Today’s post will probably be a bit shorter than usual. It certainly isn’t very exciting. I spent pretty much the entire day yesterday working on my business and getting everything ready for my accountant.
Actually it isn’t as bad as it seems. Just time consuming. I do have everything in one place, and it is only a matter of me categorizing everything and getting the figures in the right place. It is more sorting than anything.
As I looked in my accordion folder which I keep all of my receipts, I am pleased to find that the first three months are all neat and everything is already listed in the proper category. That is always a treat. But the last nine months of the year are once again “just there” and need to be cataloged and sorted. Every year that happens. It is like that because every March or so when I decide to do this, I swear that I am going to be good and one day a month sort everything so that by the end of the year it is all ready to go. I have very high hopes for myself, it seems.
But alas, by the end of April it is back to what is normal for me and seems to get pushed to the back burner until it needs to ge dealt with the following March. And so the cycle continues.
I mentioned Big Tiny’s blog yesterday and the more I read from him the more I am inspired to do better. As my business grows, I need to keep on top of things even more so I can see what is going on and make better decisions. I have done this somewhat in the past two years and I do believe that it plays a large part of why it is surviving even in this dismal economy. I think when I design and for many other aspects of my life it is OK to live in my ‘pink cloud’ world, but as far as finances go, you really need to get off the pink cloud and be very realistic. (Besides – the IRS doesn’t believe in the pink cloud way of life! I am sure many people have gone to jail or at least received penalties for pink could thinking. They are just funny that way, I suppose!)
Perhaps if I swear off to you all here in public to do better, I really will. Every once in a while someone here can throw me a random “How’s the business going this year?” which can be a code phrase to remind me that I should be keeping track of things and that I should know with a definitive answer. That should bring me to a reality check.
I don’t know why I don’t do this. I actually like seeing the numbers. Whether good or not so good, having them in front of me helps me make better decisions. It’s kind of like an X-ray is to a doctor.
Say you broke your arm. What if the doctor is sitting there trying to decide whether you need a pin put in your arm and he needs to operate on you or if just resetting it and putting a cast on it would do. The nurse suggests an x-ray, but the doctor declines, because he feels he knows how bad it is. He wants to cut you open anyway. You would probably be thankful you didn’t break your leg and run out of there.
It is probably a lame analogy, but you get my point. There is really no way you can gauge whether your business is healthy or not without looking at it clearly and objectively. It is difficult to do so sometimes – especially when you pour your heart and soul into doing something you love.
Two years ago, I reached a turning point in my life when I figured out that I could no longer pretend that my business was successful. The numbers told me otherwise. I was on my own and knew that it was only a matter of time before I would go belly up if something didn’t change. My business was in such a state that I couldn’t afford any good financial counseling and had to make some big decisions. Either I stand up on my own and learn some things about running a business or call it a day and do something else.
I read and did some research and got back to WORK again. And I gave myself a deadline. Not only did I decide on this deadline, but I told others about it. Somehow that made the commitment even more important. I gave myself two years to see improvement and make my business self-sustainable or I would walk away from it and do something else. That doesn’t mean it had to make it’s first million by then, but it did have to make enough to at least support me in whatever lifestyle that I choose to live. Otherwise what would be the point? I didn’t want the stress of falling deeper and deeper into debt and worrying about things all the time. I was really getting tired of it.
By having this goal in front of me, it helped me develop a new attitude regarding my business and it also helped me make better decisions. Instead of doing favors for everyone and allowing many people to take advantage of me, I have stuck to my guns for the most part and treated both the business and myself with more respect. As you may have read in some of these posts from me, sometimes people didn’t like the fact that I stood up for myself because they weren’t used to that attitude from me. But I needed to turn a blind eye to how they reacted to me and continue on with my own plan. I know I was still being fair, and they would need to just get used to it. Otherwise my business would not survive.
I am happy to say that things are looking better. In the past two years, my business has turned around from losing money to beginning to make money. (Note the word “beginning”) I have used the analogy of a train before, as I think it is very fitting. Not only do you need to stop a losing venture from going in one direction, but you need to turn it around and move in the opposite direction altogether. This takes time and there is no quick fix for it. I picked a two year mark because I felt that by then, if I didn’t see the trend changing it would be time to think about doing something else.
Bottom line is that knowing the numbers and facing reality is an important part of any business. As one who thinks with my creative side of my brain most of the time, this part of the process is something that I have to train myself to do on a regular basis. Being creative is a wonderful thing, except when you are doing your taxes. ;)
So a bit more working on it today and I should be able to button it up. Right now I am just finishing things up and fine tuning some different reports. If I think about it, it is kind of fun to see which parts are working and which need more work. I feel like the doctor looking at the x-ray and making an educated decision as to what needs to be done. It isn’t really that bad.
For those of you who are working on making your own businesses successful, you should read Big Tiny’s blog if you get a chance and also remember to look at things realistically. It sounds like a simple thing to do, but it is amazing how easy it can be to turn a blind eye. Eventually however, reality will surface and if you are losing money consistently, you will not be able to survive. Keeping track of things on a daily basis will help you cope with the ups and downs of your business far better than being surprised once a year.
Have a wonderful day.
-- Contributing Editor, Creative Woodworks and Crafts Magazine, If you like reading my blog, come visit at Sheila Landry Designs http://www.sheilalandrydesigns.com "Knowledge is Power"