Learning to use “The Force”

[Luke:] I can’t believe it.

[Yoda:] That is why you fail

Yoda, Star Wars The Empire Strikes Back

 

My second baby will be 2 years old this March 15. Back in 2010, that was when I issued my first invoice for my business. Shortly after, I resigned from part time work to concentrate on Vixen Business Solutions full time. In my first year, the excitement of a start-up, finding my own clients, dictating my hours and thus, my income carried me through. The saying that the first year in business is the hardest (or is that marriage?) wasn’t true for me at all. The momentum carried me through all the way past year 1.

The past 3 – 4 months has been a struggle though. The whole house thing, losing one of my bigger clients and debt collection issues started to take its toll. It’s now up to the point where I have applied for jobs and have actually attended interviews. While there is nothing wrong with having a job, for someone in business it’s a death knell. It’s defeatist talk. It means giving up.

Luckily I came to my senses and realised that while I may work long hours, not get enough sleep and become absolutely obsessed with cashflow, there have been just as many benefits in working for myself. I have the privilege to take Meatball to school every day and most often be home in time to pick him up. I can also time my days off to coincide with Fruitman’s. To me, that’s worth putting up with no sleep and a few stress-induced grey hairs.

So, as Luke Skywalker had Yoda and Daniel-san had Mr Miyagi, I found me a mentor. Not so I can learn to wield a lightsaber or do the praying mantis kick (although that would be AWESOME), but so I can get some guidance with that I’m doing with my business. Someone that can help me focus when I deviate from my core values and get me back on track. Someone that I can be accountable for other than myself and call me out on things that I haven’t done that I said I would do.

Mentoring can cost an arm and a leg but luckily, the NSW Department of Trade and Industry (sorry if I got the name wrong guys, you’ve changed names so often I can’t keep up!) have an initiative called the Young Entrepreneurs Mentoring Program. For those of you sniggering at the back ‘cause you know how old I am, their cut-off is 35, ok? I still qualify with a few years left to spare. While there is still a small fee payable by the participant, the rest of the cost is subsidised by the government. You identify the issues you want to address and they partner you up with a mentor that can best help.

It’s difficult for me to ask for help. I blame it on being an only child that’s so used to doing everything on my own. It’s refreshing to be able to talk to someone about my ideas and get an honest opinion about whether it’s going to work or not. And so far, it’s going well. My mentor has given me feedback on some ideas that I’ve been working on and if they’re worth pursuing or not. Along with the one on one mentoring, we have weekly sessions that deal with business related topics such as drafting business plans, etc.

Has anyone else taken part in the program or have found themselves a mentor when they started out? Was it effective and what did you get out of it?

Update: Unfortunately, since I started writing this post, the funding for this program has been cut. My fellow participants and I are the last group that will take part. It’s such a shame because I think it makes such a difference.

A Difficult Lesson I’ve Learnt Recently

Since coming up with the idea of starting my own bookkeeping business in November 2009 and commencing in March of 2010, it has given me so much. Maturity, independence, perspective, patience and improved our finances. Most importantly, it’s given me the time and flexibility to be around for my son as he grows up.

But while I am always grateful that I’ve been given this opportunity to take my destiny into my own hands, it’s not always a smooth experience. I’ve learnt some hard lessons along the way and I’m sure will continue to do so.

For example, I’ve recently lost one of my major clients to business growth. They’ve reached the point where they need to employ someone full time rather than a contractor. Don’t get me wrong, I understand that there will come a time when a client has grown to the point where the service I provide will no longer be sufficient. I’m ok with that and I’m happy for their success.

No, the painful lesson I’ve learnt in this instance is that I was told I was no longer needed 3 DAYS before the new employee started. Prior to this, there was no mention of dissatisfaction with the service and certainly no indication they were even looking for someone. After almost a year of service, I thought my relationship with them certainly afforded me a bit more than a mere 3 days. To drive the knife in further, when talking to a friend about the whole thing, she pointed out that in order to find someone so early in the new year they would have commenced the recruitment process well before Christmas. So while they were wishing me Merry Christmas they were planning to give me the boot. Bitter, you say? Hell yes! I couldn’t care less about the fact that they were going to get someone else. I’ve successfully transitioned a client to replacing me with a full time bookkeeper before.  It was the insensitivity of the delivery of the news that got my blood boiling.

As an independent service provider, I’m not entitled to the same protection as employees are. A client can terminate our contract immediately. With no notice period, the financial effect of this on a small business like mine is disastrous. For this particular client, they have effectively cut my income by a third. I have had to let my casual employee go because I don’t have enough work for her. Thank goodness that there is enough work to keep the business running.

So what can I do to prevent this from happening again? Not much. Just a request in future contracts stating a 2 week notice period of termination, which isn’t really enforceable. Other than that, I just have to ensure that I’m always upfront with my clients and that we have a good relationship so that they feel comfortable enough to be honest with me.

For those of you with businesses that provide a similar service to mine, has this ever happened to you? Are there any of you who have measures in place to prevent this from happening? I would love to hear your ideas.

Earrings and Accessories Giveaway

For a bookkeeper, I have a creative side. I think I need to balance my bean counting and create beautiful things before I go cuckoo.

A previous business/hobby of mine was making jewellery from clay and selling them at markets. While packing all of my crap worldly possessions to get ready to move house, I came across these pieces that I made a while back.

Cufflinks

Yummy Charms

Hair Clips

Earrings - Green

Earrings - Green 2

Earrings - Black

Ironically, I can’t wear earrings unless they’re gold. My lobes go crazy itchy if I wear anything else (well, that’s what I tell Fruit Man anyway). Seriously, I really can’t wear earrings for long period of time so I just don’t.

Anyway,  to save these babies from a lifetime spent in boxes unused, I want to share the love and give them away to my bloggy friends and readers.

All you have to do is subscribe (either by RSS or by email) and tell me what your favourite piece of jewellery is and why.

There will be 3 winners who will get 2 items of their choice (each picture is considered an item, even if there’s more than once piece featured). Giveaway is open to all entrants and I will happily post them out standard mail to all corners of the globe.

Entries close 4th of November and winners will be notified by email.

PS. They’re all made by hand with clay, apart from the earring hooks and cufflink metal thingy’s.

The Importance of Financial Reports

In order to be aware of how well/bad your business is doing, as a business owner you need to be able to understand your financial reports and what they represent. It doesn’t do to just keep trading and hope for the best.

One of my former clients was a family run business. The wife handled the office administration while the husband ran the operations. She could never understand why their business always struggling financially. She knew that there was something fundamentally wrong with what they were doing but couldn’t pinpoint exactly what. Meanwhile, the husband disagreed as he was of the mentality that there was money coming in on a daily basis so the business was doing just fine.

Once we got their books in order, using their financial reports we were able to determine that while they were indeed getting the money in, the markup on their products was just enough to cover their running costs. So even though the business was turning over close to a million dollars, because they had such high overheads (rent, utilities etc), what was left at the end of the day after the bills were paid wasn’t much. Without the P&L, they would never have known what they were doing wrong.

So what reports are the most important for a business owner to know? There are 3 main financial reports that anyone running a business should know. They are:

  1. Profit and Loss – a report that tells you how your business is doing. It shows if the business made a profit or lost money in a given period of time.
  2. Balance Sheet – a report that’s a snapshot of a business’ assets and its debt at any point in time.
  3. Cashflow statement – a report showing the inflows and outflows of cash in a business.

The better one understands these reports, the better they can manage their business and identify any problems.

Next Post: How to understand the Profit and Loss report in more detail

Cash Flow and the small business

This is an old post from the old blog site. I felt it important enough to repost here as I will be disabling the old one.

Many small businesses fail because of poor cash flow. Cash flow is the process between your incoming and outgoing cash. For small businesses and start-ups it’s a constant juggling act to ensure that you have enough money coming in to meet your obligations. When outgoing cash is more than the incoming, this is where many businesses start to crumble.

Planning your cash flow is integral to running a business. It allows you to plan how much cash you require in order to operate and grow as well as highlighting times where you may need to tighten the belt a little. [Read more...]