Episode 4: Planning for a Business and a Baby
Our businesses are our babies. We fed them with time and money when they were young, continued to invest in them when they grew, and constantly nurture them month on month. If your business is anything like mine, it means so much more to you than just a job or just a career; it feels like something important you created and slowly launched into the world. A little piece of you is out there doing your part in the world.
What happens when you are ready to have a real-life baby? The thought of adding a newborn to any packed schedule is overwhelming. Most parents-to-be do not also have the added pressure of operating a thriving business. So how do we plan to for our business and a baby? For urgent client requests and nighttime feedings, for tummy time and time away from our laptops, for enjoying every moment with our new bundle of joy while not losing sight of our business journey?
How To Prepare For Maternity Leave As An Entrepreneur
In episode 4 of Financial Conversations, I sat down with Tayler Aller, kick-ass business owner, and new mum. We discuss how she planned for this exciting life moment while keeping a firm hold on the reigns of her consulting business, RMT career, educator role, and keynote speaking opportunities. I did say she is a kick-ass, didn’t I? Here are her tips:
Have the discussion early:
Babies, unlike social media posts, cannot always be scheduled out in advance. “It’s not like we can just pick a month and say this is when it is going to happen,” says Taylor. “However looking into the future and looking at a baby window helped provide us with a realistic planning timeline”.
Understanding what you know and what you don’t know is key. You can review your current financial position, discuss how long you expect to be away from your business, investigate government support programs and create a baby financial plan all before you start trying. These items can provide some level of comfort while the list of unknowns continues to grow.
Review your current financial position:
If you have never looked at your business and personal spending habits before, now is an excellent time to start. At the very least, review your bank accounts to assess your average monthly business and personal spending. Focus on removing any ghosts in your financial closet, including stepping back from unnecessary spending; and focusing on paying down debts. Ironically gaining a better perspective on your current habits is usually an excellent motivator to improve.
Consider your time away:
Experiencing pregnancy and delivering a healthy baby will be your only priority for, at the very least, a few weeks. Even at this very early stage, getting clarity on how long you would like to step away and how long you can reasonably step away can provide some clarity. This will assist in planning for your absence, as well as assist in helping you to determine how much you need to save to support you during your time away.
Look at government programs for you and your partner:
Depending on where you are located, there may be government assistance programs available to either you or your partner. In Canada, if you are a sole proprietor, you may be able to opt into Employment Insurance, this program will allow you to access government support while you are away from your business. Visit https://www.canada.ca/en/services/benefits/ei/ei-maternity-parental.html to consider if EI is right for you, also consider:
- To receive EI benefits, you are required to opt-in for 12 full months before you receive the benefits. This may mean opting in before a baby is even on your radar.
- Once you opt-in for EI and make a claim, you are locked into the program for the remainder of your self-employment career.
- Owners of more than 40% of a corporation are ineligible for EI.
Calculate your Expected Baby Costs:
While things like bassinets, diapers, and baby formula may feel like foreign concepts right now, at some point, you will inevitably find yourself at “Baby’s R Us” trying and failing to collapse an “easy fold” stroller. Having an idea of the expected costs for a newborn, no matter how rough, means having a financial goal you can start working towards. Some things to consider might be:
- Start-up costs, I know this is a baby and not a business however, babies usually require some up front expenditure.
- The monthly ongoings of a newborn. EG. diapers, baby food, clothes, and all the toys you are probably going to spoil your little one with.
- You monthly spending, here you can calculate your current monthly spending by the number of months you expect to be without a salary or business dividend.
- A healthy emergency fund. It is important to be conscious that things do not always go to plan, so having a sizeable emergency fund you can dip into will, if nothing else, provide you with some peace of mind.
There are so many unknowns when you are considering expanding your family, luckily your business planning and your finances do not have to fit into those buckets. Early and thorough planning can help you to worry about the things you need to while taking comfort in the fact that you are ok financially.
Have more financial questions? Tune in weekly to ‘Financial Conversations’ the podcast at www.financialconversations.com, Spotify, or Apple Podcasts.