As a financial coach, I’ve seen countless small business owners struggle to pay themselves consistently, often due to a lack of clarity in their business finances. Many are bombarded with manifestation fluff messages and a hyper-focus on making money, while neglecting the crucial aspect of managing their finances effectively.

In this article, I’ll share practical advice on how financial coaches can help small business owners achieve financial success by separating their business and personal finances.

When to Tackle the Separation of Finances

Introducing the concept of separating business and personal finances should be done early in the coaching process, ideally as Step 1. This helps provide clarity on the business’s financial situation and allows for more specific strategies and coaching tailored to the client’s needs.

Who Can Benefit from This Approach?

This concept is particularly valuable for smaller, service-based businesses where the owner manages their own finances. Whether they have a bookkeeper or accountant is often irrelevant to whether they commingle or separate business and personal finances. The end goal is to create a clear separation between business and personal expenses and establish a consistent paycheck for the business owner.

Understanding Your Client’s Mindset

Business owners often express challenges like not having enough clients, needing to control spending, or wanting to increase revenue. However, the actual problem may be unclear due to the commingling of business and personal finances. Commingling exists on a spectrum, from using one checking account for all expenses to maintaining strict separation between accounts. Many business owners fall somewhere in the middle, occasionally misusing funds or relying on guesswork. This leads to stress and frustration, hindering their ability to make smart, strategic decisions for their business and personal lives.

The Three-Step Process

To help your clients gain clarity and achieve financial success, follow this three-step process:

  • Separate business and personal finances to remove chaos and provide clarity.
  • Determine the business owner’s paycheck amount and structure.
  • Estimate tax savings based on the paycheck.

Once these steps are completed, you can work with your client to interpret the foundational understanding of their business and strategize solutions.

Case Study: James, the Baseball Coach

James, a baseball coach, came to his financial coach exhausted and struggling financially, despite good business performance. He believed he had a spending problem and needed more clients or revenue. After completing the three-step process, they discovered that James’ pricing model was not viable, requiring an unrealistic number of coaching sessions per week to meet his revenue target. By training multiple athletes simultaneously, James reduced his required coaching hours and experienced a positive ripple effect in his finances, emotional well-being, and work-life balance.

Preparing for the First Session

To set your clients up for success, have them complete prep work and financial worksheets before the coaching session. Review these materials (which we teach in our 90-Day Financial Coaching Program), organize expenses into categories, and color-code items to lay the foundation for your coaching. This process is crucial, whether you’re working with small business owners, individuals, or couples.

By following this process and providing practical, real-world advice, financial coaches can help small business owners gain clarity, pay themselves consistently, and create a viable business model. The end result is not just about paying oneself but also about creating balance between life and business, empowering business owners to make strategic, intentional decisions that lead to long-term success.