A few years ago, I made a couple small changes that resulted in a huge positive shift for my business.
At the time, I was building this blog and running a freelancing gig. And I was busy.
Which meant that some of the tasks I liked less than others got less attention. One of those tasks (I’m embarrassed to admit) was bookkeeping and finances.
I’ve since learned that a business that doesn’t focus on its numbers is just a hobby. But at the time, it was something that seemed overwhelming and was easy to put off. So I did.
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Don’t get me wrong, I kept track of my money, but I didn’t know it like the back of my hand. And my gauge to whether my business was successful or not was solely based on whether I was (1) profitable at all and (2) able to put food on the table and keep the lights on.
It wasn’t awesome.
I’ve since learned quite a few money hacks that have completely changed the way I do business–for the better.
Today, I want to share a few of them with you and I’d love to hear what hacks, tools, or resources you use to stay on top of your money. You can share your tips in the comments here.
1. Start thinking about money differently.
If you want to start making more money and managing your income better, first you have to start thinking about money differently.
This means learning to embrace money as a resource for you and your business, not skirting around money question with clients or customers, and much more.
Here are a couple resources to help you get started in shifting your mentality about money:
- What your pricing strategy says about you as a freelance designer
- 3 big finance myths successful creatives don’t fall for
2. Know exactly what your money is doing.
One of my biggest mistakes early on was not know where my money was going or coming from. I had a general idea, but it wasn’t until I started using some sort of bookkeeping software that it all became extremely clear.
Why is bookkeeping so important? It allows you to adjust quickly to make more money and spend less. For example, I was shocked to see, when I finally started responsibly bookkeeping, that I was paying a monthly subscription for something I thought I had cancelled years before.
Yes, I’m embarrassed. But I’m glad I finally started managing my books like I should. Plus, depending on where you live, you’ll need your income statements and profit and loss statements in order to do your taxes.
What I’ve used:
I’ve used to different bookkeeping services in the past. Here are two options I highly recommend:
Option 1: Bench Bookkeeping (Paid Service)
In full disclosure, Bench.co is a sponsor of Millo. But you all know me well enough to know that I never recommend a service that I haven’t personally tried and can’t honestly recommend.
And I gotta say: there are a lot of options for bookkeeping, but I have (by far) loved the Bench.co option the best so far.
It’s so awesome. You sign up and a bookkeeper calls you on the phone to set up your reports. Then their team rushes to get last month’s income and figure out what will work best moving forward.
At the end of each month, you review it with your personal bookkeeper, adjust anything that’s needed, and done. Your reports are available every month and at the end of each year so you can send them in to get your taxes done.
It’s seriously magical.
Sorry, I’m rambling a bit about them (not getting paid for this rant, BTW) but I was seriously blown away by their service.
Plus, as a designer, it’s so nice for them to have a beautiful, uncluttered interface that’s easy to navigate and understand. I loved my experience and would recommend them to anyone.
Option 2: Wave Accounting (Free Service)
The second option is a FREE alternative to something like Bench (above) and it’s called Wave. I’ve used it in the past and it’s been fantastic.
You essentially upload your bank statements or integrate with PayPal and the software does its best to categorize all of your expenses and income.
It does a fairly good job, but if there’s an error, you have to go in and fix it personally. The categories can get a little confusing, but with some time dedicated to it, you can certainly figure it out.
It’s probably the best free option I’ve found. I’ve tried a few others, but the interface and usability of Wave really stands out. I recommend them if you’re just getting started and need a free option.
3. Start valuing your time more
There comes a time in your business when you simply can’t do everything. At a minimum, you shouldn’t do everything. You need to focus on the income-generating tasks that you’re great at.
Master those tasks and hire the rest of it out to someone else.
It can be hard to wrap your brain around the idea of not doing everything for your business. As entrepreneurs and freelancers, we tend to be naturally self-reliant. You’re probably a jack of all trades, but don’t risk opportunities to thrive at business because you wear yourself too thin.
Here are a few articles to get you thinking about valuing your time more:
- The ultimate guide to escaping the “hours for dollars” trap
- Building your freelance design business by outsourcing
- 6 Reasons Why You Shouldn’t Fear Design Outsourcing
4. Diversify your income
I wouldn’t wish this on my worst enemy, but imagine if one day, your top five clients went out of business and no longer needed your services. Would your business survive?
If you haven’t taken the time to diversify your income, you’re missing out on added stability and more income for your business.
See what I mean by reading my secret to making steady money as a freelance designer.
You can diversify in lots of ways. Here are a few ideas:
2. Don’t rely entirely on clients (See: “25 ways designers can make money without dealing with design clients“)
3. Sell & reuse your designs when possible (See how Ben Brush did it here: “7 Ways I turn my unused designs into passive income“
5. Whatever your rates are, double them. Like, now.
I recently listened to Chris Ducker and Pat Flynn’s new podcast and they related the story of a one-day business training they did with a bunch of entrepreneurs.
The #1 piece of advice they gave when it came to pricing?
Double what you’re charging. Double your late fees. Double everything you can. It makes sense, right? If you want to double your income, what better place to start than by doubling your rates?
6. Don’t make money the king of your business.
Does your business need to make money? Yes. Otherwise, it’s just a hobby.
But do you need to make more than Donald Trump to be happy?
Not even close.
Don’t lose sight of the reasons you started a business to begin with. Sure, maybe you wanted to make more money, but you probably also wanted extra freedom, more spare time, and a chance to make your mark on the world.
Don’t get caught up in worrying about “big money in freelancing” and ask yourself, “am I happy with the kind of life and business I’m building?”
There you have it.
Keep those six money hacks in mind this year, throw in a healthy amount of hustle and you’re set up for massive success.
Share anything I may have left out in the comments on this post.
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