It’s time we talk about our creative business finances! Today’s guest is Dondrea Owens! She is the owner of The Creative’s CFO. As a certified public accountant, she specializes in helping small business owners know their numbers, so that they can grow their profit, up-level their life, and keep more money while doing it.
This content is specialized to YOU. This isn’t some advice for restaurant business owners or manufacturing businesses. Nope — she’s sharing common mistakes that creatives make — designers, photographers, artists, wedding industry pros, copywriters, and even coaches. You’ll walk away from this episode with a better understanding of your business finances and the confidence to make smarter money decisions going forward.
She’s sharing 7 common money mistakes that creative women make in their businesses, and some of these mistakes you might be making RIGHT NOW. I certainly resonated with a few of these as being mistakes I’ve made in my business early on. We’re also giving you key ways to correct the mistake going forward.
LISTEN TO THIS EPISODE NOW:
Dondrea has a special perspective that is so important for us because she used to own her own wedding stationery business so she understands the creative side hustle AND she understands the professional side of the creative business finances as well. Tune in to the full episode to hear all of the mistakes, ways to fix them, and WHY they are important.
Why is it so important to know your numbers?
So many creative women entrepreneurs think that they don’t have a financial mind so they actually just ignore their finances altogether. Dondrea says that it is so important for you to know your numbers because “you are either running a business or you have a really expensive hobby.” Or maybe you think that you shouldn’t be making money on your project or at least not a lot of it. She encourages you to get to the root of what is telling you that so that you can reframe your mind to actually be a business owner and not just run your business like a freelancer or hobbyist.
4 (out of 7) mistakes you money mistakes you might be making right now
1. Taking on too many expenses
We have all been there! Those shiny objects like courses that promise amazing results or bringing on extra help can really add up if you aren’t paying attention. Taking on too many business expenses is one of the easiest mistakes to make.
Dondrea suggests checking in with your expenses monthly to see what you are spending and how that is lining up with what your business is bringing in each month.
You must have an eye on what your business expenses are and WHY they are necessary. If you are having to ask why an expense is necessary, chances are you don’t need it and it might be driving down your bottom line.
Dondrea says that your first benchmark for profit margin with your creative business finances should be around 50% which is often easy to hit when you are an online or service-based business. 70% is your next benchmark.
Listen to the full episode to hear Dondrea’s ratio for what we pay ourselves, taxes, and business savings.
2. Spending down to the last dollar in your business
Have you ever gotten that notification that you just spent the last dollar in your business? That is not a good feeling! Dondrea says that an easy way to fix this is to set a “new cash zero”. You set a number that you DO NOT go below in your business checking account. For a lot of clients, she says she recommends 1 month of expenses.
This makes a huge difference mentally because you tell yourself that you don’t have any more money to spend, but there is still money in your account for next month. If you find that you are needing to spend more than what you have allotted, you know that you need to reevaluate those expenses or make more money.
3. “Investing” without setting benchmarks for a return
This may be a hard thing to swallow but your investments are not an investment if they don’t produce a return. This return can be defined in many ways. Some examples that Dondrea gives us are a return in dollar amount, time, or clarity in your business. But the important thing is that you have to define that return before you make the investment. You need to set the expectations.
A mistake that is a common misconception is thinking that you need a full website before they can get started with their business. You might really need a clear, cohesive brand first, getting clear on your copy and offers first.
Your creative business finances may not be able to take on a full website, high-level coaching, or as much marketing (Facebook Ads) as you want right from the start.
Ask yourself these questions:
- Is this an expense or an investment?
- How can I measure the return on investment that I am expecting?
4. Using a spreadsheet to maintain your finances
It might feel satisfying to manage your finances in a spreadsheet for a little while. I know that seeing everything together at one time can feel like it makes the most sense. But Dondrea reminds us that there is amazing bookkeeping software available that does this for you!
Exchanging your spreadsheets for bookkeeping software will save you so much time. Time is money and you don’t have to waste time doing things that can be done for you. It also saves you the headache of trying to remember the context of each expense or invoice later.
The 2 best bookkeeping software options in our opinions are Wave and QuickBooks. Wavve is free and great for starting out. Quickbooks gives you access to so much more reporting, which is one of the biggest tools you can use to evaluate your creative business finances.
The biggest thing that Dondrea encourages you to do is to take a look at your numbers. It can be really scary to dig into the reality of what you are making vs what you are spending. But if you can overcome the fear of looking at what the numbers actually say, then you can make educated decisions on what to do next. Until you know those numbers, all of your decisions will appear to be hard ones. But they don’t have to be!
I hope this episode resonates with you and helps encourage you with some ways to make managing your business finances feel easier! Make sure you listen to the full episode to hear the other 3 mistakes that Dondrea teaches us about and how to fix them!
Dondrea is the founder of The Creative’s CFO and she is a certified public accountant specializing in helping women entrepreneurs. She helps them know their numbers so they can grow their profit and keep more money. For years, Dondrea was a CPA by day and ran a wedding stationery business in her spare time! She lived in Georgia with her husband and two kids.
July 28, 2020