Michele Romanow on how to manage your money like it’s your business

“You only need to be 70% there before you jump in.”

How it applies to business: Too often, people think everything needs to be perfect before they launch their business. But Romanow says that if you feel 70% ready, then you’re ready. 

How it applies to your money: “Seventy-percent ready means you’re willing to take risks before you are totally prepared. And I think there are some things with personal finance that you will never feel completely ready for. I don’t think you’ll ever feel completely ready to buy your first house, right? It never feels in range. It’s always super scary. You have no idea what the markets are going to do. But you have to take that bet if you want real estate to be a part of your portfolio.

“I think it’s very scary to bet on yourself, too. And, if you think of it from a personal finance perspective, that is the number one thing that I’d advocate for. But the best self-care thing you can do is really invest in yourself. It’s getting you the experience, the education, it’s taking a job or an internship that pays you less because you want to learn about something you love. And then it’s putting some of your own money behind it, like, I’m going to build a business, and I’m going to change my life and do that. 

“How the 70% rule applies here is that you’ll never feel ready. You’ll never feel like you’re perfect or that you have all the skills, the right plan and the right timing. You just jump in and take on some of those risks.”

“You don’t need to be perfect—sometimes you have to trust your gut.”

How it applies to business: Sometimes you have to make decisions by trusting your gut to keep moving forward.

How it applies to your money: “I think you can solve a lot of things through diversification with money. Here’s the thing: When you’re a founder, you’re always betting and risking it all. After I made money as a founder, I managed that very differently than when I had to make that money for the first time. 

“Let me give you an example. When we started Buytopia, we had $30,000 in savings leftover from a caviar business that didn’t do too well because of the recession. We needed to get sales for the first part of the business. And we spent the last $13,000 on advertising. If that ad didn’t work, we were bankrupt. But we needed to take that kind of risk to make a business work. We weren’t being idiots; we knew this form of advertising was working for our business. We had confidence in it. 

“But when I think about making money, now I have to be a little bit more conservative. And so, I believe in a lot of balance. Around 10% to 20% of my portfolio is in venture bets. Most people would think it’s much, much, much larger.”

“I can deal with this.”

How it applies to business: When Romanow was running Buytopia, she received a call from PayPal’s lawyers, telling her that she was personally liable for $1 million in payment transactions—the result of unfulfilled orders due to supplier issues. She admits to wanting to hide her head in the sand, but she went to the office every day with the mentality that the problem was fixable. 

How it applies to your money: “This is the story of a personal guarantee. It’s very, very dangerous when you do anything with a personal guarantee. If you take out a loan for your business or yourself and you can’t pay it back, [the loan provider] can take your home and your life savings. With PayPal, we didn’t know they were attaching a personal guarantee to payment processing. It wasn’t even like we were borrowing money; we were just using them to process credit cards. So, yeah, that was super stressful.

“I woke up every single night at 3 a.m. in cold sweats for five weeks in a row. This was over a decade ago, and I can remember it like it was yesterday. 

“A couple of lessons came out of that. The first is that I would never take another product with a personal guarantee. Second, I built a large company around how you shouldn’t need to take a personal guarantee and get capital for your business. The next takeaway is that you can make it through money stress or financial stress one day at a time. And that’s the most important thing: You can go day by day and show up. I had to fight for another day. 

“I had to manage my team and the refunds and everything else around that scenario. I worked very hard to find an alternative. 

“And so, you know, everyone gets themselves into a sticky money situation a couple of times in their lives. And then it’s important to just learn from that. You overcome it, you figure it out.”

“You need to fail.”

How it applies to business: The only way to learn if something will work or not is to try it. If it fails, then you’ve learned a big lesson about your business. 

How it applies to your money: “I started a company, and I didn’t buy us health insurance. Six months into the company and I needed my first root canal. And I remember the root canal was $5,000, which was half my savings. This is a good situation where I should have dealt with a problem before it happens, versus after.”

“You have to laugh at black swans.”

How it applies to business: Black swans are rare and completely unpredictable disruptive events that can negatively affect the markets.

How it applies to your money: “When you invest, you just have to be willing to understand that any one of the things that you could invest in could potentially go to zero. A lot of people don’t ever think about that. They’re like, I made this money; it’s mine forever. When you buy a house, know that crazy things have happened in markets before. Housing markets have gone down by 50% to 60%. That is possible. You could buy a house with hundreds of thousands of dollars of structural damage you didn’t know about. Or you could have a very negative divorce. You could have a disease in the family. So many things can happen. 

“And, so, think about saving for a rainy day and trying to structure your life in a really creative way. I hear from a lot of people that things are just so expensive and so hard. When that happens, you have to be more creative, or you have to think about other ways to supplement your income. It’s good to be willing to bet on yourself and have enough diversification of income that you can hopefully rely on. You could have a black swan financial event, and that’s why you want to be diversified.”

“Don’t let people put you in a box.”

How it applies to business: People can underestimate you, but you should never underperform. Romanow says she has been underestimated in both business and investing.

How it applies to your money: “People have underestimated me my whole life. Like, I’m a four-foot-five blonde woman who’s very bubbly. And I actually get very energized when people underestimate me. Well, I think what’s worse is being overestimated. I think about someone like Elon Musk as someone that’s overestimated and how hard his life might be. He’s running three companies, and he launches a rocket, and people are like, that’s not good enough. That, to me, is a far worse fate than being underestimated. 

“But when it comes to investing, there’s a wide range of things you can do with your money. You can put it into a GIC when interest rates are 5%. That is not difficult to figure out. Investing is so much simpler than launching a business, because as an entrepreneur, you’re going to do 90% of the work, relative to an investor. Investors just write a cheque and just wait.”

“No one just gives you money.”

How it applies to business: You’ll have to work for that money to grow your business. It’s not free, even if it’s a gift. And there are no fast routes to success, as it can take 10 years to build a valuable business.

How it applies to your money: “Everyone has to fight for the dollar. Anything that’s like, ‘I’m going to give you something without you doing anything or without some sort of exchange of real value’ doesn’t make sense. There has to be a value exchange.

“Nothing happens really quickly, even when you are moving very quickly. Look for references, reviews from other people who have invested or who know this person. And if it feels too good to be true… I mean, look, I’ve done lots of high-risk deals. But you have to do way more diligence on that. When you’re doing private deals, there’s a lot of ways that things could go bad.”

“Relationships are part of business.”

How it applies to business: Romanow was married and then divorced from her business partner Andrew D’Souza. And she talks openly about how to make it work. 

How it applies to your money: “I believe that people can break up in a really positive way. I think that’s a mindset that’s completely missing in society. And it starts with even the way we label people, like the fact that someone is called an ex. That the letter ‘X’ has negative meaning is the first problem. We would never refer to other areas in our life as exes, right? I refer to them as chapters in our life. I think about Buytopia being a chapter of my life and my relationship with Andrew being a seven-year chapter. 

“The first thing is, if you want to get along when consciously separating a partnership with money, you have to take the view that this can be very positive and productive and constructive. It starts with that mindset. I entered and ended the relationship incredibly amicably. I would always recommend people try and end relationships with the help of a therapist or another person. There doesn’t need to be a fight. This was an amazing chapter, I had seven incredible years with you, I will look back at this so fondly. And that saves you a lot of grief and the rest of your life. I know relationships are very personal and highly emotional. 

“So, what would I say on the money side? Be fair and be reasonable. That means slightly different things to every person, but if you’re looking for ways to win and ways for what matters to the other person, you can get there. And it’s not always necessarily about dividing everything perfectly in half. 

“Regardless of who you are in a relationship and who you’re with, it’s always important to have a couple eggs that are just in your basket. That makes it so much easier. I think it’s important to feel like you can rely on yourself, especially if you’re ever in a bad situation, especially for women.”

“Your business plan should be able to fit on a Post-it.”

How it applies to business: Make sure your business idea is clear and has focus. 

How it applies to your money: “You want to have enough safety in your portfolio. You also want to take enough bets on yourself to get to the place you want to be.

“For myself, I created a very different goal that was very unconventional. I said I wanted to be able to retire before I hit 35 because I wanted to have kids. I put a lot of pressure on myself in my early 20s. I worked well, 14 hours a day, and I took on a bunch of risks. But that was my goal, and it was very different than other people’s. That’s one of the reasons I became an entrepreneur. I’m happy I took the risk and I tried, versus not trying at all. When you retire and when you want to retire are two very different things. My goal was to have that ability to do so.”

“It’s OK to be scared.”

How it applies to business: Fear comes from not understanding something, but you learn. 

How it applies to your money: “As a founder, and with anything concerning money, you always feel a little bit scared. It’s OK to feel a little bit scared. The best way to feel less scared is to do a lot of work to understand what is happening. There’s a lot of people who are like, ‘I just don’t understand numbers,’ or ‘I don’t understand finances,’ or ‘I don’t understand investment.’ But just go slow. You can understand anything. You have the internet, read about it. Ask, OK, how does this work? Do a little bit of math on what the interest rate is. 

“At the end of the day, all business is selling something for less than you are buying it for. If you’re investing, what is the return you are making every single year less your cost? You are the only person that is going to take the responsibility to understand what’s happening with your money. No one else can do that for you.”

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About Lisa Hannam

Lisa Hannam is the editor-in-chief at MoneySense.ca. She is an award-winning editor with over 20 years of experience in service journalism.

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