I may be a copywriter but I love a spreadsheet almost as much as I love words. I spent four years managing a team where spreadsheets, data and statistics were our daily bread-and-butter (weird for a writer, I know, it wasn’t the original plan). Our unofficial team motto was ‘I do love a pie-chart’.
But while I love a spreadsheet, they don’t come naturally, and neither do numbers. I can handle numbers, but I don’t live and breathe them like some people (ahem, Rachel). And needless to say, I don’t have any finance or accounting qualifications.
When I started my business I knew I’d have to get to grips with the world of finance, accounts, budgets and banking. I’d looked after my personal banking and held the odd work budget in the past, but nothing like this.
It was time for a deep breath and to dive in head first. Rachel has asked me to relive those dark and scary days so that you can approach the same journey with a little glimmer of light to guide you on your way.
First things first, my budgeting spreadsheet.
When I was 21 my dad presented me with a spreadsheet to prove that I could afford to move out of home. To this day I still use a version of that same spreadsheet. So, when I decided to start my business I also decided to keep things simple and adapt a copy of what I already used for the business. Why try to get my head around something different if it worked? I was already wrestling with enough new things.
That spreadsheet gives me a basic idea of what I need to spend on the business, what my living costs are, and so what I need to bring in each month. It was the first thing I did but it’s also fundamental to the business as it grows. You need to know what you spend, what’s on the horizon and what you’re making.
Tracking and recording
Next, I needed to get myself a business bank account and some accounting software, so I asked around for some recommendations. At this point, I’d like to shout from the rooftops about something.
Talk to people.
Talk to other small businesses and freelancers. Local ones. Not so local ones. People doing what you do and the opposite. They’re (mostly) not the competition, they’re your colleagues, supporters and, when it all works out well, your friends. Join freelancer groups on Facebook, get involved in Twitter chats, go along to local networking meetings and drill down into LinkedIn for information. All these people will have similar financial conundrums and palavers to you. They’re a great source of advice and recommendations, and they’re fantastic for a whinge when you’re so confused you can’t tell your profit from your outgoings from your turnover.
With the benefit of recommendations, advice, my own research and a little luck, I ended up with a business bank account and online accounting software set up and ready to go. Waiting, waiting for the business to start coming in…
Suddenly I had my first customer – woohoo! – and I had to send them an invoice. Oh.
I was lucky I’d put that groundwork in getting set up with some accounting software, because it guided me through making an invoice and made it relatively straightforward.
A couple of months later, I had my first overseas customer and had to work out how to get paid from abroad. Oh.
Again, I was lucky. I’d set up a business bank account rather than relying on my personal account, so I had a dedicated helpline I could call to get me unmuddled, and they unmuddled me in no time.
The terror of HMRC.
Don’t get terrified by HMRC. Or try not to, anyway. All that stuff is a bit scary, but I try to see their regular emails as supportive rather than unnerving. All the reminders about getting tax returns in on time make me a bit paranoid, even though I know I don’t need to do a return yet. Just automated emails, I tell myself. But the more they ping into my inbox the more the little voice in my head wonders if actually I do need to file one.
At this point that advice about getting to know other freelancers that I mentioned earlier comes into play. I asked Rachel, just to be sure, and she set me straight. Phew.
It’s important to understand the money side of things (including knowing the limits of your understanding!) so I’m making the most of all the free resources around. HMRC have lots on their YouTube channel, as do lots of business and start-up organisations, and the accounting software companies who are out there vying for your business (FreeAgent, Wave and Xero to name a few). I’m in no doubt that I will need an accountant further down the line. But at this point I’m making a real effort to learn about my finances myself and to do what I can without too much help.
The world of finance and accounting is daunting (to me at least) but it’s a necessary one if you have your own business. I’m determined to be less daunted by it though, and with the support of people like Rachel, I’m taking one step at a time.
About the author
Megan is a tea-drinking writer, and winner (mostly) of the daily battle against some pretty independently-minded hair. She works as Megan Rose Freelance, a Hertfordshire-based copywriter working with small businesses and not-for-profits to help them grow. When she’s not working she can be found tap-dancing, enthusiastically massacring her latest craft hobby or tying herself in knots in front of a yoga video.
Check out Megan's blog here for more!