675: (Solo) The Money Mistake That's Quietly Killing Your Business

**Nathan Chan** (0:01)
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Hey Foundr fam, Nathan here. Welcome back to another episode of the Foundr to Foundr Solo Podcast, where I share my lessons building Foundr over the past decade and speaking to so many successful founders, billionaires, you name it. So today I wanna talk about something that I've been thinking about a lot and it trips up a lot of founders. And it's one of those things that feels like almost too obvious to talk about, but I keep seeing this time and time again. And it's this blurring of personal and business money. Now, I'm not saying that businesses spend money carelessly, but I've been thinking about this concept that we treat our business like monopoly. And when you really think about it, we are so happy to like spend it here, spend it there. Yeah, I'll get this freelancer. Yeah, I'll pay for this agency. Yeah, I'll invest some money here. But if it was your personal money, I think you treat things so differently. And so I think it's a real fundamental problem for founders, especially if they haven't separated the two. So I want to dive in.

**SPEAKER_2** (2:06)
Here are the stories, learn the proven methods and accelerate your growth and future through entrepreneurship. Welcome to The Foundr Podcast with Nathan Chan.

**Nathan Chan** (2:20)
So I want to talk about what this actually looks like in practice. You're generating revenue for your business, things are moving, the business account is going up, and then the personal account, they're essentially the same thing. Money flows in, you don't have a real structure, you do a transfer every now and then when you need money, you got a small salary, whatnot. And what happens is cash gets pulled out whenever it's needed without any formal process, without any formal budget, mind you. And the result of this is you can't read a P&L when your personal life is running through the same accounts.
And then you have this mindset of like, oh, well, it's the business' money. It's not my money. But if you're the sole founder, it's kind of this tricky dichotomy that you have because you're like, oh, well, it's the business' money and I work for the business, right? And then before you know it, you can't make good decisions about hiring an inventory or marketing spend and you don't actually know what the business has because just because you have a certain amount of money in your bank account, definitely does not mean like if you've got a $100,000, $50,000, whatever, $200,000, half a million, a million dollars in your bank account, that doesn't mean with an e-commerce brand that you are necessary killing it because you might have a big purchase order that you need to fulfill on. Who knows, right? You don't know what's around the corner, right? So the other thing that's really dangerous with treating your business accounts and business like it's monopoly money is, revenue starts to feel like personal income and a good month. You feel good, like you let that emotional baggage, like how good does it feel, right? When you just got like a big payment or you got a ton of money in your account, like, oh, I can relax now. How good is this, right? And I've got a big thing I've got to pay for personally, just take it out of the business and it starts to feel like a piggy bank. Like, I never forget this for me and my journey when we did a big launch, did exceptionally well, had a lot of money in the bank account. And I just chilled, right?
It really messed around with my mindset. And I think I just like the fact that we're talking about this conversation around like too many founders are treating their business finances like it's monopoly money. I think just even being aware of that, it's just so incredibly important because I think as founders, when it's the business's money, it's like it doesn't truly feel like yours sometimes and you waste it. And I don't want you to do that. Like I've done that. I've wasted so much money over the years. Like I didn't even want to know, right? So how do you actually fix this? Well, first and foremost, you have to have a dedicated business account. Like, and if you can have multiple business accounts, like I love the Profit First model, right? Where you have an account for your tax, you have an account for your monthly OPEX, where you have an account for actual profit and drawings, right? So what you do is you break everything up by percentages. So let's just say for tax, you know you have to put aside every time, every time dollars come in, you put aside 20 percent towards tax and you put it in that account and you know you put in 30, 40 percent to your OPEX and then you know you put in 20 or 10 percent to your profit and it's just so incredibly powerful to have so many different accounts because then the money has purpose and it's really, really powerful. So that's the first thing you want to do. So you know every single dollar that comes in, it has purpose. It's not monopoly money that you can just play with and throw around. Second, make sure you pay yourself a regular salary that you set, right? And it's okay if it's only $40,000.