Females, Food and Finance

“Why did I not learn more about Finance?” I repeatedly asked myself since I started my own business and will I ever get my head around the financial side of the business? Will I ever get better at managing cash flow?

It didn’t make sense to me. I was good with computing cost projections and balance sheets for expats. I can explain the difference between purchasing power parity and cost-of-living index. I can tell you how COLA relates to foreign exchange rates. I was excellent in Math as a student. So it’s NOT that I don’t like numbers.

My issue was more that I lacked the practical understanding of a “good housewife”. I didn’t know how much a liter of milk would normally cost in the supermarket. I didn’t know those little secrets of saving money in Switzerland such as the fact that Migros and Denner are essentially under the same corporate umbrella but you can buy twice as much food at Denner.

When I was working as a Global Mobility Leader, I had a good paycheck. In Germany, I would even go grocery shopping in the “bio” shop Alnatura. My mother would say that I might as well go shopping in a pharmacy. For me, this meant “quality of life”. It meant that I would not be stressed at the cashier on Saturday because five other people were in line behind me.

There was another issue why I stopped learning more about finance, investments, saving money when I was employed: I had a bad relationship with money. Money stinks. Money doesn’t make you happy. When you have money, you don’t talk about it. I had all sorts of relationship issues with money.

This article is for you if you started out as a business owner or if you feel that you need to heal your relationship to money. And if you are not a female but you feel you need to get better with money, you may read this article as well. Let’s try to understand a few basics of finance and financial independence.

Maintain one spreadsheet called Cash Flow Plan

If you want to run a sustainable business, work with a cash flow plan. It can be a simple one, but you need to have your finances in order. In the early days of my business, I asked my BFF (who is a Finance guru) to review my business plan. She explained that I would just need to ensure that there is a cash flow in and that it is bigger than the cash flow out. Easier said than done, but I still use that same plan in year nine.

Moving from a monthly fixed income to a fluctuating income

When you are used to a certain lifestyle with a fixed monthly income you rely on that paycheck a lot because you tend to tailor your lifestyle around your consistent monthly income. If you are unemployed or if you start out as a freelancer you have to get used to a fluctuating income. You probably had 100’000 CHF in your bank account as a starting capital and reserve and in my experience, you will need that in Switzerland in your first two years in business (unless your business is a hobby).

Finding finance information that you actually want to read

This is a challenge I have addressed with bankers several times already. Most financial information is written in a way that no one wants to read it. Some of it does not even make a lot of sense. I received a weird letter the other day and sent it back with edits and side comments. The main message was: We could not deduct money from your account but there was a lot of fluff around it. It took me a while to understand why this company wrote to me. I have started to read the Cashguru blog now, so at least I know what is going on at the SMI in Switzerland.

KPI’s for MNC’s might not fit for small businesses

I studied Finance in college, so you would think I get it but most of these models relate to MNCs, not small businesses. This knowledge does not really help in practical matters such as where to buy in bulk or how to maintain a cash reserve. The most important KPI I remember from uni is the relation between borrowed capital and your own capital. Now, if you start out, you might just want to use your own capital. That’s a lot smarter than lending. For the years ahead, you need to find a healthy ratio between investing and earning. That’s all. Don’t forget that in Switzerland if you have a sole proprietorship a lot of your reporting obligations change at the magic 100k CHF turnover mark.

Learn Vocabulary

If you want to appear financially competent when talking to your bank manager, financial advisors, insurance brokers, mortgage providers, or lawyers, you need to know a few basics and speak their language. For example, you need to understand interest and how it works. Also negative interest, debt, and how you get into debt. What is an advantage of a mortgage versus paying rent? How do open and closed investment funds actually work?

I agreed with my bank lady, that we would meet in person once a year to go through the main issues and look at my risk profile and discuss my financial planning for the year. I enjoy that I have a personal contact and someone who helps out in case I need urgent support with online banking.

Learn about budgeting

In the early years and even before I launched GPT, I used to spend more than I earned. I applied “Reaganomics”. What works in politics, does not really work for a small business. At the time, I did not really understand that this investment could hinder my potential for getting out of the red figures in the long term.

I sometimes took bad financial decisions. For example, I started to pay myself a salary too early. I listened to an advisor and should have listened to my gut feeling. Remember that other people’s experiences in the business world could be biased. They have opened their business many years before. Switzerland has also suffered from the global economic crisis.  Often the Swiss have access to networks that foreigners will not really get into. Also, men might have faster results than women because of unconscious biases of their buyers.

Depending on your type of business, you should have a current account, which balances your company and your personal investments and costs. I would advise that you separate your private and company accounts.

Dealing with a cycle of costs

My business is cyclical and once I understood the cost and earning cycle, I could prepare myself better for the downtimes. For example, I have a lot of annual invoices in January but January is often a slow month.
It’s generally better to split invoices into smaller parts. Often, when you ask the insurance provider they are willing to support you on a payment plan. If you want to be ahead of your costs, you should ask for larger invoices and pay them as soon as you possibly can.

Learn to manage cash flow

One cardinal rule I have broken a little bit in 2017 was that I try to pay all my own vendors in advance so that they would always get their money. It means that I have to budget their quarterly invoices too and it happened once or twice that I had to put a service on hold because of lack of funding.

Another principle I have developed is to check my account twice or thrice a week, sometimes even daily. I try to issue an invoice as soon as the service has been delivered or as soon as the booking has been confirmed.

Many large relocation companies and training agencies have very long payment periods. I suffered greatly from these in the early years of my business. I had delivered a service but sometimes was only paid 60 to 90 days later. In some instances, invoices got lost in cost center discussions and bad processes. Once I got paid two years later only. Now, I am more careful about the agreements in the contracts and I try to follow up on outstanding invoices faster. I use a “Small Invoices” to manage my invoicing process.

Read and study

Even though Finance is not my favorite subject, I found out that if I research more about a topic, I can reduce hassle and costs for my business. For example, I clarified how the VAT-system works when working across borders. On invoices I received from service providers outside of Switzerland, I asked them to change their invoices so that my company would show as responsible for VAT. I also found a good rule for issuing invoices for service providers located out of Switzerland. In my first year claiming VAT back on a company car paid my rent and expenses for a month.

Review your Pricing

I review my pricing every year and check if my services are still at the price level where I feel I should get paid. It is not always possible for me to insist on a certain rate or price but I got a lot better asking for it. I see a lot of women who undersell themselves or do not even consider that they could earn more. In my RockMe! program we define a financial goal for every client.

Buy local where you need service

I buy local where I need service. Everything else I try to order online. You might be wondering why I need to have human interaction to buy a mundane product like toner, paper or pens. The reason is that for me these shopping trips are a pleasure. I like to go to the “Papeterie” and browse what they have on offer. It’s not just a transaction.

Invest in yourself the most

Over the years as a company owner and Managing Director of www.globalpeopletransitions.com I allowed most of my investments to be investments in myself. I enjoy having a beautiful working space I can go to and hang out in all day. I love to go to seminars and invest in my skills and knowledge. I know that I have to be better than average in order to stay competitive and that requires that I keep up to date with technology, knowledge in my field and update my skills constantly. Maybe it’s time to go to a Finance course.

Money and Food

I noticed with a friend recently that money and food have a lot in common too. If you tend to overeat you might also have a tendency to overspend. I am currently fasting from certain foods and from money. It means that I try to reduce my spending to the bare essentials. It helps once in a while to have an empty fridge, to buy only what you really need, and drop the coffee at Starbucks or the wines at Bohemia

Angie Weinberger

PS: Are you struggling with how to set your price tag?
Check out these PRICING articles on my blog.

HireMeExpress – From desperate to confident as a Minority Expat Partner. 

HireMeExpress is the online course that will get you from desperate to carving out an income and feeling at home in your new country. Sign up here to find out everything you need to know in order to land a job in Switzerland or another market you are not familiar with. We will send you our 19 Fresh Resume Checkpoints and further material such as videos. In case you have any questions you can email us via angela@globalpeopletransitions.com.

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