Finance Planning for Expat Coaches

“Why did I not learn more about Finance?” I repeatedly asked myself in the first five years of running Global People Transitions. It didn’t make sense to me. I was good with computing cost projections and balance sheets in Global Mobility. I was an excellent math student in high school. I like numbers. My issue was that I lacked the practical understanding of a “good housewife.” I was curious to know how much a liter of milk would cost in the supermarket. I learned those little secrets of saving money in Switzerland, such as Migros and Denner, which are essentially under the same corporate umbrella, but you can buy twice as much food at Denner.

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 I could go shopping in a pharmacy. For me, this meant “quality of life.” I would not be stressed at the cashier on Saturday because five other people were in line behind me. Another reason I stopped learning more about finance planning, investments, and retirement savings when I was employed because I had a bad relationship with money. Money seemed “dirty” to me.

Money stinks. It doesn’t make you happy, and you don’t talk about it when you have it. I had all sorts of relationship issues with fortune and with food. Over the years, through consulting and coaching, I have worked on my relationship to financial planning, and food planning came along with it. I feel ready to share the lessons I have learned with you and give you a few tips. 

If you start as a business owner or feel you need to heal your relationship with money, this article is for you. You may also read this article if you are not a female founder but feel you need to get better with money. Let’s try to understand a few basics of Finance.

1 – Maintain one spreadsheet called “Cash Flow Plan”

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

2 – Move to a Fluctuating Income

When you are used to a particular lifestyle with a fixed monthly income, you rely on that paycheck often because you tend to tailor your lifestyle around your consistent monthly payment. If you are unemployed or start as a freelancer, you must 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 of business (unless your business is a hobby or you are a trust fund baby).

3 – Find your Finance Guru

Finding the Finance Guru is a challenge I have addressed with bankers several times. Most financial writing is so that no one wants to read it. Some of it does not even make much 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 much 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 happening at the SMI in Switzerland.

The most important figure I remember from uni is the relation between borrowed capital and your capital. Now, if you start, you should use your cash. That’s a lot smarter than lending. It would help to find a healthy ratio between investing and earning for the years ahead. That’s all. Remember that if you have a sole proprietorship in Switzerland, many of your reporting obligations change at the magic 100k CHF turnover mark.

4 – Learn Vocabulary 

Suppose you want to appear financially competent when talking to your bank manager, financial advisors, insurance brokers, mortgage providers, or lawyers. In that case, you must know a few basics and speak their language. For example, you need to understand the interest and how it works. Also, adverse interest, debt, and how you get into debt. What is the advantage of a mortgage versus paying rent? How do open and closed investment funds work? I agreed with my bank lady that we would meet in person once a year to review the main issues, look at my risk profile, and discuss my financial planning for the year. I enjoy having a personal contact and someone who helps in case I need urgent support with online banking.

5 – Budget the Fun Stuff

In the early years and even before I launched my company, I used to spend more than I earned. I applied “Reaganomics .” That did not work. At the time, I needed to understand that this early investment could hinder my potential to get out of the red figures in the long term. In the past, as a female founder, I made 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 opened their business many years ago. Switzerland has also suffered from the global economic crisis. The Swiss often have access to networks that foreigners will not get into. Also, men might have faster results than women because of the unconscious biases of their buyers.

Depending on your type of business, you should have a current account that balances your company’s investments and costs. Please separate your private and company accounts. My business is cyclical, and once I understand the cost and earning cycle, I can prepare myself better for downtime. 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. When you ask the insurance provider, they are often willing to support you on a payment plan. If you want to be ahead of your costs, ask for larger invoices and pay them as soon as possible.

One cardinal rule is that I pay all my vendors in advance so that they always get their money. This means that I have to budget their quarterly invoices, too, and it has happened once or twice that I had to put a service on hold because of a lack of funding. Another principle I have developed is to check my account twice or thrice a week, sometimes even daily. I will issue an invoice once the service has been delivered or 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. Occasionally, invoices got lost in cost center discussions and destructive processes. Once, the company I worked with did not pay an invoice for over two years, but I kept following up. I became more careful about the agreements in the contracts and followed up on outstanding invoices faster. Although I still see room for improvement, my financial stress eased greatly when I started using a tool for small businesses called BEXIO.

Even though Finance is not my favorite subject, I discovered 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. 

I allow most of my investments to be investments in myself. I enjoy having a beautiful working space where I can hang out 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 to stay competitive, which requires keeping up to date with technology and expertise in my field and constantly updating my skills. Keren-Jo Thomas helped me organize my pension and understand what I needed to improve if I planned to stay in Switzerland during my old age. While this was a down-turner, to say the least, it helped me gain clarity. I also set up my last will as I do not have children and, in case of an emergency, would like to ensure that my elderly relatives have financial support. Before discussing this further, I want to remind you that you can subscribe to our newsletter by signing up for the Global People Club.

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PS: I am working on a new workbook (to be published in 2025) for anyone considering starting a business as an Expat Coach, Global Consultant, or Trainer. If you want to know more, please email angela@globalpeopletransitios.com so we can keep you updated. 

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