The creative spirit may have launched your business, but it is the financial side that will sustain it. Very few people are born with a love bookkeeping but it’s essential for any business — just make sure you’re not making these common bookkeeping mistakes.
We all started with the desire to follow our hearts and create with the passion of our crafts. However, very few feel the same excitement and passion for bookkeeping, and we tend to let these responsibilities slide. This explores bookkeeping for freelancers and self-employed people to help you avoid the common pitfalls.
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1. The Dilemma of Tracking Creative Work
It may seem like the ebb-and-flow nature of creative work does not fit with formal bookkeeping practices. Therefore, we often accept checks, deposit the money, and immediately make it available. This does not track income or create a plan for the profits; this contributes to anxiety over making it check-to-check.
First, let’s look at some considerations of a check-to-check existence – isn’t it impossible to begin to budget when your next check is an estimate, or really, a big question mark? Most creative work follows the feast-or-famine dynamic: you build up a business, reach capacity, scramble to finish, complete the project, and become available again. Now, you must drum up more business. Take this cycle, rinse and repeat, and it does not seem possible to include proper financial governance.
After all, with an income that comes all-or-nothing, forecasting and capital spending seem like toys you don’t get to play with. These toys, though, are the important tools for your business to use to grow. Without the ability to plan, your business will always be a hustle. Too many businesses falter when the owners just finally succumb to the scramble – they just don’t “have it in ‘em” to keep up the cycle.
2. Acquiring Employees Requires Better Management
Now, imagine that you reach a point and need to expand your business. Suddenly, you added a new role and manage the talent working for you. If your financial management system is weak or non-existent, you will experience a very difficult payroll process.
There must be a sense of the number of sales and your profits to balance against your business expenses. You will be dealing with others’ livelihood, and they will expect payment. Payroll is not something that will tolerate nebulous financial planning.
3. Undervaluing Your Time
Finally, another difficulty for creative women to manage in their business is the double-edged sword of flexibility. It’s great to have a flexible schedule that lets you manage other responsibilities like family or volunteer work, but you still have deadlines to meet. Late nights, weekends, and early mornings become viable times to work.
When your work day revolves around the clock, then you have a greater difficulty determining the value of your time. If you sacrifice a weekend with your family to work on a project, then you dilute your earning potential since the value of your flexible job is that time with family. You end up working more hours to make ends meet.
4. Strength In Numbers
So, your head feels like exploding at the task of adding another, complex layer to your business at the thought of managing finances. You are already maxed, and this is another weight to shoulder. Do you think you need to do this alone?
Creative women have resources available to them just as the professionals in industries use. Reaching out to a Profit Plus Coach will get you in position. Profit Coaches understand the financial side of business, and we offer tools, coaching and guidance. You are not alone in tackling the financial responsibilities of your business.
Where you may see random, erratic payments, a profit coach sees entries into a larger process that will develop into a cash management system. We look at the big picture; by reviewing your past payments, business expenses, marketing strategies, and differentiators, profit coaches analyze this data to create a plan for your business.
The creative spirit may have launched your business, but it is the financial side that will sustain it. We all started with the desire to follow our hearts and create with the passion of our crafts. However, very few feel the same excitement and passion for bookkeeping, and we tend to let these responsibilities slide.
Jennifer Dawn is the owner of Jennifer Dawn Coaching. She is the co-founder of Profit Plus Advisors, Profit First Certified Coach, and a Provendus Growth Academy Coach. She has built two multi-million dollar businesses, is a published author, and accomplished speaker.