Money Moves: A Creative Entrepreneur's Profit Playbook

I know, as a creative entrepreneur, we come up with challenges when it comes to understanding our business finances, because managing our finances isn't necessarily the first thing that we want to do. But what are some of the challenges that creative entrepreneurs face when it comes to finances? Let's break it down.

1. Lack of financial knowledge

Many creative entrepreneurs don't have a financial background and this lack of financial knowledge can mean that we struggle with understanding basic financial concepts and the terminology. Then add onto this poor time management and being so focused on creating our products and services that we often neglect to devote that sufficient time to learning about and managing our finances.

2. Inconsistent Income

As you know, most of us experience fluctuations in our income, that's a lot of time often due to the seasonal nature of what we do. And there can be other factors, especially when you think about holidays and family events etc, that can also make it challenging to be working all the time and therefore create the same income all the time. 

3. Prioritising your creative vision over financial considerations

I am so guilty of this so many times because I prioritised my artistic vision over financial considerations which then lead to a lack of profitability and financial sustainability. We can get so excited about what we're going to create for our client that we're buying things that would be perfect for what we want to create with no regard really to is this going to keep me profitable with this job.

4. Avoidance or fear

We may avoid dealing with our finances, or feel intimidated by the prospect of managing money and this can lead to procrastination and missed opportunities. It could be also a lack of organisation. Creative entrepreneurs often struggle with keeping track of their financial records, and staying organised, which can make it difficult to understand their current financial situation, and to be able to plan for the future.

I know that this was something that was really struggle for me at first too, because I didn't have the money when I first started out to have a bookkeeper come in and help me with anything. So I just had a box that was full of receipts! Plus at this time online wasn't even a thing and I was doing work with cash so I had all kinds of paper paper everywhere. It was something that I never wanted to deal with and so I would go months without knowing how my business was really doing except knowing that there was money in my bank account.

So what are the benefits of getting a better understanding of your business finances?

Getting a better understanding of your business finances can lead to increased profits.

When you gain that better understanding it often includes better improved decision - when you have a solid grasp of your finances, you can make more informed decisions about spending and investing in your business.

When you monitor your finances closely, you can start to easily identify the areas where you may be overspending, or missing an opportunity to generate more revenue, which can lead to increased profits and better cash flow, ensuring that you have resources when you need to operate and grow your business.

For example when I did event work and I would get a retainer for these jobs, I used to physically put that money in a different checking account, so that I wouldn't use any of it until when the event was happening, which sometimes wasn't until years later. But much much later on in my business I began to realise that I could use that to actually go and have that better cash flow, especially in the months where I had more inconsistent cash flow. I was able to do this then because I had already worked out and was confident of the profitability that was going to come from that particular event.

You gain increased confidence. When you feel in control of your finances, you are more likely to feel confident in your ability to manage and grow your business. Now that has to feel good. When you know that you can make that decision and take on that job, it feels amazing! You don't feel that you're missing out on opportunities!

As you grow, you have a solid financial understanding, you can communicate more efficiently with people that you work with, with vendors, and with your clients. That can lead to stronger relationships and more favourable terms for you. Think about it. If you know that you have some wiggle room, in some places, you can be able to negotiate with a vendor and look at better terms.

If you also know you have some better wiggle room, you can figure out with your client what boundary you will allow over maybe a retainer.

The three numbers you need to focus on on your P&L

The next area is that you have key financial concepts that you can master and this is what I talk about in my Finances Made Easy training.

There's only three numbers that you need to focus on on your P&L that move the needle up and down in your business that can add major profits, even double your profits in your bottom line. And the reasons why I do that is when you start increasing your revenue, or you start lowering your cost of goods, or even reducing your overhead and those expenses, then when all those things come together what ends up increasing is the profit, which equates to you taking more money home.

And that's what makes your business successful.

I want you to realise that when you start working on these things, you start uncovering hidden opportunities inside your business. You become even more successful. My coach always says, revenue feeds your ego, profit feeds your family. Yes, we can all go after that revenue. I've got to get more sales, more sales, more sales. But at the end of the day, what we really want is more money in our pocket. For all the hard work that we've put in to build this company. 

How do you overcome the financial jargon and the fear?

Well, first you get to acknowledge, hey, you know what, this is overwhelming. It can be a fear of mine. And it's completely understandable. I recognise that there's difficulty around it, as I experienced it myself in my business. And that's why I'm here because I always want to break down complex financial concepts, and provide guidance and support so you can overcome those fears.

I want you to be able to take control of your finances.

So here's some tips that I want you to use to overcome some of these obstacles and gain the competence that you need to make more informed financial decisions.

a. Take time to educate yourself. Learn about financial concepts and the terminology, and how they apply to your business. Once they're broken down, it's really not that difficult.

b. Get organised. I want you to keep accurate and up to date records of your financial transactions. Use accounting software to help you stay organised. I personally use Quickbooks online but find what works for you. This will help you keep track of your income and your expenses, and identify the areas where you can reduce costs and increase profitability. I can't tell you how amazing it is to know ahead of time that if you're having trouble financially, rather than if you waited till the end of the year to get an idea from your accountant. When you have visibility on what's happening in your business you can start to make changes faster and easier!

c. Set financial goals. I want you to be able to define your financial goals and create a plan to achieve them. This is going to give you a clear direction for your business and help you prioritise your spending. Now, this is a side note, because often when I'm talking to my clients, when we first get started, they let me know that I don't really define my goals financially, I just, you know, define my goals by how many events I want to do, or what it looks like to have deliveries each day but you know what, it's so much better to set it as a financial goal like I want to reach this much income this year and I want to have this much profitability. When you look at it that way, there's so much more creativity we can use to get you where you want to go.

d. Seek advice. I want you to consider working with a financial advisor, even a coach like me, or even your accountant who can provide guidance and support. Because we can help you make sense of financial jargon and provide insights on financial strategies that can benefit your business.

e. Take action. You all know that taking action is one of my number one things that I always am encouraging you to do. Once you have a better understanding of your finances, and put a plan in place take action to implement your financial strategies. Regularly review your financial statements to track your progress and make those adjustments as needed.

Mastering your finances is crucial for your business to be successful. So I encourage you to take action today, and start to find out where you are financially. These concepts and strategies are easy to implement, and will take you so much further in your business. 

If you're looking for more support around this then my course Finances Made Easy is designed to help you as a creative entrepreneur, be able to make those financial decisions and get your the concepts and the strategies to make it easier to understand and implement. Click here to find out more and join the waitlist for the next round.