Money maven Suze Orman came from humble beginnings to find success. In 1980, she was a 29-year-old waitress working at the Buttercup Bakery in Berkeley, California, who dreamed of opening her own restaurant. A twist of fate shortly afterward led her to a position as an account executive with Merrill Lynch. By 1987, she was transitioning from her position as the vice president of Prudential Bache Securities to start her own company, the Suze Orman Financial Group.
In the years since then, Orman’s name has become synonymous with personal finance, and the straightforward advice that she has given in her New York Times best-selling books has helped millions of people to practice better financial habits while also pursuing personal growth. As the founder of her own company, Orman has plenty of financial and investment advice for people looking to fund their own entrepreneurial dreams. Here is some of her advice for entrepreneurs.
1. Get your finances in order before you start a business
While any entrepreneur with a dream is eager to get started on building their own business, Orman cautions against rushing into the process without laying the groundwork for future financial success. Recently, she detailed four “must-have’s” for starting a business: an excellent credit score, experience, operations knowledge, and a full year’s worth of operating expenses.
While this kind of financial housekeeping and preparation isn’t the most exciting approach to entrepreneurship, doing so before embarking on an entrepreneurial journey can help industrious entrepreneurs to set themselves up for success from the beginning.
2. Think creatively about funding
Of course, saving for something like a year’s worth of operational expenses can take a significant financial toll on people with an average salary. Orman encourages aspiring entrepreneurs to think creatively about how to procure funds for their business beyond stowing away savings from their paychecks. Possible approaches could include applying for a small business loan, talking to friends and family about potentially investing in your venture, or even looking into stock market investments in order to generate extra income.
Overall, Orman posits that “it’s better to do nothing with your money than something you don’t understand.” However new entrepreneurs decide to build savings that will eventually finance their ventures, she suggests consulting a financial advisor in order to obtain guidance that will help to place them on the path to success.
3. It takes more than money to establish a successful business
As important as it is to have a reliable financial plan in place before starting a business, it’s not the only thing that matters. In an interview with Metropreneur, Orman referenced class 5, lesson 3 from her most recent book, The Money Class. The takeaway from this lesson: “you better have a passion, an entrepreneurial talent, and a seriously careful financial plan” if you want to give yourself an honest shot at establishing a successful company.
Talent and passion are as important as well-planned finances in order to establish a successful business. More than anything, passion can be a defining factor that differentiates those entrepreneurs who achieve their goals from those who do not. Passion is a key component of grit: it is the fuel that can keep entrepreneurs going in the face of hardships, whether they be logistical or financial. As a measure of whether or not an entrepreneur truly has passion for his or her business, consider this idea that Suze Orman posed in the same interview: the business you pursue should be “a dream you had while you were working, not an idea you came up with because you’re out of work or tired of working for someone else.”
4. Stick to your business budget
According to Orman, one of the most important things that an entrepreneur can do is create—and strictly follow—a business budget. In an interview on Huffington Post Live, Orman spoke with a personal finance blogger about budgeting tips for entrepreneurs and outlined the three most important financial details by which entrepreneurs should abide.
Orman recommends that entrepreneurs evaluate how much money they need to earn every month in order to cover the operating expenses for a new business. Once they know that total, she says that any money made beyond that number should be saved and put into a savings account. While it may be tempting to spend the extra income, this could prove to be destructive in the long run. Moreover, she recommends that entrepreneurs consider opening a Roth-IRA for extra funds, where they can watch their money grow and have it on hand in the event of an emergency.
5. Reframe failure as a lesson
Even the most accomplished entrepreneurs have experienced their share of failure. Suze Orman states that when an entrepreneur become the boss, it’s crucial for this individual to learn how to view failure as a valuable lesson, rather than to dwell on what went wrong. In regards to this lesson, she said, “Along with all my successes, I also have had many failures. But being the boss means you look at those failures as lessons you needed to learn to be even more successful in the next venture you try.”
In short: fail, then don’t give up. It could be the decision that leads you to even greater success in the future.