Line Paras understands the financial and time pressures faced by her clients. Beginning her business, Counting Clouds, first as a side-hustle in 2011 and then full-time in 2014, she’s aware that when it comes to business, it’s not always possible to launch into it full-time. ‘I studied bookkeeping in 2011 while I was on maternity leave, and started working with a couple of clients soon after completing my studies… For a few years, I worked a couple of part-time jobs as a bookkeeper, whilst servicing a small number of clients. In 2014 I took the leap to full-time self-employed.’

Today, Line oversees a team of seven full/part-time and flexible employees who look after 90 sole traders and small businesses – ‘mostly creatives and mostly in Melbourne’. Line counts one of her earlier tactics as setting her business up for success. ‘I specifically targeted my niche market from day one. I had been involved in jewellery, craft, design and music in Melbourne for several years and felt comfortable in those worlds.’

This not only enabled Line to carve out a niche but to build a creative community around her business. ‘A lot of the clients often collaborate, commiserate and connect together.’ says Line. ‘Money matters are very personal to most, and I’ve been incredibly lucky to have so many people recommending my services to their peers.’ In addition, Line has relationships with accounting firms who often send her referrals.

Given Line’s knowledge of small businesses, what are the common mistakes people make when it comes to finance? ‘I think a big mistake is thinking admin is a minor detail for a tiny new business, or even an unnecessary expense when you’re starting out! Signing up for an accounting software subscription is not the same as hiring a bookkeeper and tax and GST law is not straightforward, so unless you’ve studied it, I don’t recommend you do it. At least talk to a professional to give some guidance from the start. It does not have to be a long-term commitment and it does not have to cost you a lot in accounting fees. If you go ahead on your own and then make a mess of it,  then it will be even more expensive.’ Another mistake small business owners tend to make, says Line, is ‘overspending and not keeping money aside for non-negotiables like insurance, superannuation, tax and GST’.

For those just starting out, what other advice would Line give when it comes to money management? ‘When people are just starting out they can jump the gun and be reactive rather than proactive, and not always consider the big picture first when making financial decisions,’ says Line. ‘Business management, bookkeeping and accounting should never be an afterthought. Doing your own books will not make you more money! Doing what you do best – running your business, moving and shaking, making your art, selling your wares is what will help you make a profit and probably/hopefully it is also what makes YOU happy.’ At its most basic, Line’s advice to small business is: ‘Aim to save 15% of your earnings each week for GST and tax. Keep your receipts and get a bookkeeper’.

Connect with Line Paras and her team at Counting Clouds via their site or on Facebook and Instagram.

TIPS TO HELP YOU RESPECT YOUR REVENUE

1. Know Your Numbers

At the absolute minimum understand your overarching revenue goal and projected expenses on an annual basis. Understand the amount of money you’ll need to not just survive but to thrive. Part of the reason people start a business is to have more “work-life balance” so making sure you have enough money coming in so that you’re not forced to work 24/7 is essential to long-term success and mental health. When you have your total revenue worked out, break this down into 52 to give yourself a weekly check-in point to how well, or not, the business is performing.

2. Identify Your Levers

Do you know exactly which areas of your business bring in the greatest revenue? Which are the most profitable? Too often small business owners will be unaware they’re wasting precious time and resources on things that contribute little to the bottom line. I ask many of my clients to do some mind mapping starting with their income or revenue goal in the middle, and then literally mapping out all of the ways that revenue goal may be achieved. For example, you may have a goal of $1m, and perhaps $300k will come from events, $450k from sponsorship and the rest from products sold. Once you have the figures in place, determine how much time and resource is required to achieve them. What you’re looking for are the items that can be achieved quickly and still generate a great return. The online tool mindmeister is great for this (as is a pen and paper).

3. Ask For Help

As Benjamin Franklin famously said, ‘An investment in knowledge pays the best interest’. Unfortunately, for most of us, money education is not something we learn at school – or even at home. While this looks to be changing (Melbournian Kenny Chy won My Big Idea with his proposal that students learning about basic money management), for many when it comes to money we need to swallow our pride and ask for help. This may be investing to work with a company like Counting Clouds, seeing a financial advisor, meeting with a money mentor or enrolling in a short course about money and business. You don’t know what you don’t know, but by working with an expert you’re closer to making the right financial steps for your business.

4. Utilise Online Tools

Before I resigned from my full-time exec role in 2015, I met with a successful business owner. She suggested I invest in using an online platform, like Xero or MYOB, to make invoicing, payroll and payments easier. Her biggest message was think like a CEO from day one and start as you mean to go on. Like Line, she also suggested that speaking to an expert FIRST, before setting myself up on these platforms would ensure I understood how best to use them and could link up my accountant or bookkeeper to help me with challenges that arose. While the cost to this may be more than using a free Excel document or Google Sheet, the long-term benefits far outweigh any upfront investment.

5. Don’t Be Afraid to Let Go

If something isn’t working financially, don’t be afraid to let things go from your business. While you may want to flog it for another few months, or even years, part of being a successful small business owner is understanding when it’s time to let something go (no matter how emotionally invested you may be). This could be a product line that’s just not cutting through, a service that takes more time to complete than you make from it or, unfortunately, staff who are not fulfilling the role you hired them for.

Fiona Killackey is a business consultant and coach and the founder of My Daily Business Coach, a consultancy that provides business coaching and consulting, branding + marketing workshops and creative ideation.  Fiona will be teaching a new workshop in July for people wanting to start a business, Loving Mondays: How to Plan and Start a Business.