With up to 80% of small businesses failing, understanding your Money Personality is more critical than ever.

Entrepreneurship is a high-stakes journey, with research from the University of the Western Cape indicating that approximately 70-80% of small businesses in South Africa fail within their first five years. While market forces, operational challenges, and innovation play their parts, an invisible force can often make or break a venture. This force is the clash of the founding team’s different ways of thinking about money, their financial fears and blind spots, and their behaviour around money matters – effectively, their different Money Personalities.

Jacques Coetzer, General Manager of Distribution Strategy at Sanlam, explains that this internal friction, born from fundamentally different approaches to risk, spending, and security, can derail a promising venture before it ever reaches its potential.

“At the heart of financial decision-making lies our innate Money Personality. Sanlam has identified seven distinct personalities that define our financial behaviours, ranging from the risk-averse Prepared Protector, who prioritises security, to the goal-driven High-Stakes Achiever, who thrives on calculated risks for high returns. The potential for conflict increases when co-founders with clashing personalities come together without proactive management.”

Why founders clash over cash

Coetzer says understanding your respective Money Personalities requires self-awareness. “You can’t possibly understand your business partner’s biases around money, risk, and control if you don’t understand your own. This awareness turns potential arguments into productive conversations.”

He shares some examples of entrepreneurial personality pairings and their potential points of conflict:

• A High-Stakes Achiever, seeing a market opportunity, may want to take on significant debt to scale the business. Their partner, a Prepared Protector, may view this as a reckless gamble, preferring slower, organic growth funded by profits, causing a fundamental clash in strategic vision.
• An Adventurous Enthusiast might be tempted to invest in a flashy new office or expensive technology to reflect the company’s aspirational brand. Their co-founder, a Calculated Planner, may be prone to “analysis paralysis”, wanting to model every possible financial outcome and risk, leading to frustration as the Adventurous Enthusiast may worry about missed opportunities.
• A Generous Guardian founder might feel a deep-seated need to provide for their employees, perhaps offering above-market-rate salaries or bonuses, even when cash flow is tight. This can conflict with the pragmatism needed to ensure the long-term financial health of the business.

Building a framework for financial success

To navigate this complexity, Coetzer advises founders to create a financial “playbook” for making major financial decisions that is agreed upon before a crisis or opportunity arises. “If you and your partners can agree in advance on the framework for making decisions, you make the process predictable – removing the guesswork and reducing conflict.”

Coetzer says this is where a diversity of Money Personalities can become invaluable. The cautious founder’s diligence can temper the ambitious founder’s impulsiveness, leading to more balanced and robust decision-making.

The great divide – separating business and personal wealth

According to Coetzer, the most crucial discipline for any entrepreneur is to create a clear wall between their business and personal assets. “It’s often your personal capital that funds the venture when you’re starting. However, your income becomes unpredictable as the business grows, impacting your ability to fund both your lifestyle and the business’s next growth phase.”

He says this challenge extends to one of the most critical aspects of personal finance – retirement. “Often, a big chunk of an entrepreneur’s retirement asset is tied up in the business. They’re building it in the hope that they’ll one day sell it for enough money to fund their retirement. The unfortunate reality is that there are far more stories of these things failing or not living up to those dreams – leaving founders with little to fall back on when they reach retirement age.”

The invaluable role of a financial adviser (or two)

While teamwork is essential, objective expertise is non-negotiable. Coetzer offers a powerful, if unconventional, piece of advice – entrepreneurs should consider having two financial advisers. “I would have one financial adviser for the business and one for me personally. The skill sets are different. A business adviser understands corporate finance, cash flow, and capital investment. A personal adviser understands your Money Personality, your family’s needs, your retirement goals, and your anxieties.”

Coetzer concludes, “Ultimately, if you understand one another, communicate openly, play to your strengths, and seek expert advice, you’re not just building a successful business – you’re building a stronger foundation for the rest of your life.”