Financial Health for the Creative | Building a Purposeful Business
I am shaking the dust off of this section of the website today you guys! Holy cow…how has it been almost two years since I have truly written a “for photographers” post? I’m a little blown away by that. First things first, I want to be upfront with you that there’s a bit of a movement happening here. I eluded to it on instagram earlier in the week, but I will specify here that while I used to write strictly to photographers, I’m broadening the horizons and hoping to meet and encourage anyone working as a creative entrepreneur who is seeking to cultivate a purposeful business.
Second, let me explain, in short, what has been going on the last two years to catch you up to this moment:
- I’ve been mothering two children. Enough said there ;).
- I’ve been focusing my efforts on reaching and maximizing the experience of my clients. I’ve had some of my absolute favorite jobs the last two years, and servicing those clients as well as reaching my goals in that area of my business became priority.
- Last year, 2016, I took some major steps for myself and hosted a 2-day workshop as well as spoke at the 2016 Wedding Symposium. These were big events for me on this side of the business, and in combination with reason #1 and #2 just mentioned, my time and energy were devoted elsewhere than this little blogspace.
There’s much more to say, but for the sake of getting to the point of what I actually want to share with you all today, we’ll move on :). What I DO want you to know, is that this blogspace is making a come-back, and I’m thrilled to be spending time with you today on a topic that I’m leaning into right now: running a financially healthy business!
When I started my business 7 years ago, my business accounting was pretty simple! I shot digital photography and apart from a second shooter, my cost was small. When I started shooting film 3 years ago (a little crazy to me how time goes by…ahem, like with this area of the website…) things started to shift and my accounting became increasingly more complex…and not just because of the cost of film. As my business has grown, so have the costs. Things like networking memberships, monthly software subscriptions, having an office assistant, and utilizing outsourcing services that allow me to keep work/life balance in check (stow this topic away…it’s one of my favorites and we’ll certainly touch on it in future content!). Needless to say, managing my cash flow and making sure I still have money to pay my family afterwards has become an increasingly complex task. And it’s that last line (“make sure I still have money to pay my family”) that is precisely what brings me to today’s topic that I’m passionate to share with you all!
About three months ago I was introduced to the book Profit First at an educational event and my interest was perked. I did not like the title, and I’m going to deal with that first because I find it has negative connotations, especially for someone like me, who is purpose-driven in business first and foremost, and views the monetary reward as secondary (though valuable and necessary for the survival of my family). The book’s main premise is not about how to make as much money as you can, but more so, how to run a business that is healthy and lasting. So if you’re like me and the idea of talking money makes you a little queasy, hopefully I’ve helped you overcome a piece of that as well.
So if you’re still hanging on this journey with me, I want to share with you five takeaways (inspired by the reading of Profit First) for running a healthy business:
- Profit is SO important, and it is the mark of a healthy business. Profit is what sustains your business in the rough slumps that all of us have or will face, and it’s what allows us to grow the business without accumulating risky debt. (important note: profit is not what you pay yourself…that is considered an expense, and your profit is above and beyond your business expenses. He goes into detail on what and how the profit should be used and how to calculate percentages for profit, costs, and your own salary in the book, and I definitely recommend checking it out!).
- Make paying yourself a priority. This is my favorite point! By paying yourself first rather than expenses, you are requiring your business to live on a budget in the expense realm and to be thoughtful and strategic about the expenses you are incurring. Are they truly necessary? Are they contributing to the overall experience of your client? If not, why do you have them?
- Living with limitations is a challenge for creative innovation. This is a concept that is tandem with the above. If you have to get something done and only have xyz resources to do it, you will find a way if you are disciplined and determined enough, and you will likely be able to achieve just as much. I love this quote: “the ultimate innovation is to extract more from less-expensive resources” (p. 130).
- Ironically, most of what determines your profitability is what goes on after you make a sale. Meaning, your SYSTEMS. If you don’t have strong systems in place, or, you are using failing systems that are costing you in wasted resources and time, you are cutting your profitability. This point challenged me so much, and pretty much gave me the kick in the pants to get to work on analyzing my current systems and the time+resources I am using to complete tasks.
- Don’t justify expenses if the numbers aren’t matching up. This is a hard truth that hit me in a good way. I care so, so much about the use of my time and pride myself in being able to free up time in my business in order to spend more at home–a really awesome thing with a good motive, right? However, I’m learning to make sure to balance this out with the truth of my numbers. If the numbers aren’t working, it’s only going to be so long before I quit due to burnout (you guys, the responsibility of running a small business, no matter how much you enjoy it, is NOT worth it if you are not being paid adequately for it), or, my business is going to tank.
And some of the best advice I found in this book: START NOW. Do something, right now, to begin pursuing financial health in your business. It doesn’t have to be perfect, the goal is simply to start taking action, and all the small, simple steps you commit to making on a daily basis will reap a huge reward in the long run!
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