Ever wonder how the successful bosses you look up to actually handle their money? I sure have and so has my friend Reina. We had questions, but we felt weird asking each other or other boss friends about it. Well we’ve recently decided enough is enough. It’s time to make it normal to talk about money with each other! Introducing the “PAY YO’ SELF SERIES”. One month, 8 successful bosses sharing their money secrets, + one webinar to share what Reina + I learned and answer your money questions!
Up first on my blog is Lauren of Elle & Company. I met Lauren one year ago at the Creative at Heart Conference, but was blown away by her blog content before that. Lauren is super smart & biz savvy so I can’t wait for you to learn all about how she manages money in her business!1. Can you tell us about the various income streams that make up your business revenue?
One of the greatest pieces of advice I received when I first started Elle & Company was to create multiple sources of income. Instead of putting all of my eggs in one basket (especially with the inconsistency that often comes with freelancing), multiple income streams helped me balance it out and create more security, which made it possible for me to make the leap and run my business full-time.
At the moment, my income comes from the Elle & Company Library (a subscription-based collection of files and templates for creative entrepreneurs), e-course sales, design services, affiliate marketing, and speaking engagements.
2. Do you plan your revenue goals for the year at the beginning of the year? If so how do you come up with that #?
I do, although I’m prone to coming up with a new idea that makes me tweak my revenue goal at least once during the year.
I start by setting a revenue goal for each income stream. I look at my current Library subscribers and set a goal for how many I want to bring in by the end of the year. I look at my queue of design clients and decide how many spots I want to offer. I look at my e-courses and set goals for the number of seats I want to book. Because the prices are already established, it gives me a fair estimate of how much money I’ll bring in throughout the year.
The great (and somewhat scary) thing about running a business is that your income is up to you. You decide how much money you’re going to make. If I want to bring in more revenue, I know I need to either take on more clients, increase my rates, bump up my course marketing efforts, etc.
3. With an idea of what you will make in the next year, is your next step to budget? What does your budget usually include/look like?
Another great thing about running an online business is that my costs are super low, so budgeting isn’t a huge hassle.
My budget includes monthly subscription costs (like Adobe Creative Cloud, Mailchimp, and Crowdcast). I also contract out some work to another freelancer and I brought an assistant on part-time, so I include those expenses as well. Other than those 2 items, that’s about it!
4. When did you start paying yourself & how did you decide how much to pay yourself?
My goal has been to keep as much money as possible within Elle & Company. If I don’t have to touch it, I don’t.
Every time money comes into my account, I set aside 30% for taxes and leave the rest untouched until I pay myself on the 15th and 30th of the month.
As far as the amount goes, that’s something I’m still working through. This is different for anyone and depends on how much money your business is bringing in, but the amount I’ve chosen to pay myself is largely based off of our personal budget – rent, utilities, etc. Again, we’ve been really frugal and cut back expenses so that we can leave as much in our business account.
5. Do you invest back into your business (education/equipment etc.)? If so how much money do you put aside for that and what do you invest in?
Yes, although in all honesty I need to be better about budgeting for it! This questionnaire has been showing me some areas I could be improving on… 🙂
6. Do you or have you started to work with a book keeper or an accountant? If yes, when did you take that leap?
Yes, I just started working with both at the beginning of this year.
With all of the different income streams and now having an employee, I realized it was too much to handle on my own and I wanted to make sure I was handling things the right way.
In all honesty, I wish I had started working with an accountant right from the very start. I would highly recommend making it a priority in your business.
7. What fears did you have around making or spending money in the beginning of your business? Do you have different fears or obstacles now, if yes can you explain?
My biggest financial fear was and continues to be making sure that I’m taking care of my taxes appropriately. It can get very complicated very quickly and it differs from state to state, so sorting that out is always a little scary.
Another fear I had at the beginning of my business was making enough money and bringing in a steady income. But after building my client base and coming up with a reliable scheduling process, I’ve been able to stabilize my income, raise my prices, and increase my profits.
8. How do you and your business account for the variable income nature that an entrepreneur’s business revenue can be?
This is one of the main reasons I try to keep as much money as possible in my business.
I’m moving more into developing products at the moment and spending less time in service work, which means that my income now comes in chunks; it isn’t as consistent and streamlined. Because I leave enough money in my account, I’m able to pay myself the same amount while I’m working on a product launch.
9. Is there anything else you would like to share with new entrepreneurs who are nervous when it comes to making/handling the money in their business?
I would highly recommend focusing on bringing in multiple streams of income, especially if you’re trying to take your business full-time. Think through ways that you can streamline how much money is coming in each month, whether it’s through subscription-based products/services or a streamlined client process. It can truly make all the difference.
MORE ABOUT LAUREN:
Lauren Hooker is the graphic designer and founder of Elle & Company, a blogging, business, and design resource for creative entrepreneurs. Her love of design led her to a BFA in Visual Communication Design from Virginia Tech in 2012 and after a couple years of freelance work, she started her business full-time in 2014. Her mission is to teach other entrepreneurs the fundamentals of business, blogging, and design in order for them to turn their lifelong passion into a successful, profitable business.