair enough. I came into this business not working specifically with a niche. Most advisors when they enter the industry, they're just trying to build a client base to sustain them. You can't help people 10 years from now if you can't survive until tomorrow. So in the early years, you are working with everybody. But, as time went on, I guess some of the things that I do for solopreneurs that I didn't do for maybe your employee type clients would be what we just talked about.


An emphasis on proactive tax planning. There's a difference between tax prep and tax planning. I think a lot of people don't really understand the difference there. Tax preparation, is just like what some of you might do on TurboTax. You fill in the lines and that's looking at the past year. So there's really nothing you can do to change the past, your accounting. That's why they call it accountants. They account for what happened in the past. But I think the real opportunity lies in planning for the future from a tax perspective. Not just trying to say how can we decrease the tax liability or reduce the taxes from this prior tax year, but how can we reduce the amount of taxes over your entire career or lifespan?


That's really what I put a focus on. I am not a CPA. I'm not an accountant, so I work heavily with, or hand in hand with, I guess is a better term for it with my client's CPAs. It's kind of, me and the CPA are putting our heads together to do as good of proactive work as possible for the client. So I would say tax planning is a big one that I probably wouldn't do as much of for an employee type client simply because business owners have way more tax planning opportunities. Then I think second would be cash flow planning. Kind of sounds a little redundant but, if you're earning a salary or even an hourly wage and you know about how many hours you work a week, your weekly, biweekly, monthly paychecks are gonna look pretty similar. If you have that consistency in income, it's a lot easier to plan your spending and savings. Whereas, my clients most of the time have extremely variable income throughout the year. So we just really have to be careful and pay attention to what do we have on hand? What are we expecting over the next few months? And, where do we need to be putting our dollars to work?

Carly Ries (10:27):

Absolutely. This just all sounds so great and something that solopreneurs absolutely need to be considering when they're running their businesses. At what point should they start looking for a financial advisor?

Hunter Boyd (10:39):

Yeah, obviously, I'll address my bias. I would tell you that from the start. Reason being is you want to build that foundation, that solid financial foundation that you can grow your business on. Really I think with solopreneurs, and this kind of ties into that last question, you know, they have to worry about not only the personal side of things. Everyone has personal finances, but solopreneurs obviously also have the business side of things. So they go hand in hand. You have to pay attention to both because it's a yin and yang kind of relationship, right? It's like the business feeds your personal finances, but the personal finances also create demands for the business income and expenses. So working with an advisor, really a financial planner, early on to get that foundation set, put at least a general plan in place of, "Hey, how are we going to handle or manage, you know, and coordinate the personal finances along with the business finances."


And, an advisor can really help in the early years of a solopreneur or even before they make that leap. I have plenty of clients who I started working with them as an employee. They were an employee, and then they came to me and said, "Hey, I think I want to make this leap into entrepreneurship but I'm scared. Financially there are unknowns and I don't really know what I'm doing. Can you help me kind of walk through and crunch these numbers and bounce ideas off of each other?" I think that's really where an advisor can help you in those early years. Getting a plan in place so when you do decide to take that leap, you know what you're doing. I think that just increases your chances of success when you have a plan going into it.

Carly Ries (12:40):

Absolutely. So if people want to get started, let's say they're starting their business right now. We see a lot of people moving from calling themselves freelancers into actually branding themselves in solopreneurs. So if they're taking that leap and they're ready to go for the gold, what should they look for in a financial advisor when they do get started?

Hunter Boyd (13:00):

I think of at least three main things. Solopreneurs, freelancers, one-person business owners, whatever title you give to yourself, I think there's one important thing that needs to be addressed before you even start looking for an advisor. And that is to realize, and this is my opinion here, I'll say that, but I'm of the opinion that a well run small business is the greatest wealth creation tool that we have as Americans for a number of reasons. That being said, work with an advisor that can give you advice, because that's what you need, especially in the early stages. You don't need someone to come in and try to sell you a product, which unfortunately there are, and I'm using air quotes here, but "advisors out there who really are just glorified salespeople".


That's not who solopreneurs need to work with. They need good unbiased advice. Start your search by looking at fee only financial advisors or financial planners. Those are people who can get paid for giving good, unbiased advice without having to sell you something. Chances are, if you're running a good business, you're going to get the greatest after tax return on your dollars if you're investing back into your business, not into some mutual fund or annuity. There is a place for those financial products down the road. But especially in the early years as you're building and growing that business, if it's a good business, put your dollars back in the business and work with someone who can get paid to tell you that. Fee only is kind of the number one thing to look for. Make sure they're a fiduciary.


A fiduciary, if you're not familiar with that term, is just someone who is legally bound to act in your best interest. You might think, well, shouldn't every advisor be a fiduciary and act in my best interest? Yes, but they're not all fiduciary, so only fiduciary. Then last, definitely not least, is do your due diligence and search for a financial planner who specializes in working with people like you, solopreneurs, freelancers, small business owners at the very least. Like I mentioned earlier, there are certain processes and pricing models and other little aspects of the experience that you'll get that you'll want to have if you're working with an advisor who specializes in working with people just like you.

Joe Rando (16:00):

Hunter, a question for you, when you talk about financial advisors that our fee only, how does that fee usually work? Is it a flat fee per per month or per quarter per year? Or is it a percentage of what they're managing for you? What's typical?

Hunter Boyd (16:18):

That's where I feel bad for the everyday average consumer because unless you live and breathe in this industry, it's so hard to tell. Honestly, our industry, the financial planning, financial advising industry is changing a lot right now. Every six months that goes by, big changes happen. And one of those big changes is fees and how advisors or planners are compensated. I'll give you the very quick timeline of how things are changing. It started out, if you were investing in the seventies or wanting to work with an advisor in the sixties, seventies, eighties, you were working with a stock broker. They were selling you securities, stocks, bonds, and they were earning a commission.


Then we started to see into the nineties, fee based. And if you see fee based, that means that they're charging a flat fee, a percentage of the assets under management. So you were having to invest assets with that advisor or planner in order for them to make money. They're making a small percentage on the amount invested that that advisor manages. Now, what we're starting to see more of is what we call the AUM, the assets under management model. That's by far still today the most popular. But what we're starting to see more of now is the fee only, and that can go a couple different ways. You'll see a flat annual retainer dollar amount. It might be, and I'm just throwing out totally random numbers, it might be $2,500 a year.


So you pay this advisor $2,500 a year and he or she is all yours, 24/7, that retainer model. Personally, I have put together a pricing model that I think aligns really well with solopreneurs, freelancers. A lot of them don't have big dollars to invest into the traditional investments. They might be making good income or, on the flip side, they might have inherited some money and/or they might have a large portion of their net worth tied up in their business, whatever it may be. They may not have active dollars to invest. So for me, I charge on a percentage of income, household income or net worth, whichever is less. I'm advising on all areas of my client's lives, not just the investments. We're looking at real estate, the business value. Business valuations are a thing that I do for my clients that you don't see a lot of other advisors doing. So we're looking at everything. And I think that is the best pricing model as far as aligning our interests. I know that was probably a long winded answer, but that's kind of the shift we're seeing.

Carly Ries (19:41):

I think that was a great answer. Hunter, since we were talking about finding the right financial advisor for you, I'm gonna put you on the hot seat and ask you what are the top three most common questions you get from solopreneurs and how would you answer them?

Hunter Boyd (19:58):

Ooh. I would say, these are in no particular order. I would say one of the top questions I get and this is usually the first question I get from people who are actively reaching out, "what should I do with my profits?" These folks are maybe a year or two or three into their business, whatever it is, and they're finally starting to see, "Hey, I've got some money left over pretty consistently now every month. What should I be doing with it?" I think that's probably the number one question I get as far as popularity. The cop out answer, but really the only true answer I can give is, it depends what you do with those profits, because everyone's different.


I don't give cookie cutter advice. Everyone's situation is so different. Every client of mine gets customized advice so that's the only true answer I can give there. I know it's kind of a cop out, but it's the only true answer. Another popular question is "how can I pay less taxes" or something along those lines. Again, it is going to depend on every person's situation, but what I can say to that is a great place to start is working with a proactive CPA. There are a million different CPAs out there, but there are a lot fewer proactive, forward looking CPAs. And anytime you can get a proactive forward looking CPA working in tandem with a good financial planner, really good work can get done.


So that's my answer to that one. Then I'm trying to think of a third common question. I'll speak for my client base specifically here. Most of my clients value experiences over tangible things. Again, my clients are younger, and I think that's kind of a generational thing. My parents are baby boomers, so I have no problem saying this. The boomer generation liked things, having the house with the white picket fence, the nice new cars. Nothing wrong with that, but I think there are generational differences going on right now. One thing that's important or a common question that I hear a lot is, "Hey, how do I enjoy today?" And, make the most memories and experiences with my family while still responsibly planning for down the road, for the future, for retirement.


To that, I would say, obviously it's gonna depend a little bit, but I think the easiest way to accomplish that and to be able to spend your money kind of guilt free while still knowing that you're being responsible and planning for the future is to pay yourself first. The book Profit First by, Mike Wichalowicz, great book, Profit First. Really it's just an accounting mentality of, Hey, of all the revenue I get from my business activities, let's say my savings goal, I need to save and invest 10% of my revenue in order to hit my financial goals. Great. Set that aside first. So as soon as you get your revenue for the month, take out 10% off the top, put it into savings, investments, whatever it may be to help you reach your goals.Then whatever's left over, that's how much you can spend. And that's kind of in reverse of what most people do. They pay their expenses, they live their lifestyle, and then they save and invest whatever's left over. A lot of times, as you can probably imagine, there's not a whole lot, if anything, left over. So this way save and invest first, pay yourself first, and then you can spend whatever's left over guilt-free. You might have to adjust your lifestyle a little bit, but that's the one way that you can guarantee, Hey, I'm taking care of myself in the future. And then whatever's left over, let's enjoy and make the most of it.

Joe Rando (24:20):

Hunter, can I ask a question? It's a little bit of an old book, but have you ever heard of a book called Rich Dad Poor Dad by Robert Kiyosaki?

Hunter Boyd (24:28):

Oh, yeah. That was one of the first personal finance books I ever read.

Joe Rando (24:34):

He had the the same advice, Pay Yourself first and his argument was that, it's more painful to not pay your vendors and suppliers than it is to take a pay cut yourself. There's a double edged sword or, a couple of different components to that process that kind of help the business function.

Hunter Boyd (25:00):

Totally and Carly, I think when you were reading off that bio earlier of one of my mission statements when I started this was, to be the guy that my parents wished had come along 30 years ago. Anything I do, I always keep that in my mind. And what we were just talking about there, paying yourself first, is something that in hindsight, I realized my parents didn't do. They did what is more common, save and invest for ourselves, whatever is left over after all expenses have been paid. I was just talking to my dad this morning and I was actually telling him that we were going to have this conversation, do a little podcast interview. He was asking me what some of the questions were in the topics, and this is the number one thing he said he wished he would've done differently, is pay himself first, throughout his entrepreneurial career.

Carly Ries (26:04):

Yeah, it definitely makes sense. Just a heads up listeners, we'll be referencing the two books mentioned Rich Dad, Poor Dad and Profit First in the show notes. But with those books, Hunter, do you have any other resources you would recommend for people that want to get started?

Hunter Boyd (26:20):

Yeah, a couple of different ones that I think would be super helpful for this community. Number one, if you haven't read it, The EMyth by Michael Gerber, is probably my favorite. The e in EMyth stands for entrepreneurial, so the Entrepreneurial Myth. The whole premise of the book is explaining why you should not just work in your business but also take time to work on your business and the impacts that that can have over the course of your business's life and really what that means for your business as you decide to step out of it. That's probably my favorite book. I recommend it to every client I get.

Carly Ries (27:08):

Joe, I feel like you and I should start getting royalties from Michael Gerber because Hunter, you're actually the third person to recommend that as one of their resources that we've had on here. But for good reason. Actually the fourth because I also said it when we did the Turn the Table interview and interviewed each other. But yeah, I 10,000% agree. Just thought I'd mention that, but Hunter, keep going. Sorry to cut you off.

Hunter Boyd (27:30):

Yeah, no problem. So I wrote a blog post a little while back and I put it at the top of my LinkedIn page, cuz I think it's super helpful and super applicable to just about any solopreneur, freelancer, because most all of them are going to have variable income. It's called the Hill Valley Strategy and it's really just how do you level out your income, even if you have variable income. It's really just a strategy for how you can pay yourself and set up different accounts to smooth the amount of income that you're paying yourself every month so it's easier to save and budget and plan your cash flow. So I think that is super helpful. Anytime I'm talking about cash flow, that's usually the first thing I reference.


Then last but not least, Micro Acquire, not sure if you guys have heard of this company and platform, but, their goal is to help small guys and gals like the folks in this community, to get acquired. To sell your business and have that successful exit, which maybe not for all of us, but I think for a lot of us. I listened to the last podcast. It looked like that was a big theme. Having that light at the end of the tunnel and to have that successful exit. This platform is really trying to make that possible for the small one-person businesses. I think that's a place that would be worth checking out.

Carly Ries (29:15):

Excellent. Those are super helpful. Again, those will all be in the show notes. I can't believe this because I'm so enjoying this conversation, but we're actually onto our last question. This is something we ask all of our guests. What is your favorite quote about success?

Hunter Boyd (29:29):

Favorite quote about success? Well, I guess this is kind of a financial theme today, so I'll go on that theme. I think this one's especially true for one-person businesses is, it's a three word quote. "Time is money." A lot of us bill hourly or even if we don't, it's just us, right? There's no one else, maybe a virtual assistant or something like that, trying to help offload some stuff, but time's valuable. It's precious and, there are only 24 hours in the day. It's one thing we all have in common. So, just being super cognizant of your time and making the best use of it.

Carly Ries (30:12):

Great advice. Well, Hunter, I am so glad our paths crossed. If people want to learn more about you or reach out to you, where can they contact you?

Hunter Boyd (30:21):

I would say I'm the most active on LinkedIn and on my profile you can find all of my other contact information. If I had to point you in one place, LinkedIn would be it. It's Hunter M Boyd.

Joe Rando (30:41):

We'll put a link to that in the show notes too.

Carly Ries (30:46):

Absolutely. Awesome. Well, Hunter, I can't thank you enough again for being on the show. Joe, I think you can agree. I thought it was a great episode.

Joe Rando (30:54):

Thank you very much. Appreciate your time.

Hunter Boyd (30:56):

No, this is great. I nerd out to this stuff all day, so I love sharing it.

Carly Ries (31:01):

There you have it. If you like what you hear, be sure to subscribe to the show on Apple Podcast and we will see you next time.

Closing (31:06):

You may be going solo in business, but that doesn't mean you're alone. In fact, millions of people are in your shoes running a One-Person Business and figuring it out as they go. So why not connect with them and learn from each other's successes and failures. At Lifestarr, we're creating a One-Person Business community where you can go to meet and get advice from other solopreneurs. Be sure to join in on the conversations at