I was inspired to write this post after reading Andrew Askins’ recent article. In the post, Andrew shares a detailed overview of his company’s financial data including revenue, expenses, salaries, and more.
As Andrew puts it, “People resonate with that kind of openness and realism… We wanted to inspire the next wave of entrepreneurs and just felt like it was the right thing to do.”
Money is this touchy subject that most people feel uncomfortable talking or asking about. But there’s power in demystifying financials and opening up about the one thing that’s on everyone’s mind.
When you look at a successful entrepreneur, it’s easy to wonder what goes on behind closed doors that you don’t know about. It’s easy to separate the unknown in their business from the known in your business, and put that unknown factor up on a pedestal. But when you reveal what’s behind those doors, you see that we’re all fighting our own version of that same ceaseless battle; trying to create more monthly income than monthly expenses. And sometimes we fail. And that’s OK.
Money is at the heart of every business. Revenue, profit, and cash flow are perhaps the most reliable measures of actual success in the marketplace. Maybe if we talked about money more, entrepreneurship would become more concrete and attainable.
In July 2017 I stepped into an entirely new industry with absolutely zero experience. In one year, I’ve booked more work than I can handle alone, planted the seeds of a half-decent portfolio, and created enough monthly income to survive and invest back into my business.
In this post, I’ll share my monthly revenue and expenses, and I’ll talk about a couple of the major lessons I’ve learned in Year One of this crazy adventure. I’m hoping that my transparency will show young creatives or entrepreneurs that with a little bit of time, persistence, and work, it is possible to start at zero and create something valuable. And maybe it will inspire someone to go for that thing they’ve been wanting to go for.
I’m a little nervous to share these numbers. As I write this sentence, I feel the urge to first qualify why they aren’t as large as they could be, how I plan to grow them, and how I need to keep more comprehensive/detailed financial data… But enough of that. Take a look:
|
Month |
Revenue |
|
July 2017 |
$0 |
|
August 2017 |
$0 |
|
September 2017 |
$300 |
|
October 2017 |
$1,650 |
|
November 2017 |
$150 |
|
December 2017 |
$875 |
|
January 2018 |
$3,500 |
|
February 2018 |
$3,200 |
|
March 2018 |
$3,233 |
|
April 2018 |
$1,625 |
|
May 2018 |
$4,983 |
|
June 2018 |
$6,000 |
The figures in the Revenue column represent money actually collected in that month. As you can see, the first 6 months were pretty rough. It was extremely difficult to sell jobs without a portfolio or experience. And when I did sell jobs, it was for a mere $100-$200. So I did a lot of cheap and free videos to practice, and I picked up a restaurant job on the side to cover my basic living expenses.
I barely stayed afloat for the first 6 months. I started out with over $50,000 in debt from student loans and my previously failed business, so I did anything I could to cut expenses. I actually rented out my apartment to save money and stayed on the couch for free for almost 2 months until I got kicked out (or, was asked to leave). After that, I bounced around from couch to couch for another couple months, driving around town with all my belongings packed into my car. It was miserable, uncomfortable, and embarrassing.
I also didn’t create an LLC until last week.
*Please don’t take legal advice from me because I am (clearly) not a lawyer. Although this is a nice little disclaimer, don’t you think?*
I know many will scoff at this. I’m a huge proponent of creating a business in real life before creating a business on paper. I’ve started my fair share of LLCs in the past that never saw a penny, like many would-be entrepreneurs, but this time I was determined to turn my “business” into a “business” before officially calling it a “business.”
I see so many young entrepreneurs spend time, money, and energy getting an LLC and other insignificant details in order before doing the only thing that matters in the beginning: generating cash flow. The legal details are easy. Making your very first sale is hard. Before you have your first sale, if you’re focusing on anything else but landing it, you’re avoiding the vital hard thing and pointing in the wrong direction. If you’re not careful, you’ll find yourself with nothing more but a neat little certificate to call yourself an “entrepreneur.”
It didn’t make financial sense for me to register an LLC that early either. It costs roughly $125 to register a business in South Carolina, and for the first year I immediately invested every single penny I earned strictly according to this hierarchy:
- Basic living expenses (rent, food, gas, etc.)
- Project costs that directly drive income (equipment or labor)
- Better camera equipment
Filing for an LLC didn’t (and frankly still doesn’t) fall into any of those categories. Plus, it felt good to fly under the radar not pay the government for doing nothing (even though they’ll still take their cut in April. Bastards.)
This leads me to the first major lesson I learned:
Sell beyond your capabilities
You live on a line.
Below that line is a set of projects which are within your domain of experience.
Pursuing and completing these projects is comfortable and easy because you’ve already proven you can do them well.
Above that line is all of the projects outside your experience. These projects are difficult and confusing and create hesitation because there is a real possibility of failure.
Growing yourself and your business happens when you reach above that line and commit to doing more than you know you can handle. All the growth I’ve had in the past 12 months came from the moments where I was truly challenged and questioned my ability to make it out.
Expenses
|
Month |
Revenue |
Expenses |
|
July 2017 |
$0 |
– |
|
August 2017 |
$0 |
– |
|
September 2017 |
$300 |
– |
|
October 2017 |
$1,650 |
– |
|
November 2017 |
$150 |
– |
|
December 2017 |
$875 |
– |
|
January 2018 |
$3,500 |
-$2,393 |
|
February 2018 |
$3,200 |
-$3,357 |
|
March 2018 |
$3,233 |
-$3,292 |
|
April 2018 |
$1,625 |
-$3,648 |
|
May 2018 |
$4,983 |
-$5,908 |
|
June 2018 |
$6,000 |
-$5,528 |
I don’t have data for the first six months because I didn’t keep track of it.
This data also doesn’t show the full picture because any additional income I made from my restaurant job is not reflected in the revenue. Plus, there isn’t any separation between personal and business expenses for this first year.
I believe keeping detailed financial records has massively contributed to the growth of my revenue. Rather than having a vague goal of “End the month with a positive balance in my bank account,” I can now accurately predict what I’ll make and spend each month which gives me the ability to set ambitious but realistic goals.
Now for the second major lesson:
The angels are in the details
“The devil is in the details,” as the saying goes. To me, this means something like: if you don’t pay attention to all of the minor details, you’re bound to miss something vital which will hurt you more than you expect.
The other side of this is just as true. If you start paying attention to all of the minor details, you’re bound to find little keys that will boost your progress more than you think.
Knowing the exact state of your financials is the first step towards molding them into what you want them to be.
This is a powerful principle that is true across more domains than just finance. It means that if you spend the time to organize some part life so that it can be clearly observed, underlying patterns will become apparent and you’ll find yourself with the power and the responsibility to put the pieces where you want them to go, one by one.
I struggle with details but I also realize it’s nothing you can’t train yourself to keep up with. There are useful software tools abound. You just have to commit and stick with one because the benefits are delayed.
My financial system currently consists of these tools:
Wave – For tracking actual expenses & income by linking to my bank account. I also use it to send invoices and collect payments online.
Google Sheets – For manually tracking high level numbers each month.
Finally:
Build, don’t run
There’s a big difference between running a business and building a business. When you run your business, you’re operating inside of it. You’re creating proposals, making sales, finishing projects, and keeping the cash flow going. If you spend all your time working on things inside your business, you leave no time for building your business.
Each of these things require entirely different visions and skillsets. I don’t want to do the work in my business forever, so I need to build systems and processes for everything I do that somebody else could plug into without ruining the whole thing. It takes a lot of meta thinking, organization, and patience. As you push prospects through your sales funnel or push projects towards completion, it’s so important to document everything and keep track of the process from start to finish. It’s a messy process because those processes are always in need of improvement, so once you systematize your first thing, it’s immediately ready for improvement. Queue the patience.
This is something I’m new to exploring, and it’s rapidly changing the way I interact with my business. Here are two books I recommend on the subject:
The E-Myth Revisited by Michael Gerber
Built to Sell by John Warrillo
Thanks for reading!
-Simon