If you are like many creative entrepreneurs, you may have a strained relationship with money. Obviously you’d like more of it but then again, you don’t want to sell out as an artist or compromise your creativity to get it.
And when you do have it, it never seems to go as far as you thought it would and before you know it, there you are again wanting more. You may even describe yourself as “bad with money”.
I have a theory that many creative people self sabotage when it comes to money – I know Jonathan does…
- There’s the question of value: Is my art worth it? Is it valuable enough for anyone to pay any money for it?
- Then there’s the question of how to get more: How do I sell my art without selling my soul? How do I sell more without selling out?
- And finally there’s the question of what you do with it when you get it: There’s no point in managing it because I never really have any. So I just won’t bother…I’ll just spend it.
Aaaah, money. Don’t you love it? đ As someone who has always enjoyed a relatively good relationship with money, I’ve been working with Jonathan recently on his relationship with it.
We’ve been working through his plans for his illustration business and putting things in place to help the flow of money f-l-o-w more easily and frequently for this is what money is meant to do…flow. This is what we’ve been working on…
Heal Your Relationship
If some of the above sounds familiar – and you perhaps describe yourself as being “bad with money” – then the first place to start is to begin to heal your relationship with money.*
This is easier said than done since you’ll be dealing with the habits, beliefs and practices of a lifetime but consider it as a journey and the first thing you need to do is to take the first step.
Whether that means reaching out to ask for help from someone else, reading up and arming yourself with knowledge about a topic that scares you or buying a book (Rich Dad, Poor Dad by Robert Kiyosaki is a great one to start with) – do what you need to do, if you recognise you have a problem in this area.
* Watch this space – we may have something coming up to help with this. You heard it here first đ
Multiple Streams of Income
A message we’ve often emphasised here is to build multiple streams of income from your illustration skills. It’s taken Jonathan long enough to get started on creating any income from his illustration but now he has, he’s got one eye firmly on creating additional streams by being smarter about which avenues he pursues.
The purpose is to reduce the reliance on just a single channel and target market so that should one ever slow down or disappear, the others can help pick up the slack.
As a creative entrepreneur, how many ways could you create additional income streams from your illustrations? And what are you going to do to build these?
Separate Your Finances
If you run your illustration business as LLC or limited company, then you’ll almost certainly have a dedicated bank account for your business.
If you don’t, do you have a separate bank account which you designate for your business? It doesn’t strictly need to be a “business” account with the additional charges often levied for these but it does need to be an account you use *solely* for business transactions which means:
- All business-related income should be paid into this account
- All business-related expenses should be paid from this account
No exceptions. Ever. As an entrepreneur and business owner, you play 2 roles when it comes to money:
- The CFO of our business finances
- The CFO of your personal finances
By all means be sloppy and disorganised as the CFO of your personal finances but don’t let this spill over into your business finances. Keep the 2 roles separate and keep your finances separate. Not only will this reduce all the headaches and stress come tax time, it’ll also help you manage the money you earn as an employee of your business.
While it may seem overkill, setting up your finances in this way means that you’ll replicate the “salary as an employee” structure which prevents you from dipping your hands into the business’ pockets when you run short and treating your business as simply a vehicle to pay your bills (it is this, I know, but if you really want it to take off and for your work to be appreciated, you need to view it as so much more).
Pay Yourself First
As an employee of your business, how much salary do you pay yourself? Or do you just dip into the money your business earns whenever you need it? This goes hand in hand with the advice above and helps you separate your money personae.
As CFO, you should be paying yourself a salary – you can pay this every week, every fortnight or every month if you like, but do it regularly and do it consistently. Even if at times you’re paying yourself just $5 from your business account as that week’s salary, do it anyway – it’s the practice and habit that counts.
Claim Everything
One of the things we’ve been spectacularly bad at is claiming things against tax which could very easily be deductible. This is going to change! We now keep receipts for absolutely everything (in a folder, organised by month) and plan to engage a better accountant to help us figure out what we can claim before we submit our next tax returns.
If you don’t do this already, start doing it now – it can make a huge difference to your overall tax bills and your tax liability. The more organised you can keep your filing system throughout the year, the less painful your reconciliation will be at the end of the year…if you’ve been surrounded by piles and piles of papers tearing your hair out in previous tax years, you’ll know the pain this can cause! It’s not too late to get yourself organised đ
The topic of money can be a thorny one that conjures up all sorts of feelings, fears and anxieties amongst creative entrepreneurs – it needn’t do. By establishing and following good practices, you can become a great manager of your money and build a strong, profitable illustration business with strong, financial foundations.
