223 | Live Money Coaching: Setting Yourself Up for a Better Retirement

Hilary Hendershott Better Retirement


Welcome to episode 223 of Love, your Money! Today, I’m sharing another Money Coaching session with one of my clients to give you actionable insights to grow your wealth.


In this episode, my client and I dive into the financial nitty-gritty of her salon business as she focuses on growing her retirement assets in her mid-50s. You’ll hear about passing costs through to clients, insights for smarter IRA contributions, and balancing between maximizing your revenue and giving back to your employees and your community.


If retirement is in the back of your mind — and you’re feeling behind — today’s episode might be just what you need.


*Please note, to protect my clients’ identities and respect their privacy, I’ll be using pseudonyms for all money coaching episodes.

Here’s what you’ll find out in this week’s episode of Love, your Money:

  • The finances of my client’s salon business
  • Giving back vs. running a business
  • Getting clear about financial goals
  • A money journaling exercise 
  • What is your business really about? 
  • Acting as a mentor to your employees 
  • How to handle profit-sharing in your business
  • Planning for the future 
  • Taxes and retirement contributions

Inspiring Quotes

“People often don't honor and recognize the business that they're actually in.”

“The most valuable work we can do is to start from the WHY.”

“Don't go into a business thinking, ‘Can I make it?’ That's the wrong mindset.”

“You should be planning to be rich, not planning to avoid taxes.”

“CPAs value themselves based on how much they help people not pay tax, not how much they help you grow your net worth.”

Enjoy the Show?

Today, we’re airing another episode of Live Money Coaching. Today, we’re meeting Rachel for the first time. As a reminder, that’s not her real name. So we’re removing actual name and bio information, so the episodes are anonymous. Rachel is a wonderful lady. Just an absolute joy to work with. She’s been working as a hairstylist for like decades. She also earns money doing outside sales for an eyewear company, and what her husband does is buying, renovating, and renting out local real estate.

So, in this conversation, we’re getting the lay of the land with Rachel. Rachel owns a building and is thinking about borrowing additional equity from that building to renovate it and turn it into a salon, where she could have other stylists and professional services folks, like a nail tech and a massage therapist rent space and pay her rent for that space. She’s really excited about the social possibilities of that salon, like what it would feel like to be there. She just loves that. But what she needs to take into consideration is that when we look at her historical income, she’s earning far more money from outside sales than she currently is from doing hair. So does she really want to give up that income?

Rachel really wants to get her finances in order. She’s in her mid 50s, and as part of that work, I’m encouraging her to identify measurable and specific goals. Of course, we always need to know where we’re starting from, so I’m also talking with her about her current household asset level and spending. This can be a bit tricky, especially with entrepreneurs, because most of us pay for some otherwise personal expenses from the business, right? So there’s that question of, okay, that looks like a business expense, but if I didn’t have the business, aka if I were retired, would I then need to be covering that cost from my retirement income? Do I need to replace part of my business costs with retirement income distribution? So, taking money out of my IRAs and other accounts. So we tend to really dig in on that with our clients.

Not only that, but entrepreneurs tend to have chronically optimistic thinking about their assets. And I love this about business owners, but it can be tough to get people to settle on an actual number for these most important financial calculations. Moving forward, the first fork in the road for Rachel is deciding whether to move forward with the salon idea. Her current idea is to borrow $120,000 of the equity in the building to finance the renovation. But then, of course, that puts her business $120,000 in debt, right out of the starting gates. You’ll hear Rachel talk about wanting to live into or create her business from her calling. That’s another word for purpose. Or as the infamous Simon Sinek would say, her why.

So, I just wanted you to know what she’s talking about when she says her calling. And just a note for when she’s talking about her husband’s business real estate holdings, her husband has a business partner and those two own everything 50/50. But there have been some difficulties in that business partnership. The details aren’t that important, but that’s why you’ll hear her say she doesn’t really feel the confidence of ownership in terms of her husband’s business assets. And I said, well it’s tough to feel secure about an asset you co-own with someone you’re not sleeping with.

So, I’m referring to her feeling secure that her husband and his business partner can work it out, because her husband isn’t sleeping with his business partner, and that those real estate assets are actually going to pay for her retirement. Taking on a business partner is risky, risky, risky because that person can really cost you big time if they get injured, tired, distracted, angry, disgruntled, or any of the above. So just be really careful and make sure that you take the time to pre-contract for various ways that you can and will separate in the future. Okay, without further ado, here’s money coaching with Rachel.


Hilary Hendershott: All effective coaching starts with your goals, right? I’m not here to foist any ideas or goals onto you, so I have to know where we’re going. You set the direction. I just tell you how to get there.

Rachel: Yes.

Hilary Hendershott: Oh, my goodness. Okay. So, can you give me the synopsis? I read your intake form and all you kind of said was, “I’m not really sure.” I know I have your goals.

Rachel: I’m a little all over the place because there’s a lot of avenues. And one of the things I know about, just my experience with you, is you just have a way of wrangling and getting right to the point. So, there’s this salon where we’re looking at renovating and we’re getting bids. So, we’re in this process and it would be…

Hilary Hendershott: You own the salon?

Rachel: I own the building, and I’ve been doing double payments for three years so that I’ve got…

Hilary Hendershott: You’ve got the million-dollar asset?

Rachel: No. We have like a million in assets together. I owe 39,000 and it’s worth, well, the appraisal was 140. So, we’re about to borrow 85%. So, we’re about to borrow, I don’t know, I’ll end up with a mortgage of about I’m going to say 115 or 104. It’s going to be gorgeous so that the vibe is people see and experience their beauty, a gathering place people want to linger in. And I’m at the point, I’m 55, so I’m like I want to get this figured out way faster than I would have in my 30s, and I’m wanting to do a lot less hair and actually build other people’s careers, but also I want to hire as well, which I have zero staff. It’s just me. And I’ve never done it this way before.

Hilary Hendershott: Can I ask a few more questions?

Rachel: Absolutely.

Hilary Hendershott: Do you have startup capital? If you’re going to hire people, what’s it cost to pay the…? $39,000 mortgage is cheap. Okay. And then when hairdressers come on staff, are they 1099 or are you paying them a base?

Rachel: This is why I’m here. So, I need to decide how I’m going to do it this time. Traditionally, how I have done it in the past is they’re 50% commission of whatever they make. Well, prices in my town of about 7,500 people, I’m a $45 haircut. I really should be $60 but that is about $20 higher than most people are. So, I need to be creative about what the market will bear in the town. So, pricing is going to be key. And then I also rep eyewear and I make extremely good money doing that. So, I will be pulling from those dollars to be able to make sure I’ve got enough for whatever I want to do. So, with eyewear, I can go from $5,000 to $10,000 a month depending on sales, and I am a 1099 there.

Hilary Hendershott: So, it looks to me like you made $52,000 cutting hair last year. So, you brought in a total of $52,000 doing $45 haircuts, which makes sense. Okay. That number makes sense to me. But you only paid yourself $9,000. So, is the other $40,000, are you just paying for a lot of personal expenses from the business revenue?

Rachel: That would be bills, software, retail like inventory, back bar like hair color, perms, cotton, gloves, blow dryers, tools.

Hilary Hendershott: Are you passing those costs along to your clients? So, perm, color.

Rachel: No.

Hilary Hendershott: Oh, honey.

Rachel: I know why I’m here. Yeah. So, that’s some of it.

Hilary Hendershott: You’ve heard me talk about the money operating system®.

Rachel: Yes.

Hilary Hendershott: Tell me, what did you get out of that? What did you take for? What do you hear for yourself in thinking about the lessons about money that are hard-wired for you?

Rachel: I don’t have them articulated very well but there is an element of he is, they are better with money than I am. I really enjoy what I do.

Hilary Hendershott: I know you do.

Rachel: You know, it’s not…

Hilary Hendershott: You’re a ball of joy. I’m just wondering why, if my perm costs you $25 in solution, why are you charging me $45 when the person next to me who’s not getting a perm doesn’t have a solution that costs $25? Like, that’s my cost. Why aren’t you passing it along to me?

Rachel: Right. I don’t know. I know it’s the thing to do. I just have never done that. There’s an element of I just want to build other people’s careers now. It doesn’t harm me to do that. I can afford it.

Hilary Hendershott: 30, right?

Rachel: Yeah.

Hilary Hendershott: And how are you going to build other people’s careers when you haven’t built your own? I don’t hear it as a critique. I’ll never criticize you, okay?

Rachel: No. I mean, it’s funny. When I hear it out loud, it’s actually comical but there was a time where I was way more intentional or whatever. We’re just sitting really well and I don’t have that hunger, that urgency. And it is time to do that. It’s time to run it like a business.

Hilary Hendershott: Why?

Rachel: That’s the kind of thing to just bluntly say is, you know, I’ve run a salon like a business, and now I’m not. And I need to start doing that again.

Hilary Hendershott: But why? When you say, “I need to,” why do you need to now?

Rachel: Well, because I do want to create a space. I want to create something I’ve never created before. And this is going to take money, and it’s going to take intention and it’s going to be really gorgeous. I just have to get myself up to, I don’t know what I have to do but it’s like it’s going to require different things that I’ve been doing.

Hilary Hendershott: So, do you see in some way, if you’re fully funded and I don’t know that you are fully funded but you have investable assets, one could make the case, “Hilary, I’m done running a salon like a business. I just want to give back.” That’s not an unreasonable thing to say, right? But you’re coming to me and saying, “I want to create for my colleagues.”

Rachel: One, this year has taken so long to just get a renovation, the bids and stuff. And it’s not my wheelhouse because I am a bundle of joy and it’s bumming me the f* out. And I kind of lose focus because I’m up to a lot of things and I have a lot of other options. But I think once I speak with the banker, what needs to get in place is profit first. By the way, I’m really being loose with profit first. I don’t have automated withdrawals.

Hilary Hendershott: The most valuable work we can do is to start from the why. I will get with you into profit first, I promise. I want to get on board with why you’re here and why it’s important to you. And I can’t quite figure out what’s lighting the fire to make money.

Rachel: Well, I’m 55. I’m not going to be working forever. I don’t know that I’m fully…

Hilary Hendershott: You want more money in your net worth. You want to grow your net worth.

Rachel: Well, for sure. Yeah, 100%. And I don’t know that the salon is the vehicle to do that. I think it could be something gorgeous and a nice way to give back to the world, but I don’t think that’s going to be my method of building wealth.

Hilary Hendershott: How much money do you want to save? By how much do you want to grow your net worth?

Rachel: To have financial advisors, we just met with them, and I only have 200,000 or 300,000 in my Roth, between my Roth and my traditional. We have a lot of rentals. We have land, but I don’t feel like my hands are on any of that. Do you know what I mean? We’d like to travel. I think we wanted to live on $50,000 a year in retirement or something like that. The other thing is when I’m 70 or 80, I don’t know if I’m fully funded to take care of myself. Say I get sick. So, I just don’t feel secure about my financial future and I’m only really starting to get sober about that in my 50s because I’m like an income earner. Always had enough but I’m not going to be able to do that forever. So, that really concerns me.

Hilary Hendershott: So, can I just reflect to you what I heard? I just want to make sure it’s accurate.

Rachel: Yeah.

Hilary Hendershott: Sounds to me like your husband either already had some real estate or bought it with his money while you’ve been together, and that doesn’t necessarily feel like it’s yours. Is that correct?

Rachel: Yeah. It’s a little bit like that. He didn’t have much. He had land that we paid off together. So, he has a business partner in his construction company and so they have been buying all of the rentals. So, half of that is in our assets. So, all that million and whatever, well, that’s great. You know, he thinks I should feel secure about that but I don’t and it’s nothing against anyone. I’m just wanting to be really as confident in my own ability.

Hilary Hendershott: And it’s tough to feel secure about an asset that you co-own with someone you’re not sleeping with.

Rachel: Thank you. That is very well articulated. Again, I’m not complaining. We just bought another piece of farm ground that he’s creating with his dad and his son, which is great. I love it. I do love it but I’m like I need to get really intentional with the money I am bringing into the marriage, I’m earning, that I know where it’s coming from, how it gets there like that, and put it where it needs to be where I think it needs to be for us. He has kids. I have kids. My kids are not farmers. None of that is going to go to my kids. I know I don’t have to leave anything to my kids but my building is mine. I paid for it. This renovation in my world needs to happen. And then I would like to have a manager in there. I would like to go and do the eyewear thing that makes it really good money and take that money toward my retirement and then have the salon. I know it sounds really confusing. I’m hoping you’ll help me get it.

Hilary Hendershott: No, I can hear it all. I can hear it all. So, I have some homework for you. Ready? I want you to do some money journaling.

Rachel: Okay.

Hilary Hendershott: So, I want you to give me the Reader’s Digest version of your money past, just as you recall it. Be specific about words that were sent to you, themes, things you remember your parents saying, or the adults that are around you. One thing I would like you to journal about, when you’re right there, you got a client who has a perm and a client who doesn’t, and you say $45 to each person. If I were right there and I said, “Why are you not charging that person for what that actually cost you to do?” I just want you to go free form, just type any answer that comes to you. Even if at the end, don’t delete it. If there are three different answers, that’s cool too. I just want to hear what comes out of you. I’m not picking you apart. I’m not criticizing you.

Rachel: I feel fine.

Hilary Hendershott: Okay. And then I need to better understand the financials of the eyewear business. You’ve said several times eyewear is what makes money and I’m not really clear why we’re doing hair yet. So, let’s just talk that through. And then the other thing in the journal or on the intake form, I need for us to agree to our goals together. What I want to know is what we’re going to accomplish together. So, if we’re 12 or 24 months from now, you’re looking at your retirement account balances and you go, “Holy cow, that engagement with Hilary was just so cool. I got everything I wanted,” what would those numbers be? Okay?

Rachel: Okay.

Hilary Hendershott: And then the last thing is, will you please send me pictures of your building? I want to see it.

Rachel: Yeah.

Hilary Hendershott: It will help me. You mind if I ask for… You just met with your financial advisors. Are you willing to send me the reports that they generated for you?

Rachel: Okay. Perfect.

Hilary Hendershott: Good. I think we’re off to a good start.

Rachel: Me too. Now, you know why I’m here.

Hilary Hendershott: This is going to be good. You’re coming in at a good time. I didn’t realize how the degree to which you’re actually starting over or starting something new. You are so all possibility, all miracles, all the time that I didn’t realize how everything that had molted for you. And so, it’ll be great for you to really have a picture of the numbers that are going to get generated. How do you sell the eyewear? And in the past, how literally like physically have you sold it? To your customers or how?

Rachel: Yeah. So, I route myself and I’m in a 12-week territory because there are four states. So, every 12 weeks I’m in. That’s right. So, I have a car and it’s loaded with actual physical frames. And so, when I make an appointment, I sit down with the optician. We look at anything that stale on the board. We pull it, they return it, and then they order a new product. So, they’re actually physically touching it.

Hilary Hendershott: Oh, you dog and pony yourself out to optometrists.

Rachel: Yes.

Hilary Hendershott: How are you going to sell eyewear in a salon then?

Rachel: Well, we don’t sell it in the salon. I mean, the intention is that I would have a staff and I just manage them because I’m in the salon Mondays and Fridays, half a day on Fridays and Mondays. And so, I’ll cut hair and I’ll do the stuff that I need to do. The other thing that’s happening is I would like to be a hybrid rep in that I have filmed two videos to stay connected to accounts between sessions, and I can work with them remotely. The problem is there’s an antiquated opinion among way too many opticians that they have to touch the product and put the product on their face and they really don’t. And we have a state-of-the-art website with a virtual try-on. It’s better than anything I’ve seen. So, there are ways to also wrangle some of these people into doing some more remote stuff. But anyhow, I mean, it could be that I come to you and I come to the conclusion that I sell my building and I’m not going to do a salon, or I don’t rep eyewear, and I learn how to generate money in the salon. I mean, it could be, but I think they can house together. I’m just not sure.

Hilary Hendershott: Here’s my concern is because in the one business, as a stylist, your business model is finding new people who will let you do their hair. As a salon owner, your business model is finding good stylists and nail techs and massage people, etcetera, etcetera. As an eyewear rep, your business model is optometrists. So, what you’re presenting right now, it just completely particle-izes you. You’ve got three different customers. You have people whose hair you do, you have stylists, and you have optometrists. And so, gosh, I would love it if we just had one customer because what you’re talking about is your passion. It’s your soul. It’s your calling. But you’re only going to be there Monday and Friday?

Rachel: Yeah. Now, I don’t know that my calling, I don’t have my calling anchored to the salon. I just have my calling. And I was going to design a business from it. My reservation, I’m just going to say my reservations about committing to the salon 100%, staffing it. I hear nothing good about staffing. I mean, honestly, the prices here, I mean, I can definitely raise the prices, and I definitely know that there will be customers there, and I just feel like there’s going to be a cap or a limit. And so, I would have to really overcome that. I don’t think I can’t overcome it I guess. It’s just, am I up for that again at 55 or do I do eyewear where the money’s just there? I mean, 5,000 to 10,000 a month is pretty good.

Hilary Hendershott: Well, here’s my thing is people often don’t honor and recognize the business that they’re actually in. So, for me, for every qualified financial advisor-client, there are probably 50 financial advisors who desperately want to serve you. That means I’m in a massively competitive industry, and that means I’m actually in the business of client acquisition. My actual job is finding clients, right? I got a client who’s in my business consulting program, The Money Blueprint. She makes bags, okay, but she doesn’t distribute on Amazon. She has 20,000 followers on her Instagram. I said, “Your actual job is finding manufacturing in the Philippines and making Instagram videos.” That’s how she actually gets paid. It has nothing to do with the damn bag, right? So, my impression of salon owners is that they’re actually in the business of managing women who are fundamentally horrible to each other.

Rachel: Yeah.

Hilary Hendershott: I don’t know. I trust you to be happy doing anything you set your heart out. And of course, how you be is how they will show up. So, I’m sure great stylists will come work for you. I just have never seen a salon owner go, “I love my life.”

Rachel: I know it. I know it. Hilary, I know it and it worries me.

Hilary Hendershott: All right, so how’s this going for you so far?

Rachel: I got to tell you, I was so in my head writing my email to you the first time. And now I look back and I’m like I’m so relieved and glad I did it. I think this is going to be a great 90 days, probably the best 90 days.

Hilary Hendershott: Well, just know that I both internalize what’s needed and forget the rest of it. And I know 100% that you would probably write it very differently today versus last week simply because I’ve done it myself. Okay. The last time we were on the call, I said, “I just don’t understand why you keep telling me no one can command a price higher than what you’re charging in your tone. Why are we fighting this?” I would love to just consider using the skills you already have, the knowledge you already know, the wisdom you’ve already internalized to create a business that lives outside of your human form.

Rachel: Okay. Hear me out. This is a thought that it was never intended for me to be doing all the hair 40 hours, like I’m never going back there. I don’t want to do that anymore. And the thought is I am the one creating the space for people to have a nice career. I would like to hire. There are several women in this town that are retiring. They really don’t need the money but they’d like to work. I would like to have somebody like that here full-time paying them. They’ll be coordinating the salon, coordinating the staff. I mean, obviously, I’m going to be here a couple of days a week and will come in. I will host staff meetings. We’ll do thinking. That would be really cool so that they’re part of creating a culture, a gathering place where people want to linger. And I would just like to be the one, I like the fact that I own real estate. I like the fact that I’m going to have something to sell at the end of my time or my kids will inherit, whatever, but I’m thinking a small team. Money’s there. We grow the team. We grow the building. Now, I have not mapped out how many years that would take. I’d like the renovation to be done by March of 2024. I’d like to start hiring people like three stylists max. Like, one nail tech, two nail tech. There’s a massage therapist that’s interested in coming. So, I would really just like to be the person who’s doing the promotional stuff. And I’m training people to do the inventory, which is there’s not a lot of inventory in a salon. But what do you think of, I guess, that was my end result is I really…

Hilary Hendershott: Yeah. I’m just taking notes. I like it. I like it because it allows you to fully embody your energy. It allows you to be out and about. It allows you to leave the salon. It allows you to get sick. It allows you to go on vacation. And so, what we need to figure out is with three stylists, two nail techs, and one massage therapist, how much revenue is being generated and how do you get paid? And I know you’ve said you charge them 50% before.

Rachel: Yeah, in the past. And I’m kind of thinking maybe we should do something not so antiquated because I think it is hard for people to make it. I would love to do some profit sharing at the end of the year. There’s one thing. Also, if you go hourly, it just does not incentivize. Like, I would have never made it. I never needed a guarantee. I flat-rolled made money. Not everybody’s like that these days, for sure. Obviously, everybody’s not driven by, “I got to take care of myself here,” which was a pretty good, I mean, it served me well at times. There’s got to be a way to not go broke with employees. I do know the right things to do in a salon, to build a clientele. Like, for instance, it is so simple to rebook them, to recommend products. There is a direct correlation between the number of products a person leaves the salon equal to retention, like retaining that client. It’s just how it’s been for so long. And that’s just true.

Hilary Hendershott: You see yourself as a mentor.

Rachel: Definitely.

Hilary Hendershott: Okay. So, this has a lot in common with real estate brokerage, right? So, the broker will invite agents to come in. You get a desk, you get training, you’re on your own. Most real estate agents earn $20,000 a year. Some earn a million. And so, I can see I think we should talk about this six-month cushion, etcetera, because just note and I get where you’re coming from. But in a conversation that started with how can I make money, the first thing you talked about is spending money, giving other people your money, right?

Rachel: I know. Yeah.

Hilary Hendershott: In the form of a guarantee. Let’s talk about profit sharing. I can wrap this up for you real quick. I do profit sharing every year I’m profitable. So, you can do profit sharing when you’re profitable and you will not do it when you’re not. Easy-peasy. And profit sharing is voluntary. And so, you get to the end of the year every year. And what I do is I keep notes of the bonuses I gave people last year. I try to keep their profit sharing either the same or higher, or I go to them and I say, “There’s no profit this year guys,” and it’s not a surprise. I’ve been talking about it since April with my team, right? So, it’s like, “There are no bonuses this year but next year I intend that your bonus is higher than last year.” So, they really need to see the bonus as an accessory, not as a main entree. So, definitely, you can do that. Profit sharing can be done in the form of paying cash bonuses or into a retirement plan, a deferred tax-deferred retirement plan, which if you really want to help people build careers and lives and financial freedom, that’s a great thing to do. But again, these are conversations you have when you have money, right, when the business is up and running.

So, probably my guess is the first time you’re having this particular conversation is 2025. I mean, it’s possible 2024 but if you start in March, it just seems unlikely. And so, you’re creating the Mecca, the place to be, the hair and beauty and luxury and female place to be. I mean, people just want to come hang out, right?

Rachel: Yes.

Hilary Hendershott: And so, I get it.

Rachel: I got more clear about the rentals. So, I started talking to his office manager.

Hilary Hendershott: Okay.

Rachel: And there is some good stuff there but they’re not making income now. It’s for the future. But they have them all paid off with the exception of they’ve got $85,000 mortgage on one and they’ve got I think six rentals.

Hilary Hendershott: Well, what does that mean? It’s for the future. Why would it not be making money?

Rachel: Well, okay, so first of all, money that they get off of the rentals goes back into paying off the rental and also going back into the business. So, when they pay one-off, they end up getting another one. So, right now they bring in $5,500. Let me see. Maybe $6,000 a month. I mean, I wouldn’t be surprised if rentals don’t show income until they stop buying properties. Hold on a minute. They are all paid off except the fourplex, which has an $85,000 mortgage. They paid off the shop, which is worth a lot. Renovation. Okay. So, at least they have the value of the property. So sorry. The houses are not done and that’s what makes the income negative because they still cost so much in property taxes, utilities, insurance, construction, and loans.

Hilary Hendershott: So, for all new construction?

Rachel: No. They are renovating one, two. They’re renovating two.

Hilary Hendershott: Okay. I’m having a hard time getting the picture. But what’s the eventual, what’s the fruition of this real estate empire? I see eight total properties including the Rock Quarry and the Little White House, and I see a lot of money being poured into real estate. So, no mortgages, no low-rate mortgages, no leveraging other people’s money. When are you going to stop buying? When are you going to capitalize on what you’ve done? What’s the exit plan from this?

Rachel: All right. So, it’s 50/50. So, 50% will be…

Hilary Hendershott: Okay.

Rachel: Yeah. That’s what he wants to do in retirement. He just wants to live off the real estate income. And when he’s done because he’s 47. He’s like me. He used his body his whole life. So, he’d like to be retired, I think, at 55. I think he’s got 7 or 8 more years. He’s doing an $8 million house here in 2024 and it’s probably going to take two to three years and he will be 50, which is a game changer. And then we’ll see what he’s going to end up doing next year. And I think that’ll go two or three years. And then that’s probably going to be his last big project is in his words, I don’t really know what’s going to happen. So, in retirement, I don’t know that he has. I’m sure he’s got it in his head but what the timeline may be is that he would like to be 55 and retired from construction and then living off the rental income, farming with his son. I am, though, going to get really clear about what’s important to me, which is I’m going to be old someday and I want to run a salon in a way that I think is amazing. And I don’t know how it’s going to go but I want to go through whatever stages I have to go through to produce something that I’m proud of and that people that, you know, it’s a contribution to. Instead of complaining about this, let’s do something great.

Hilary Hendershott: And what we need for that is differentiation, right? $15 is not going to make or break anybody, right? They were already going to pay $30 down the street. Another $15 is not going to hurt. It’s alright.

Rachel: Yeah.

Hilary Hendershott: Right? And so, we sit down. They believe they’re getting something special. Your cuts have flair, right? I mean you thought at all about including the frames in your salon.

Rachel: Okay. I do think you can have a brick-and-mortar. I would just need an optician and an eye doctor to refer people and we could have an optical boutique, which could be… But I don’t know that business, and I don’t know how profitable it is.

Hilary Hendershott: All grow on each other, right? If you told me eight years ago that I would have the company that I have and it would look the way that it looks, the number of people and what we’re doing, I’d have been like I don’t even know how to relate to that story, right? So, don’t worry about the long-term plans. The important part is you have work you love and it’s profitable. And so, have you done a pro forma for the one as you’ve designed it, the plans that you sent me? In other words, do you have a report showing what you’ll be earning if all the therapists are at max capacity?

Rachel: No.

Hilary Hendershott: Okay. That’s what we need.

Rachel: Okay. So, I owe 38,000 or 39,000. I can look it up for exact. And this thing is worth, well, appraised at 140. And by the time my rental’s done, I’m probably going to have a mortgage of 104,000, so I don’t have this. Like, it’s so doable. I can pay for that myself, you know? I mean, I don’t need any staff, but this is…

Hilary Hendershott: That’s not how a business owner thinks.

Rachel: I know. This is why I need you.

Hilary Hendershott: Don’t go into a business thinking, “Can I make it?” That’s the wrong mindset. We want to have a plan for your salon that gets you to financial freedom, that has an interesting profit amount, and by profit, I mean the amount you pay yourself plus what we save that is actual company profit. It comes out of the same bucket in the beginning but you have to earn a salary. You don’t have to earn in the first 12 months. We could make a plan that has you have a ramp, an on-ramp that has breakeven for 12 months, whatever. You decide that period of time is. “But, Hilary, I can pay a $100,000 mortgage without any income.” No. Don’t ever say that again. How many stylists do you think are in…?

Rachel: Oh, man. Okay, there’s 21 just in the downtown area, and I’m sure I’m missing some people. I’ll just round up and say 30 stylists.

Hilary Hendershott: Okay.

Rachel: And two cosmetology schools, one 30 minutes west and one 40 minutes east.

Hilary Hendershott: I recommend you consider having a 30-minute. Her job is to attract professionals who want to build a career and make a bunch of money for her brokerage. And so, there’s ways in which you already embody similar ways of being, but you might just have a chat with her. Right?

Rachel: Yeah.

Hilary Hendershott: What I’m doing, it looks and feels a lot like what you do. We’re both attracting professionals. Our energy, the way we be, impacts how much money they bring in. Can you give me some of your secrets? Right?

Rachel: Yeah, yeah. And too, I don’t know if you got the pictures to my salon but I can only have so many people in 1,063 square feet.

Hilary Hendershott: So, you might need a trailer. You might need some of the space.

Rachel: We can add on to the build here. And as to generate income with the existing business, our building, renovate it to your vibe but she goes, “You can always add on an addition,” because I do have room and I do have people. And she goes, “If you want to grow your team, you’re going to have to grow your building once the team grows.” So, right now, four stylists max and two nail techs max, and one to two massage therapists. I mean, that’s it. And then it’s somebody to coordinate the salon. Like, sitting at the desk, making sure we’ve got the purchase orders for inventory, making sure the stylists have what they need and that they’re working.

Hilary Hendershott: Yeah. It’s going to be a little cramped but you’re just going to lean into it. It’s going to be high energy. It’s going to be like, “Excuse me, I got to get around you. I got Starbucks for everyone.” It’s going to be like energetic music, right? So, can you put together… What I want to see is a spreadsheet.

Rachel: We meet with our guys Thursday, by the way, because we need to decide if we’re going to, if I’m going to do funding more IRA or am I going to do a wealth management account for like bigger purchases or if we need it or, yes, I don’t know.

Hilary Hendershott: Well, you’re in a place right now where you’re planning to start a business, so you want as much free cash as you can. I mean, cash options, right? So, if you put it in an IRA, now you can’t spend it.

Rachel: Yeah, but the wealth management you can get to without penalties. You’re not paying 10% interest when you withdraw it.

Hilary Hendershott: Yeah, but you should not be investing money that’s earmarked for the business because it can lose 30% tomorrow.

Rachel: I was just looking because I’m a sole proprietor and I’m an LLC. I go 1099, I mean, and I’m always looking for ways to kind of reduce the tax bill. So, I usually just write a check like the end of March. If it looks like we’re going to owe more taxes, I just write a check to my IRA. That’s what I’ve been doing.

Hilary Hendershott: Well, that’s a little backwards. You should be planning to be rich, not planning to avoid taxes. And rich people pay high taxes. You should be contributing to your IRA what you want to and can contribute to your IRA. And then the tax bill gets figured based on your planning. Not the other way around. It’s the tail wagging the dog.

Rachel: I know. Yes. So, you’re getting clearer about why I’m here, aren’t you?

Hilary Hendershott: Don’t worry. 80% of the population does what you do and CPAs talk to people like that because CPAs value themselves based on how much they help people not pay tax, not how much they help you grow your net worth.

Rachel: And that’s my community. That’s who I go to for advice as an accountant. That makes total sense.

Hilary Hendershott: Yeah.

Rachel: I’m ready for a mindset shift.

Hilary Hendershott: Well, how much cash is there right now? Well, you’re talking about putting money in your IRA. Is there money that you could put into your IRA in March? Are you saying you have cash sitting around?

Rachel: I use, well, in my tax account, I have $1,500 right now for property tax. And then by next year I would totally have 3,500 the more I own.

Hilary Hendershott: These kinds of numbers, though, that’s not going to move the needle for you in terms of if you put $3,500 in your IRA, you’re maybe saving $1,000 or less on taxes.

Rachel: Yeah. I think we’re in the 25% tax bracket, I think.

Hilary Hendershott: Yeah. That’s not going to move the needle.

Rachel: Not ever.

Hilary Hendershott: This is good. Okay. I’m actually starting to have a good sense of your household finances. This is good.

Rachel: Oh, in cash, we only have 5,000 set aside, just cash, emergency fund, and we could live on that for three, I don’t know. Our household bills I think are around five. I could get that number back again. But you know what, with the profit first, I’ve got my little separate banking for my tax hold and my profit hold. I haven’t really done much with those two. I have my taxes set aside for property tax. I just really need to get on a clear plan and very much ready. I’m just going to stop talking because I’m really not talking like somebody building wealth.

Hilary Hendershott: This is for that. I don’t know how you would know how to talk like someone building walls since you never had before.

Rachel: Yeah.

Hilary Hendershott: But we’re just taking stock of like what is.

Rachel: Yeah. I’m smart, and I know really smart people. And I know that I can make this sh*t happen. I just got to have the balls to get in a conversation with someone like you and work it out. Does that make sense?

Hilary Hendershott: Well, we need a change. You’re up to changing your frequency like us, what you and I are doing together, right, and say doing new things and saying new things and he’s going to be seeing new numbers. And, ultimately, a person, in my view, we look at any financial asset for its capacity to produce income. So, if I look at the first page on your report from Trust Financial or Trust Company or whatever that says desired income, $36,000 a year. Now, that seems low to me, but…

Rachel: That is low because that’s Social Security number. I think what’s not in there is the money from rentals and I think I don’t know that number. Again, I don’t think it gets articulated very well in our meetings with these guys.

Hilary Hendershott: Yeah. This report lacks distinction. So, your sources of income will be Social Security income from your retirement account. So, your Roth IRA, your traditional IRA income from IRA, his Roth IRA is too small to really talk about, and any income from his rental properties. However, if he’s managing seven of the properties, he’s not retired.

Rachel: Thank you because I have said this since we were dating. I go, “Your retirement sounds like work.”

Hilary Hendershott: Yeah. Send me that. Put together what you can in terms of a pro forma. I want to know what the salon looks like at max capacity. So, if you have each chair filled with a great stylist or great professional services provider, and they’re working as much as they can and they love their lives and they’re charging top dollar, what does the salon make?

Rachel: Okay. Good. Yeah.

Hilary Hendershott: All right. Good. All right. Well, I’ll see you next week.

Rachel: Yes, I think so. Okay.

Hilary Hendershott: Okay.

Rachel: Yay. Thank you so much.

Hilary Hendershott: I’ll see you in a week, honey.

Rachel: All right, babe. Bye. Thank you.

@derek@podpostmedia.com @charlie@podpostmedia.com  I’m am quite positive Hilary recorded a snippet to be put here since this is where the next coaching session starts. I saw this in her email when she sent you the links originally. It’s not in the edited audio file I’m listening to right now. It needs to be added please.

That will be rectified as well. Not sure how that got missed, but we’ll get it fixed.

great thank you


Hendershott Wealth Management, LLC and Love, your Money do not make specific investment recommendations on Love, your Money or in any public media. Any specific mentions of funds or investments are strictly for illustrative purposes only and should not be taken as investment advice or acted upon by individual investors. The opinions expressed in this episode are those of Hilary Hendershott, CFP®, MBA.


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