I started my business for two reasons:
- I was really curious to see if anyone would pay me for my art, and
- Once they did pay me for my art, I was ecstatic and obsessed with becoming my own boss.
Admittedly, I went into this very focused on doing what I wanted every day, and my fantasies of career freedom definitely didn’t include punching numbers and tracking finances. For a long time, I barely paid attention to those aspects of running my business.
As business picked up, I found myself feeling more and more scattered. I was working like crazy, but had no real clue how well my business was doing. And that? Made me feel like I was never doing enough.
I also desperately wanted to quit my Day Job. Without knowing how much money was coming in, and more importantly, how I was going to make more in the future to sustain my desired lifestyle, going full time on my business seemed like a pipe dream.
The first thing I did to start (finally!) tracking my growth was hire a bookkeeper. He entered all of my monthly income and expense for a full year and had a few meetings with me to discuss how to structure my business financially. Talking to him was a huge education for me. And when I saw my numbers, I was very pleased! I had no idea that I had made that much. Ok, it wasn’t that much. But it was enough to make me feel like I had a real business.
And you know what else? It was a starting point for estimating how much I wanted to grow the next year. After looking at the monthly breakdown of my expenses, I decided that I wanted to triple my sales for each month. It was a manageable goal that was easy to track.
However, I didn’t become a finance-tracking maven overnight and still have to force myself to stay on top of my numbers and goals. It’s an ongoing process of figuring out what works, and how to make it work for me.
So today I want to share a few lessons I have learned and a few mental roadblocks I had to overcome to get acquainted with my financial goals.
First, I realized that pretending like my finances would take care of themselves, in fact, did not make them take care of themselves.
I was in a terrible habit of hardly ever looking at my bank account, simply because I was afraid of being disappointed. Yep, I was avoiding financial woes by ignoring them. I didn’t really want to know how bad it was or how little was coming in (or how much was going out!). So I let it operate in the background and spent money on supplies and new product ideas and e-courses (among many other things) based on my intuition of where I stood financially.
I preach a lot about trusting your intuition, but when it comes to finances, this is one area where detailed charts and numbers are absolutely necessary.
I chose to set real sales goal numbers based on real statistics of how my business had grown in the past.
While my business is relatively small, it has grown by leaps and bounds from where I started over four years ago. Seeing those numbers laid out, nice and neat, made me realize that. I was better able to calculate how much extra work I would need to do to triple my sales each month. I had a solid number that I was striving for, and there were a few months where I actually exceeded that number.
For a long time, I didn’t want to commit to financial goals. I wasn’t sure if my goals were realistic, or if they were big enough. As my business has grown, the numbers that I am coming up with feel more ambitious than ever. That is both exhilarating and really fucking scary. What if I don’t hit those goals? But it’s not about hitting the mark perfectly every time. It’s about having something to plan for and getting as close as I can possibly get to that number. It also helps me understand what strategies work and keeps me motivated to try new things if what I am doing in my business is falling short.
I started setting aside time every week to bring my books up to date and track my progress on my financial goals.
Like I mentioned above, I hired a bookkeeper to help me get my books in order originally. Eventually I took back control of my bookkeeping (mainly to save a little money) and have been reconciling everything myself using Quickbooks Online (this is not a sponsored post for Quickbooks—it’s not a perfect program, but it gets the job done). When I originally took over my own books again, I put off managing them for months. It’s super easy to to say, I’ll do that tomorrow. In reality, I had no interest in doing it, so I didn’t.
I finally decided to get serious and set up a weekly schedule for myself, assigning each day to specific tasks. Mondays? Are for bookkeeping, social media planning, and any other administrative or business planning tasks. While production and filling orders typically happen on every day of the week, I make sure that the task assignments for the day of the week are done first. This has been working remarkably well for me. I’m not typically a long term planner, and have had many days in the past where I woke up and didn’t really know what I would be working on that day. Having "assignment themes” for each day of the week has been a huge time saver and has kept me very productive and accountable.
I tallied up every monthly expense, both personal and business related, plus how much extra I wanted for leisure spending, saving, and paying off debt, so that I knew exactly how much my salary should be. This helped me create those sales goals, too.
Whenever I used to think about how much money I wanted to make, I would always think of $100,000. This number was completely arbitrary and had nothing to do with how much I needed, or how much I wanted so that I could live the life of my dreams. After I calculated all of my current and aspirational expenses, it turns out that I really only need about $66,000 per year to live very comfortably in my desired lifestyle. Obviously, more would be awesome. But that number helped me figure out what my hourly wage could be, and when I factored that in to my product prices and profit margins, it helped me figure out what my yearly sales would need to be to pay myself that much.
I was so excited by this little exercise that I ended up calculating my income goal based on two more levels: conservative and moderate (the $66,000 per year was the ambitious goal). So now I have a range of income levels based on different amounts of money allocated for paying off debt, saving, and leisure expenses.
I eliminated several tiny monthly expenses that ended up saving me over $140 per month (that’s over $1600 per year).
This one may seem small, but those little expenses add up! I was paying $5 per month here, and $10 per month there on several monthly subscriptions. Before canceling them, I really felt like I had whittled my expenses down as much as I could. But over time I had gradually accumulated a hefty monthly fee for a bunch of things that I either didn’t need or didn’t actually use. I plan to revisit this purge every few months to make sure that my money is being spent responsibly on both business and personal subscriptions.
I’ve been truly amazed at how setting up a few good habits has eased my stress when it comes to finances for my business. I think in the past, I expected things to just work out if I worked really hard. But the truth is, having a clear idea of what’s happening behind the scenes of my business has helped me feel more in control of my own income and well-being.
What about you? Do you have any tricks for staying on top of your administrative and financial numbers? Share it in the comments below!
Did you enjoy this post? Sign up for the newsletter to be notified when new posts are live, have access to the worksheets library, and get a weekly digest of the things that inspire me.