Getting to Grips with FinancesJul 30, 2021
A massive part of your business is getting to grips with your finances. It's not really enough to hand it over to an accountant at the end of every year, you want to have insight into where your money is coming from and where it is going.
Come and join Debbie and me as we share our tips on how we manage our finances, with a little bit of abundance mindset thrown in!
Bertie: There we go. Good morning. Good morning.
Debbie: Morning, everybody listening. We're talking about a great topic today with business. What are we talking about Bertie
Bertie: today? We're talking about getting to grips with finances. Finances. Do you know what? Finances, finances, accounting, money. Like all of that stuff.
It's so fucking boring. Isn't it? It's such a part. Yeah. But we're taught to believe it is, but actually it doesn't have to be, and we're going to make finances for that should been the title today.
Debbie: Yeah, it's not boring. It's not boring. Making money as fun. It's fun. Like seeing how much money you're making is, is, is, is, is great.
Like putting, being able to create products and then counting out what your, I don't know. I think, I think it's good. I like it. I think it's fun. And I think that oftentimes you, right. We're told that finances, aren't fun. Maths. Isn't the funnest subject in the GCSE curriculum. Is it especially if you're not that good at math.
It's quite a hard subject. Like lots of people struggle with mass. And so think of, they have numbers probably starts from that point. And also there's a whole mindset stuff around money, but if you can reframe it from boring to fun. You can actually enjoy getting stuck in with it and having a bit, you know, looking at the money that you're making and thinking about, you know, that's the, that's the final point of how successful your businesses?
Isn't it really,
Bertie: it is. It is so publishes. If you're just joining on LinkedIn, the stream didn't start and we've had to start the stream again. So that's why I was a little bit distracted there, dude. I was doing some technical, technical wizardry in the background.
Debbie: I could see, I could see. So just carried on
Bertie: talking and now, and now we are.
Officially live on LinkedIn again. So apologies. If you just joined us today, we're talking about finances and Debbie was just monologuing about some stuff I was saying I hate to be. Debbie was saying that she loves finances and I just want to repeat it again very quickly. We'll just
Debbie: summarize. I just think that.
For a lot of people. And so a lot of people grow up with a fear of numbers and there's also a lot of mindset stuff around money and earning money and whether we're good enough for money and all of this kind of thing. So all of that combined, when you start a business can mean that you find finances a bit fearful, or they seem a bit dull or spreadsheets are terrifying.
So you can start pushing that stuff away. But if you're running a business, You need to know your figures.
Bertie: You do. And I think you made a really good point because I started by saying that, you know, finances are poor and things like that. And you know, like accountancy and that kind of thing. It has a T and bookkeeping it's it's on the more boring end of things.
Right. Okay, but I think you raised a very good point in your monologue. I was listening to, I caught 80% of it. And you said that really good point, which was when you're making money. It's really good. And I think that's great. I think when you are making money and you seeing all those numbers come in, that's when it does feel exciting because that those numbers are increasing.
Yeah. I think where managing finances is super important. It's, I mean, it's super important when you're making money because there's lots of things to plan. And put things away for, but it's equally important when you're not like just burying your head in the sand and not being on top of your numbers is a very, very slippery slope.
So just because it's, I think that's when it's, it can be really depressing and hard work and I've run over. The literary made. I mean, I've run lots of businesses that have made their money, but you know, like thinking back to fill my belly days, like the first two or three years, if that was so fucking hard, like there was no money coming in.
And every single month it was sitting down and working out what had to be paid and where that money was coming from. And it was basically coming from an interest free credit card that was there moving to another interest rate credit card. So the reason that we got away with that though is because no matter how dire it was.
I was still on top of those numbers. I knew exactly what was coming out and exactly what was coming in and exactly what I could jump juggle about. So that's the, I think that's the difference. So even if you're having a really shit time, if money's not coming in and we're just coming out of COVID, it's still no excuse, just to think, oh fuck it.
I look at my accounts and my counselor. You've got to be on top of it and you've got to be looking at it right now. I know it's hard, but that's the difficult part.
Debbie: Yeah. I think that's really true because in my first few years of business, it was tricky as well. And I wasn't earning a lot of money. In fact, God, that, you know, I was having tax credits come in that topped up my income that said she meant I could play around and test ideas for my business and have this kind of, you know, like David Cameron was my husband really.
Piedmont, David, what are we doing this month? It was great. But. I didn't pay attention to my finances. And at the end of that first year, when I tufted it all up, I was like, oh my God, I've hardly had anything. And I spent probably more than I should have been spending because it wasn't keeping an eye on it.
And that was such a lesson. So the next year I got a good spreadsheet. I was putting the numbers in every month. What was I spending? What was I bringing in? What was the difference? What was the profit and really getting on top of that? So I, I knew, okay. I can afford to invest in this because I've got this money coming in, or actually I need to look for more work.
I need to get out there and hustle a bit harder. I need to go make some more connections because they don't have that many, you know, that many clients or at the time it was kind of managing PR and social media for other people. So. You need to know at both ends of the spectrum, what it is. And one of the things that the advice that got given to me by a fabulous lady called Cara Holland, who wrote a great book, how to draw a better business, was just go and get a whiteboard from the range, get colored pens and split that whiteboard up into 12 sections.
And in every month, right in out. In and out profit and have that on your wall. So you've just, cause you can put it in a spreadsheet, but you kind of see a spreadsheet. You're not looking at it and you don't really pay attention to it. If you've got something on your wall, that's like every month what's in, what's that what's the profit.
You can see your business grow, develop over the year. You can see where the gaps are. You can see when you've had good months. And then you're like, what did I do in that good month? How do we create that? Yeah, this was not a good month. What was going on there, but just even squirreling it in a spreadsheet, I don't think it's.
'cause you don't look at the spreadsheet daily and having a daily reminder of the success of your business means that you've got that in the back of your mind and it spurs you to do more stuff.
Bertie: Yes, it does. So, yeah. So I'm in past agreement, part disagreement with you on that. So. This never happens.
Debbie: Tell me what's going on, Betsy.
Bertie: So I agree. I absolutely agree. You need to be on top of those numbers and whatever those numbers are, they need to be clear and transparent. It just isn't always the revenue that I would say needs to be clear and needs to be up there. So. I would say, look at the things that drive that revenue. So if you're, if you're just focusing on the revenue that you could be missing on other things, so do you need more referrals?
Have you, if you've got a really good network within your business already, and people aren't telling others, how can you focus on that? Or do you just purely need more customers? So it's sort of that. So they're the numbers that personally I would focus on revenue is always the result of that. But yeah, you know, whether, whether that's in a spreadsheet or is clear, just don't hide from it, the more.
It's hard when those numbers are. On where you want them to be. You know, I use like diet analogies a lot. I was talking about dieting last week. You know, if you're, if you've got two stone slews sticking the picture of yourself, being all like fat and stuff, which is like a, my fridge and having that big, heavy number it's depressing to look at, but it does the job.
There's no hiding from me. I've got two stone to lose. It needs to be clear and transparent. I can either look at that number and be reminded of it. I can just bury it and keep it in chocolate up knobs all day. It's there. And it's the same with your business. Just knowing those numbers. It might not be the most inspiring thing, but it's, it's going to get better and it will always get better if you focus on it and understand what it is that drives that.
So yeah, that was the only point I wanted to to add in that.
Debbie: And I think, I think this idea of like getting to grips of finances, it's pretty much business 1 0 1, isn't it it's like, it's like one of the basic things that we need to do as business owners and. You just got to do it. You just got to do it.
Like, you know, the people running Sainsbury's have a really clear idea of every single little bit of your business. You need to get that into what's the supply chain, how much we're paying for this, what's the profit, but, and that, like how much does it cost me to acquire that customer? Like you could really drill into it.
And the more, you know, that stuff, the more profitable, the better your business is going to be. And you just can't run a business and not know the finances. So while you might not have started a business. Because you might start a business because you love the thing that you do. If you want it to be a successful business, you have to become a business person and getting to grips with the finances as part of that, becoming a business person.
And so if you're not sure how to do it, like, I don't know, find an accountant or a coach or somebody who can take you through it and give you some really simple steps and strategies to be able to. Get on top of it because we've all got different tools that we use in, in things. And Emma Torrance, who I run the blue stuff in swift, she gave me a fantastic Excel spreadsheet at the beginning.
I had all the maps in it, you know, and now I now share that with people who ask for it because you just put the numbers in and it goes, boom. And at the end of the year, it goes gives you, you know, the tie to the totals, but there are tools that we can use to help us with this stuff. But it is a must have common business, not.
Be on board with your
Bertie: finances? No, no, you can't add. And I think another good thing that you've just made me think about there is just the right tools for your business. And I think there's two problems to this. I think you need the right tools for the business. Well, first of all, you have to shift your mindset a little bit.
So I'm just going to step into that one a second. Let's just say that you've been employed in the same corporate job for however long. Or you, or that's how your family works or whatever. You've always had this thing that you had this set amount of when coming in and whatever you spent on, every single thing that you spent on was an expense.
So it literally reduced the amount of money that was going to be in your bank. At the end of the month. Every time you bought something, it was just reducing that amount. A lot of people go into business with that mindset. So they don't buy things for their business that they need. For example, tool to grow their business or tools to save their time specifically, or spending money on people like us to coach and mentor them or all of these things.
If you're looking at it as an expense, then it's the wrong way to do it. Now I'm not saying that you should go then and rush out and buy every single thing that's out there. That's not it. Yeah. Don't look at the cash, look at the value and look at the time saved. And then it's a whole bigger picture.
There was a piece of software that I was looking at recently and it did loads and loads of fancy stuff that I didn't need. There was one thing that I needed it for out of the 99 things that they did. And that was to get my invoices into Xero. That saved me and my bookkeeper loads of time. So that was like 20 quid a month.
And I was like, oh, I'm not spending 20 quid. I don't need all that. I only need that tiny thing, but actually it was the right decision because that 20 quid a month has saved hours of work for me and somebody else. Sometimes you just. You just need to reframe the way that you think about it. So working with a coach for example is expensive, but if they can help you increase your revenue month on month consistently, then that pays for it back infinitely.
And it's the same with a lot of business tools, design tools. I pay now for a lot of video editing tools, things that save me so much time that they're just, they're just worth it. So yeah, I spend a few hundred pound a month on software. It's that? That's just how it is. All of that time. I happen to be spending on cloud.
I can make that back from one client. And that's, that's the big difference. So things that you're spending on your business are not necessarily expense. A lot of them will be an investment and you need to draw the difference between the two.
Debbie: Yes. I was literally going to say that it's about expenses versus investments.
Isn't it? Because things are expenses that you need, like pens and paper, and then there's other things that will be an investment and that will save you time or save you money. One of those things. Cause if you're working with somebody like us, it will save you time because you don't have to learn that stuff because somebody is just going to say, this is how you do it.
Plus it'll cut apart your business. And if you're using a products that your video to thing stuff, that's going to save you time, which then you can recruit elsewhere and it's like, where's your time best spent. And how can you, how can you use your time? So I think it's, yeah, it's that investment versus expenses thing.
And you do need to invest in your business at the beginning of. Lots of money and all sorts of things that saved me so much time and giving me new perspectives and things and new skills. And it's been, so it's been so worth it. It's been fantastic. So yes, don't be frightened to spend it as well as.
Bertie: that's right. And we were just talking before, you know, about the whole computer thing, Mac versus windows and all that stuff, but we weren't getting to that debate on here, but you know, I've seen like founders using computers that were like 10 years old and struggling with stuff and just take it for granted.
Maybe buy a new computer. There's nothing wrong with this, but I know there's nothing wrong with it. It's taken, you're taking two hours to do something that should take half an hour. Your time is extremely valuable. So, you know, you might, you, you might just need to look through and see what you're spending money on, how you're doing things.
There'll be some stuff that you probably haven't invested into your business that will save you so much time. And that's a, you know, that's all part of managing finances. So it's switching the money. Is it a cost or is it an investment? Because generally before you start a business, everything was a cost average.
It was in cost. And
Debbie: just before we end, I want to add into my house as well, start saving for a pension. Like most of us freelancers entrepreneurs, solo entrepreneurs, whatever. If we were in a paid employment, our employer is now legally obliged to put money aside for our pension. We are not legally obliged to do that, but Jesus Christ do not rely on the UK government to look after you in your doted at 67, plus putting a little bit of money aside for the pension.
So even if that means, instead of putting 20% aside of your earnings each month for your tax, put 30% aside each month, because at the end of the year, you'll have a bulk of money that you can then put into a pension or something like being the safeguarding yourself for the future as well. I love living in the moment, but especially for women, we know that there's a gender pay gap, but there's also a savings gap.
Like there's a massive savings gap. Men tend to save money and invest in do stocks or shares a lot more than women. And so if you are running money, you're going to have to be putting some money aside to think about your future as well. Like nobody wants to work 40 hours a week till they're 67 or whatever.
That sounds awful. So yeah, that's just a big call out there. Like. Pensions as well. Like if you were employed somebody is putting money into that, you're now in control. You're the controller. So, so be a good boss yourself and invest in your future.
Bertie: Yeah. Yeah. So, so many things with that and it's, yeah, you've got so pensions as well.
And just when we're talking about saving, if you're like fat registered and things, making sure that you're, you know, if like, again, it's one of those big, the number of people that I've got a fat bill to pay, it's like, but then it's not yours. So I to see the VAT is my money at all. Like. As soon as it comes in, I'll move.
I don't even try and calculate the wherever it works at 18.2%. I, like I just moved 20% into an account into a, are you styling? They have spaces. 20% goes into a separate account. And I leave that than to my VAT, the bill comes and I just pay that out. And there's always a little bit of buffer in there that then I'll just either move back to the account or do whatever with.
So that's the way that I manage it. But you can like, if you are struggling, you can get rid of it. Clever with the way that the VAT works, but you still have to save it, but because you're paying like a month ahead of you having cash flow issues, you can use that to some degree you know, as long as you are, but you can only do these.
When you're on top of your numbers and I can retain them before I used to be that on top of them. I used to drive my bookkeeper mad that like, when we were really struggling for cash, I'm like, okay, how much did the bank account? But we don't need that until then. We've got this money coming in here and it's like, no, but that fat's not ours.
It's like, yeah, but we've got these invoices. It's like, you can manage things correctly. But only when you're on top of it, but if you don't, if you're not in that really tight situation, then yeah. Just make, just move it out. Otherwise, you're going to be in a problem and tax, we can't avoid tax, right?
Like it's not, we've got to pay it. So move some money into your tax account money into a VAT account. And then at the Angela have a nice little Brucey bonus that you can go and spend on whatever you. Hey, it's your pension money. Doesn't have to be boring. It can be, it can be, can be fun. And if you're on top of it, then you will really build a great successful business.
And we believe in you don't we do that.
Debbie: Fabulous. That's that then we'll see you next week.
Bertie: We will see you next week. Thank you very much.
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