OK firstly I’m probably not actually your Auntie and secondly I wouldn’t usually advocate taking advice from people who aren’t trained to give business advice, but you’re here now, so you might as well humour me.
Running your own business is a bit like parenting. It’s an amazing, life enriching experience, but it regularly involves doing stuff you don’t want to do.
- It’s spending money on bills, when you really want to spend it on laptops, big screens and cool digital signage.
- It’s having to contact a friend, because you’ve already sent them the invoice four times and they still haven’t paid it.
- It’s being organised, even if that isn’t your natural state.
- It’s having a great idea, but putting it to one side so that you can get through your to do list.
- It’s putting off calling somebody, because you said you’d call them 3 days ago and still haven’t done.
- It’s structure and routine, even when you hate structure and routine.
- It’s wading through endless unsolicited emails.
- It’s knowing your numbers.
- What’s in your bank account? What stock do you have? What stage is that project up to? When is that invoice due to be paid?
- It’s working, when you’d rather be doing something else.
- It’s doing something else, when you’d rather be working.
- It’s having to be creative on demand.
- It’s putting yourself out there and desperately hoping that all your hard work pays off.
For lots of people with small businesses, the experience is often a rollercoaster with amazing highs and terrifying lows. That is all perfectly normal, but it can still take a bit of getting used to.
The highs are the little dance we do with every new client we win, the smiley faced social media posts when you’re doing something cool, and in my case, opening my very own digital skills training centre and finally replacing the sign over the door.
I love the work that I do and I love the people that I do it for. Every moment of joy I create with my business is ultimately down to me. The lows of owning your own business sometimes seem to last twice as long as the highs, in reality they probably don’t, but it can definitely feel that way. Second guessing yourself is exhausting and unlike when you work for somebody else, the blame for every single thing that goes wrong, ultimately lies with you.
In short my business advice is to find ways to maximise the highs and reduce the lows. What do you personally need to do to reduce the drama and maintain all the positive aspects of running your own business?
When you really dig down to the root cause, the lows are usually caused by one of two things.
- Money. Can I afford this?
- Confidence. Can I do this?
When you are confident in your abilities and have enough money to pay for everything you need, (need, not the random crap you just feel like owning), running a small business is great. It’s still a lot of work, but it’s absolutely one of the best feelings.
The stuff that wakes you up in the middle of the night, isn’t usually your next great idea. The stuff that keeps you awake at four in the morning is normally an incoming (or slightly overdue) bill. It’s worrying about a project that has already gone over its timescale. It’s remembering something that you forgot to do. It’s feeling stressed that you need to fix a problem, before it impacts on something else and worrying that you won’t be able to. Nothing fun happens at 4.00 am, unless you’re still up from the night before.
Lots of people ask: What skills they need to start a business; what they need to know to get started; what tools they need; what software they need to learn; how to be charismatic, so that clients will hire them and yes all of that is great, but running your own business isn’t always what they expect. Knowing those answers is helpful but you can have all of those things and still not be successful.
There are lots of problems that can be solved with a big enough bag of money, especially when you are running a small business.
- Not enough hours in the day? Outsource some work or employ somebody and your problem is solved.
- Utility company threatening to cut your supply off – pay your bill and your problem is solved.
- Want to give your business premises a makeover – hire somebody to do the work and your problem is solved.
Money is great, but unless you have an unlimited supply or wealthy relatives, who are happy to keep giving you wads of cash, it won’t make you successful. If your business doesn’t eventually pay its own bills, including a salary for everybody that works there, it’s not a business. It’s an expensive hobby. An expensive hobby which is probably a lot more stressful and time-consuming than a regular hobby.
The best way to make sure that money doesn’t become a low point in your business is to keep an eye on it. You need to know where you’re up to financially – all the time, not just now and again! You also need enough structure in your organisation to make sure that you don’t cause problems for yourself.
- Are you keeping track of your outgoings?
- If you need your invoices on paper to keep track of them or need online bills to be sent to a dedicated email address, then do so. Do whatever you need to help you stay in control and see exactly what you are spending and when.
- Are you wasting money on subscriptions you don’t actually use? Free trials can be really difficult to keep track of.
- Auntie Claire’s Tip: On an iPhone, you can cancel the subscription immediately and it will still last for the 30 days or whatever the agreed trial length is.
- Are you paying for things from the right bank account?
- Subscribing through the app store on your phone lumps everything together and makes it harder to keep track of.
- Don’t forget to keep an eye on your PayPal or SumUp accounts and any associated cards.
- Did you once renew a client’s web domain on your husband’s credit card, because you did it once as a one off whilst on holiday and forgot to update the card details when you got back? – maybe just me on that one.
- Are you invoicing clients for the services you provide?
- If a service lasts for 12 months are you renewing it with the client or are just giving them free services, because you’re not sure when it runs out and / or don’t have a system to prompt a reminder? If you don’t have a PA or an online system to manage it, why not try an online calendar and see if that works for you?
Money is really important and even if you have enough, you have to manage your finances. No matter what kind of relationship you’ve had with money throughout your life, for the sake of your business, you need to be in charge. You might not be the sort who watches every penny, but you need to make a start. You have to keep an eye on your money. It’s not always easy and there might be times when you’ll check your balance, or get a text from your bank and it will really ruin your day, but understanding what is happening will ultimately help you move forward. You have to move yourself onto a path that keeps you and your business safe. Having a bit tucked away, can really help when unexpected bills crop up or when you want to take advantage of an opportunity.
Even if you have plenty of money in the bank, you probably don’t have enough to happily waste it on an ongoing basis. If you are giving clients free services, whilst paying your businesses bills from your personal account, then you are not on the right path and rather than simply obsessing about how to get more work in, make sure that you review how you might be leaking funds. Giving away free products or services isn’t a problem, as long as you are doing it on purpose and your business can actually afford for you to do so.
If you still regularly find yourself in the queue at Tesco, transferring money from one account to another on your banking app, then you’ve drifted off the path. You either didn’t have a plan or you had one and didn’t stick to it. It’s up to you, it’s your business, but these things have a habit of backfiring.
If managing your money is one of your bad habits, then it’s time to work out how to rein things in. For some people it’s using a book-keeping app on their phone, for some it’s hiring somebody to do it for them and for others it’s writing everything down in a notebook and putting time aside each day, week or month to do the necessary. It doesn’t matter what you do, but you or somebody on your behalf HAS to do it. You can either do it regularly throughout the year, or you can choose to do it the day of your annual tax return, whilst questioning all your life choices and possibly crying.
HMRC , Banking and Legal Structure
If you are a sole trader then you and your business are legally the same thing, so as long as you’re not up to anything dodgy, HMRC don’t really care what you do, as long as you submit an annual return and can produce accurate records. High street banks will tell you that you need a business bank account (that they can eventually charge you for having) but you actually don’t. Business bank accounts offer certain features that personal accounts don’t, but you can easily have two personal bank accounts and use one for your business and the other for your personal life, especially when you are just getting started. Why start the countdown on your 12 or 18 months free business banking on day one, when you may only have occasional sales and minimal outgoings? The important thing is not to have one personal account for everything – that is asking for trouble.
Once you start running an incorporated organisation such as Limited Company or a CIC, the game changes. You and your business stop being one and the same thing, even if you are the only person. Legally your business is one thing and you as an individual are another. You need your bills, invoices and banking to be in the businesses name. HMRC definitely care what you do once you become an incorporated business. You also lose a lot of your privacy once you become a director. Sole traders don’t have to give anybody their home address, in most cases, but incorporated businesses do and if you chose your house as the registered address for your business, then the details are out there for the world to see. Nobody can stop you being a sole trader, but there are several reasons why you could be banned from being a director. There are times in life when you really should read the fine print and deciding the legal structure of your business is absolutely one of those times. Do you want to be limited because it sounds better or is there an actual reason for it? Do you want to do all the additional paperwork necessary to be a CIC or could you just be limited by guarantee and still achieve your goals. Choose wisely young business owner.
If you are naturally disorganised, then you need to find a way to stop that affecting your business. Finding paperwork in the first few minutes is ideal for every day life, but it can be essential for business life. I’m not great with paperwork. I’m amazing at establishing systems, but I’m terrible at consistently using them, however I’ve developed a couple of systems that work for me, when it comes to managing the important stuff. Essentially I keep really important things in designated places and dump other stuff in a big pile (save the judgement, it actually works for me) The pile system frustrates me just enough to have regular filing sessions for standard stuff, safe in the knowledge that I know exactly where any really important things are. At home I know exactly where my passport is, but I’d have probably have to to wade through the pile on my desk for a recent bank statement. NB: This system only works if you can locate your pile in a room that isn’t shared with anybody else, such as my home office. Trying this in our kitchen would be a recipe for disaster and probably start an argument.
Whether it’s actual paperwork or the files on your laptop you need some level of organisation and if you can’t force yourself to do it, then work out a way to achieve the same results. In my case it’s being obsessive about certain items and having adhoc filing sessions for the rest. For other people it’s hiring somebody or allocating those tasks to other members of their team. If you need to send somebody a copy of your public liability insurance certificate, you can’t just tell them that “it’s here somewhere” and expect that to be ok.
I’m a big fan of colour coded filing systems for physical papers. Being able to see at a glance, which folders relate to the charity I run and which ones relate to my business is a real time saver and it suits the way my brain works. If it’s orange, it’s for S.P.A.C.E. and I keep all their things together wherever possible. I also like to arrange things by context, if I have the room. Interestingly I never have problems managing any of the items relating to the charity, despite handling the admin, managing their digital and being the Treasurer. My brain clearly thinks that the charity is far more important than any of my self employed ventures!
Being untidy isn’t the end of the world, but if you’re blocking a fire exit with a set of ladders, a flammable Christmas tree and a stack of empty cardboard boxes, then you’re not being untidy, you’re endangering lives. If this sounds like you, then stop reading and move that stuff NOW.
If you are a person that starts a small business, then the key to happiness and success, often boils down to making sure that you don’t let your bad habits affect your business. You don’t necessarily have to be as organised as your most organised friend or as financially savvy as your wealthiest relative, but you need to control your weaknesses enough to stop them getting in your way because that can make you doubt your abilities. Confidence is really important, especially on those days when things aren’t going to plan. The systems that you decide to implement, might not make sense to anybody else, but if they help you control your business and manage the rollercoaster, then that’s absolutely fine. What works for you, may not work for somebody else, so you might have to try different things to find systems that suit you. The important thing is not to let things get out of control and damage your chances of business success. Some people choose to outsource certain tasks, some find ways of using technology to automate things and others just need to work on establishing better habits. Find what works for you and give yourself the opportunity to enjoy all the high points of running your own business.
As much as I’d love to share some other nuggets of wisdom, I’m not a business guru and we all know that deep down, I probably only started this blog post so that I could delay chasing that invoice!