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Money Matters

Entrepreneurs are obsessed with money. We fret about raising it, saving it, borrowing it, and spending it.

This chapter has all sorts of great ideas related to cutting costs and financing your business. One thing I've learned about money: many projects cost three times as much as you budgeted and usually take twice as long to complete—especially in the media and entertainment world.

Optimistic entrepreneurs often fail to consider how they can support their families while waiting to draw a salary. New business owners are notorious for overestimating revenues and underestimating expenses.

It's a blessing if you have someone else pay your living expenses—at least during the first year or two. My husband, Joe, has always had a “real” job, with good health insurance benefits. Through the years, he's provided a stable financial foundation and health insurance for our family while I've maxed out our credit cards and gambled everything we had on several ventures, including SBTV.com (Small Business TV), the first online television network exclusively covering small business news and Back on Track America, a cross-country speaking tour cosponsored by Amtrak in 2001 after the terrorist attacks on 9/11.

SBTV.com, launched in 2000 with marketing support from CNN.com, was way ahead of its time. We produced hundreds of high-quality video clips, but unfortunately, they were unwatchable on a dial-up connection. We sold that company in 2003 and now you can watch broadcast quality clips on 201greatideas.com.

Although I had a syndicated column, a book contract, and a syndicated radio report, my first years in business were challenging. I was lucky, though. Sales of my first book, Succeeding in Small Business: The 101 Toughest Problems and How to Solve Them took off after USA Today published an excerpt and an extensive profile, including a picture of me working in my new home office.

That story prompted American Express to sponsor my syndicated small business radio report. The radio report, which aired on CBS stations across the country, combined with my weekly column, served as a magnet for speaking engagements and consulting projects.

It's been an adventure. I don't regret quitting my job. But riding the entrepreneurial roller coaster is why both our kids work full-time for major media companies. Evan is a graphic designer for Bloomberg Businessweek. Jeanne is an assistant editor at Pixar Animation Studios. When she's not working hard on the next big animated hit, she creates animated and experimental videos for artists and musicians.

They vowed never to be entrepreneurs after an especially traumatic family vacation in Las Vegas. The phone rang while we were watching TV, and the kids (then 12 and 6 years old) were splashing in the groovy, in-room hot tub. The call was from our bookkeeper, and she was crying so hard I couldn't understand what she was saying. She finally calmed down enough to tell me we owned $91,000 in federal taxes—and it had to be paid within 24 hours. I almost fell off the bed. We packed up and checked out. Goodbye hot tub and mirrored ceiling. Goodbye Vegas. We stopped at Denny's for breakfast. I was crying so hard I couldn't eat, but Joe said the pancakes tasted soapy.

Thank goodness, I had the money in the bank. It turned out our flaky former CPA had forgotten to prepare the vouchers to make the required estimated tax payments! I was too busy running the business to keep track of when to pay the taxes. That's why you, the business owner, have to stay on top of everything, especially financial matters.

Most everyone reading this book has faced similar money challenges. So read on to learn the best way to court angel investors, how to collect debts, and how to reduce your tax burden without raising an eyebrow from Uncle Sam. Speaking of Uncle Sam, the U.S. government purchased $350 billion worth of goods and services in 2009, so think about whether you can become a government vendor or supplier.

The chapter begins with one of my favorite ideas: becoming a “profit enhancement officer,” or PEO, for your business. If you've had it with your current business and are ready to move on, I share some good ideas about how to buff up your balance sheet before selling your business.

Meanwhile, here's a great money-saving tip from the American Institute of Certified Public Accountants: If you pack a lunch instead of spending $6 a day, five days a week, and put that money in the bank for 10 years, you would end up with $19,592, based on a 6 percent interest rate. That rate is not realistic, but the point is, every dollar saved really counts. Find more money-saving tips at http://www.feedthepig.org.