Kate Toon is a misfit amongst entrepreneurs—she’s literally written the book on it with her non-fiction work, Confessions of a Misfit Entrepreneur.
She’s fond of telling people her three successful businesses have been built from her back shed while eating chips and watching Netflix.
Despite that image, she is a successful copywriter and search-engine optimisation teacher, through hard graft and some smart money management.
It is notoriously hard for creatives to put a value on their time, and harder still to stick to it in the rise of the gig economy. And conversations about money don’t always come easy. But it’s important to work out your worth and charge accordingly.
Toon took smart advice and applied the lessons of corporate life to keeping her small business finances on track. There are no regrets for the sacrifices made along the way or her ‘small is beautiful’ approach to keeping business manageable, profitable and fun all at once.
Advice from dad she never forgot
Moving from a high-powered advertising agency role to start her first copywriting business, Toon admits she was in a blind panic.
“There was no business plan, I was flying by the seat of my pants,” she says. “And there’s no motivator quite like being five months pregnant with no maternity leave options.”
Even as a fledgling business, advice from her dad stayed front of mind.
“Dad always said, ‘neither a lender nor a borrower be’,” Toon says. “I’ve never forgotten that. So, there were no investors backing me, no loans, but also no savings to fall back on.”
“Looking back, it was crazy, but I just got stuck in and worked hard. A year in, it was thriving.”
Making money management non-negotiable
“From the start, valuing my time, using it effectively and keeping my finances in order were non-negotiables,” says Toon. “I don’t fit the stereotypical entrepreneurial mould – but money isn’t something you leave to chance.”
Here are Toon’s top tips for successful financial management in your small business.
1. You need a money partner
Get an accountant from the get-go, don’t wait to hit a random income you think makes you a success. As Toon says: “I had no confidence in DIY accounting, I knew it was important enough not to leave to chance.”
2. Know your rate (and your worth)
Set an hourly rate (using an online calculator) that covers your costs, pays you a salary and ensures you’re not working for love alone. Know how many billable hours you have in a week – real, productive working hours – and see if it all adds up.
3. Track your time
Coming from an ad agency, Toon was used to tracking time and billable hours.
“Being tough with my billable time is key to my success. I use tools like Toggl to track my time and keep me honest so I limit Facebook faffing time,” she says.
4. Balance the feast and the famine
Toon’s biggest financial lesson from running three successful small businesses? Spend as little as possible.
“Small business means peaks and troughs of income. Think about every schmick piece of tech or another cute notepad (we all have our weaknesses) in terms of your billable hours. How long did you work to pay for that?” asks Toon.
“You don’t need to live like a monk, but rewards are more satisfying when you’ve worked hard for them.”
5. Stay sane with processes
Having processes for your business saves time, helps keep cash flow moving, and may even save your sanity. Try to:
- track everything, even tiny spends add up quickly
- charge a deposit for your work – it manages risk and keeps cash flow healthy
- stay on top of your invoicing; bill quickly with seven-day terms
- keep separate accounts – know what’s yours, what you need for business expenses and what you need to put away for the tax man.
Remember small can be beautiful
“There have been opportunities for investment that could probably grow my businesses into a huge beast, but it’s not the kind of business life I want,” Toon says.
“It’s OK to keep a small business small. Small is beautiful, as far as I’m concerned. All the better if it’s profitable and easy to manage!”