Smart Money Podcast: Setting Your Business Up For Success | Personal-finance

This week, we talk with a business owner about how she turned on-the-side consulting work into a business with multiple revenue streams — and her passion for supporting other Latina entrepreneurs.

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Three years ago, Theresa E. Gonzales decided to take the leap into self-employment. With her company, 5-E Leadership and Marketing, she advises women entrepreneurs on marketing and operations strategy, with a focus on leveraging technology to grow their businesses. She also hosts a podcast, “Latinas From the Block to the Boardroom.”

Latinx entrepreneurs start businesses at faster rates than any other demographic group — the number of Latinx-owned firms is growing approximately 10 times as fast as the number of businesses owned by members of other ethnic groups, according to the 2021 State of Latino Entrepreneurship report from the Stanford Graduate School of Business.

Gonzales took on her first consulting client while she was still working in Silicon Valley. When she began learning about the size of her target market — Latinx business owners — she realized she might be able to pursue that kind of work full time. In 2019, she dived in.

In growing her business — and helping others do the same — Gonzales learned the importance of setting yourself up for success. Right away, she created a business entity and opened a business bank account. She recognized where she needed help and hired people with those skills, like an audio engineer and a bookkeeper.

1. Before you launch, do your market research: Define who you want to serve and what you offer those customers that’s different from your competitors.
2. Separate your business and personal finances: You can open a business bank account with an online bank or a local bank or credit union.
3. Keep clean books from the start: Accounting software can help with this, and as your business finances get more complex, you may need a bookkeeper.

Have a money question? Text or call us at 901-730-6373. Or you can email us at podcast@nerdwallet.com. To hear previous episodes, go to the podcast homepage.

Sean Pyles: Welcome to the NerdWallet Smart Money podcast, where we typically answer your personal finance questions and help you feel a little smarter about what you do with your money. I’m Sean Pyles.

Rosalie Murphy: And I’m Rosalie Murphy, a Nerd who writes about small business.

Sean Pyles: Today, we have a special episode for you. We are kicking off a new series called Nerdy Business, where we talk with entrepreneurs about how they built their companies. And my partner for the series is small-business writer Rosalie Murphy. Rosalie has done some producing and editing work on Smart Money before, but this is her first time in front of the mic. So welcome on to Smart Money, Rosalie.

Rosalie Murphy: Thank you, Sean. I’m glad to be here.

Sean Pyles: Who are we talking with this episode?

Rosalie Murphy: We are joined today by Theresa E. Gonzales. Three years ago, Theresa decided to shift from a career in Silicon Valley to self-employment. With her company, 5-E Leadership and Marketing, she advises women entrepreneurs on marketing and operations strategy with a focus on leveraging technology to grow their businesses. She also hosts a podcast called “Latinas From the Block to the Boardroom.”

Sean Pyles: Great. Well, Theresa, welcome on to Smart Money.

Theresa E. Gonzales: Well thank you for having me. I’m very excited to be here.

Rosalie Murphy: We are so glad to have you. For starters, Theresa, could you just tell us about your career path? Where did you start and how did you start consulting?

Theresa E. Gonzales: Sure. So the Bay Area, I came to school out here because of the creativity and the art. And I was just very curious to leave the Central Valley. I decided I’d like to start business school. So my journey took me to City College. And then I went to San Francisco State University, where I got my degree. And then I said, I want to take a leap into tech. And how that came to be was just a network that I created out here. And that’s what you do. When you start, you have to create those relationships in school because you never know where you’re going to land on your feet when you get into the business world. You run into those people. And I eventually got into tech, some of the bigger companies down in Mountain View.

And I noticed that I was working a lot on the front end of sales and marketing teams and strategic go-to market teams for new platforms and services that were servicing small businesses. And what I learned was that we were serving a lot of small businesses, but I didn’t see a lot of people of color, even though there were people of color that were starting small businesses. So this was a very intriguing thought that was in my brain at the time. But then I started to see more women. They were starting businesses, but they didn’t have a lot of technology skills. And we started talking, and that’s when I said, “Well, I can help you with that.” And so that was kind of like where the side hustle started.

Sean Pyles: What specifically were you getting them set up with that they didn’t have before?

Theresa E. Gonzales: Obviously a lot of them needed the POS systems, which are the payment systems. But they didn’t have the conceptual idea of tracking their customers, how to send them email marketing campaigns for discounts. They were just doing the direct marketing, the basics. Like, “I’m going to send out a postcard to the community, and they can get a discount.” Or, “I’m going to go to a popup.” And those are all very good. And they were using some social media. But when you start to get into the details of understanding your sales revenue and historical growth, like who are your customers that constantly keep buying? Who are the people that buy the most type of product from your business? It gives you a lot of data. So I was educating them on that, and it was just epiphanies that were happening. And I said, “Wow, this is really cool.” I can teach them this. And it’s like, everybody can be on the same page because the data today online is so important. So that’s kind of where the journey led me.

Sean Pyles: Yeah. It seems like you were able to leverage your experience and your education in business school to help businesses that you wanted to lift up and share your knowledge with them. And then by doing that, they were also able to help you expand your business. So a very mutually beneficial thing going on here.

Theresa E. Gonzales: Correct. Exactly. This is where I started to dig and do a little more research before I started my business. Because I wanted to understand, what was the target market, right? How big is this opportunity if I were to switch into going into a full-time business? And that’s the smart thing to do because you want to know what you’re getting into, right? And so for me, that was doing the research and understanding how big is this market that I can capture. And then I started looking at podcasting as part of that. The research showed this is the big opportunity then. So that’s how I made that decision.

Rosalie Murphy: So what does your business look like today? What are your revenue streams, and what kind of clients do you work with?

Theresa E. Gonzales: So today the revenue streams come from the podcasting aspect obviously, but a lot of it comes from consulting. Strategic business coaching, I like to say. And what that means is, we move beyond just your social media calendar, your content. I mean, that’s all very important, but it’s also about the experience. Then you start to look at the data and then we start making very strategic business decisions about what’s the next opportunity for us? How do we grow the business? So a lot of it comes from my strategic consulting aspect of sitting down with them and looking at the business as a whole, and then putting their information together to say, here’s an opportunity for you to grow your business and to really stand out. And how do we put marketing, sales and things together that will make that happen? I know it sounds kind of grandiose, but we have very boiled down conversations to make it simple.

Rosalie Murphy: Yeah. How do you find clients, Theresa, or how do clients find you?

Theresa E. Gonzales: That’s a great question. So how clients find me is through networks. So I have joined a lot of business networks — women-owned business networks. I do a lot of engagement on social platforms, obviously. But I also do the podcasting piece, which is distributed all across the world, and people have found me in that regard. But I also do a lot of email marketing, but a lot of it is repeat business to be honest. And that is kind of the bread and butter of a lot of small business is referrals and repeat business because it’s really about the relationship and the trust. And once you find those clients that they feel they trust you, or that you can communicate with them, or you understand their culture, or you have that connection with them about the business, they want to continue to work with you. So that’s how I’ve built my business and gained clients. But at some point, if you’re on a growth trajectory, you really have to expand into other arenas and be open to other industries or opportunities. And that can be a little scary too.

Sean Pyles: Yeah, I bet. Well and I understand that you are focused on supporting Latina entrepreneurs in particular. Can you talk about your decision to focus on this sort of clientele?

Theresa E. Gonzales: Sure. So at the beginning, when I had done my research, I had noticed that women of color were starting businesses faster than any demographic. That was very interesting to me, because that told me a lot of things. One is that they’re very technically savvy, but they may not have the business strategy behind them. Because business school is expensive. And if you don’t have the business school kind of chops around finance and the operations — data analysis of how do you turn that into a revenue stream — these things become very overwhelming. And so I said, well, I can be a part of that layer into their business journey. And a lot of us do that, but the technology piece is what I really understand. And that’s where I like to do a lot of the education for my clients, is understanding what is the right technology? How do you build your business with technology? And then also, how do you leverage all this information that you have, to build your business year over year? How do you manage the money to keep investing in yourself?

Sean Pyles: Were there any unique challenges of working specifically with Latina entrepreneurs that you think maybe other entrepreneurs like a white guy like me, maybe wouldn’t have encountered any sort of challenges that folks had to overcome?

Theresa E. Gonzales: Oh gosh. Yes. I mean, there’s a lot there. That’s a big question, but it’s very true. And I would say access to capital is a very big thing. Now I’ve been fortunate because I have money, but I have also been able to have, as we say, friends and family, but then there’s also business loans. But you have to have your ducks in a row for that for lending institutions. And one of the things that I’ve learned is that that’s a very hard thing for us to do. And that comes with confidence. And how do we show up to go to a bank and say, “Here’s all my information. I’d like to take out a business loan so I can have cash flow.” A lot of us have not been in that situation to show up to a bank and say, “Hey, can I get a $50,000 loan?” Or more, to buy a building or to pursue that dream. It’s a big step. It’s a big step.

Rosalie Murphy: So, Theresa, now I would love to do maybe what you do with your clients, which is pull back the curtain a little bit and understand what’s happening behind the scenes. Growth doesn’t happen overnight, and there’s a lot going on that maybe the public or the customer doesn’t see. So what were some of the steps that you were taking in the background to set your business up for success?

Theresa E. Gonzales: When I started this journey, and I have been in business for some time. I’ve worked for really big companies in Silicon Valley. And then we work with the small-business community, or we put a very big strategic initiative behind it. And you understand it all takes money, but there are a lot of people that are organized around these initiatives and projects. So when I started, I said, “Oh yeah, well, it’s just me and it’s small and I’m only working with one person and it’ll be fine.” And then I said, “Oh my gosh.” There are a lot of steps in the process that you begin to understand, like getting your sole proprietorship or your LLC. Getting trademarks, getting your business license, getting a bookkeeper, making sure that you have sales accounted for, your expenses.

I mean, all these little things that I’m like, “Oh yeah, I could do this.” But then it becomes like, “I need help.” Because I can do this part, but I need some help on this part of the business. And I mean, I did it myself, but you do have these little steps that you take that I wasn’t really aware of. And I knew they were there, but I didn’t understand the process.

Sean Pyles: So basically formalizing the way you were running your business.

Theresa E. Gonzales: Exactly. It does formalize the business, which then, when you’re taking those growth steps, you’re able to have all this information teed up like a golf ball. And then you go into the bank, if you need a loan or you want to expand your business, or someone wants to invest in your business. You have all these things in place, and they see that you’re serious and you’re ready to make that journey and you want to keep going. So, yes, it’s very important, but it’s a stamina game too, mentally, because it goes up and down. Once you get it down though, it’s like, “OK, I’m glad that’s over with.” And then you just keep going.

Sean Pyles: Ready for the next challenge.

Theresa E. Gonzales: Yeah. You’re ready for the next challenge. And you got to be ready for it.

Sean Pyles: Yeah. Great. I would love to hear about your team. Who do you work with on a regular basis? Who was your first hire? That sort of thing.

Theresa E. Gonzales: I have an audio engineer for a lot of my content publishing and podcasting. And then the bookkeeper was immediately after that. And because I knew sales and marketing, I kind of knew that piece of the business, but what became very apparent to me was a bookkeeper. I needed that person to really help me reconcile my expenses, my sales, all these things at the end of the year. And then I have a designer who really helps me with a lot of my website and my branding. We work together on that brand logo. I have a trademark for that. And it protects your business along with your business license, your sole proprietorship. All these things really are protection and they’re an investment too, but those are the things right now.

Sean Pyles: I think it makes a lot of sense to offload tasks like bookkeeping, designing, having someone who can do operations, because it makes me think of some advice that my regular podcast co-host Liz Weston gave me, which is to focus on the tasks that only you can do and try to get the other stuff off your plate. Because it’s going to get done one way or another, but if you can’t focus on what you do best, then nothing else will be as good as it can be.

Theresa E. Gonzales: And I mean, that is 100% true. That’s what I also tell the women that I work with in their business. You want to make your cookies and your cupcakes and you want to sell your scones in your bakery. You go do this, and I’m going to help you set up this part. And we’re going to have meetings about this and we’re going to see how you do and where we can expand into wholesalers and really kind of push that idea where they have a committed time to think about these things.

Sean Pyles: You mentioned revenue and that brings me to my next question. I know it can take a while sometimes for small businesses to become profitable. Now that you’ve been in business for about three years, have you hit that milestone yet?

Theresa E. Gonzales: I would say just barely last year. I did.

Sean Pyles: Well, congrats. It’s not easy.

Theresa E. Gonzales: Yeah. COVID really threw a monkey wrench into a lot of businesses. And I was affected during that time because I had written out a three-year plan, like you should do when you start a business. And then COVID hit six months after I started the business. Everybody had to shut down, so how did we pivot real quick? People needed money. So I have a whole podcast about this, actually, with a wonderful woman, Nathalie Molina Nino. And we talked about this, specifically how women of color didn’t have a lot of access to capital for them to stay afloat. But a lot of the companies that I had worked with, they were sustainable and they already had an online presence. So we had to pull back a little bit. It was a very painful time for a lot of people, but I was able to hold a couple of clients and now it’s just expanding. So I’m very grateful for working with the women that I have, and it was a very interesting time. Something we’ll all never forget, I’m sure.

Rosalie Murphy: What do you do to keep your business finances separate from your personal finances? I know that’s something that can be challenging for a lot of people who strike out on their own.

Theresa E. Gonzales: Right. I had to take a deep breath there because it’s very hard. And everyone says, “Well, you got to pay yourself first.” And yes you do. But I’m reinvesting always in the business because I am in the mindset of growth. And you have to have that mindset of, “OK, I want to grow the business and I want to help more people, so it’s of service.” So when you have your personal finances set up, you definitely want to keep them separate from the business. It’s very good to have separate bank accounts, separate checking. It’s also a way to see also how the money’s coming in for the business.

Rosalie Murphy: At what point did you do that? Was that when you formed your entity?

Theresa E. Gonzales: So when I started the business, that was actually the first thing that I did. It went hand-in-hand with applying for my LLC, then getting the business bank account established because then it has your name. And then you have your personal banking account separated from that. And it was a credit union, so community credit unions are awesome.

Rosalie Murphy: So what is next for you, Theresa? What are your goals for the rest of the year or the next three years, or however far ahead you’re planning right now?

Theresa E. Gonzales: My goals for the following years are to build up a lot more clients in different industries. And a lot of it is in the health and wellness, but there’s also a lot of opportunity for finance and health tech. So I would like to start focusing on those that are coming up. I also work with a lot of B2C customers. So there’s B2B customers and then there’s B2C. The business-to-consumer client that I have right now, I’m looking to work with more women in that arena. But also to educate them on how they can get partnered with large corporations on how they can get certified as a minority-owned business. And that’s big. That is really big.

And there’s a lot of money and initiatives behind these corporations to really look for women that have products and services that are licensed as minority-owned business. I’m actually in the process myself because that just opens up huge doors. Huge doors to you. So that’s kind of where I’m at in educating more women around that. And it is a process and it does take all these things we’ve talked about in this podcast to really have it set up and lined up for you to go into that next phase of being licensed. And then how you get into those opportunities with larger corporations to sell your products and services.

Sean Pyles: Theresa, to your point around educating your clients, I’m wondering what advice you would give to anyone who’s hoping to grow their business right now?

Theresa E. Gonzales: So anyone that’d like to grow their business, really sit down and write your plan about, are you solving a problem? Are you serving the community or your base that you would like to create this product or service for? And then, do you really see the long game in that? Because if it’s a short-term gain that you’re looking at, it may work out and it may not, but you have to understand it is really the long game that gets you to those financial goals and the networking opportunities. And then also the big partnerships that you’re looking for. So if you have that mental stamina to do that — because that’s very important and that you’re supported with people that will help you in that journey — it will be amazing and you will really enjoy it. It is fantastic. Because at the beginning I thought, “Oh yeah, this is going to be very cool.” And then I’m like, “Oh wow. I don’t know.”

Sean Pyles: It’s a daily slog, sometimes. It’s a lot of work.

Theresa E. Gonzales: It is a lot of work. But when you see the fruits of your labor, so to speak, it’s a really happy moment. And I’m very grateful and thankful.

Sean Pyles: Well, Theresa, thank you so much for sharing your story with us.

Theresa E. Gonzales: No problem. Happy to do it anytime.

Rosalie Murphy: And now some tips for our Nerdy entrepreneurs or anybody who’s thinking about starting their own business.

Sean Pyles: First, do your market research. Who do you want to serve, and what can you offer those customers that’s different from your competitors? Then you can figure out how big your opportunity is.

Rosalie Murphy: Second, separate your business and personal finances. You can open a business bank account with an online bank or a local bank or credit union. Your revenue can go into that account, and your expenses and taxes can come out of it. And when you’re ready to pay yourself, you’ll essentially be sending that payment from your business-self to your personal-self.

Sean Pyles: Third, keep clean books. Accounting software can help with this. And as your business finances get more complex, you’ll potentially need a bookkeeper.

Rosalie Murphy: And that’s all we have for this episode. Do you have a money question? Turn to the Nerds and call or text us at 901-730-6373. That’s 901-730-NERD. You can also email us at podcast@nerdwallet.com. Also visit nerdwallet.com/podcast for more info on this episode. And please remember to follow, rate and review us wherever you’re getting this podcast.

Sean Pyles: This week’s episode was produced and edited by Rosalie Murphy with help from me. And here is our brief disclaimer, thoughtfully crafted by NerdWallet’s legal team. Your questions are answered by knowledgeable and talented finance writers, but we are not financial or investment advisors. This Nerdy info is provided for general educational and entertainment purposes, and may not apply to your specific circumstances.

Rosalie Murphy: And with that said, until next time, turn to the Nerds.

The article Smart Money Podcast: Setting Your Business Up For Success originally appeared on NerdWallet.