5 Principles For Financial Success As A Creative Entrepreneur
Today I want to dive into some finances.
I was chatting with a mentor of mine last week about balancing the current needs of my business with the long-term goals and vision I have for my life, which includes family, contribution, spirituality, and my business.
He recommended a speech given at a world-wide conference of the church I belong to, and while there is a spiritual context to it all, the principles are sound and gave me something to focus on and measure against.
As many of us are companies-of-one, it falls on us to be responsible for the financial health of our businesses and our personal lives.
I'll share the five principles and then a link to the speech at the end if you'd like to check it out:
Practice Thrift And Frugality
"There is a wise old saying: 'Eat it up, wear it out, make it do, or do without.' Thrift is a practice of not wasting anything...Frugalitymeans to practice careful economy."
I'm much more in favor of the bootstrap mentality - getting profitable from the start, staying profitable, and not relying on outside money from investors to fund my businesses.
I much prefer to fund my businesses by serving my customers and clients.
What that means is that early on, when there isn't a ton of money coming into the business, you get resourceful and thrifty with your budget. You don't need to spend thousands on a website, hire out contractors for everything, or even an office space if most of what you do is digital/online.
I moved back into my home during the pandemic after having an office in downtown Provo for about two years. I didn't have any need for it, and since my kids were home I needed to be here to help out as well. My whole setup is in my bedroom now, as my wife is also working from home and prefers the office as it's south-facing and about 10º warmer.
It's much more impressive to be profitable than it is to spend and show it off. Frugality and thrift will extend the early life of the business.
Seek to be Independent
"Independence means many things. It means being free of drugs that addict, habits that bind, and diseases that curse. It also means being free of personal debt and of the interest and carrying charges required by debt the world over."
“Interest never sleeps nor sickens nor dies; it never goes to the hospital; it works on Sundays and holidays; it never takes a vacation; it never visits nor travels; it takes no pleasure; it is never laid off work nor discharged from employment; it never works on reduced hours; it never has short crops nor droughts; it never pays taxes; it buys no food; it wears no clothes; it is unhoused and without home and so has no repairs, no replacements, no shingling, plumbing, painting, or whitewashing; it has neither wife, children, father, mother, nor kinfolk to watch over and care for; it has no expense of living; it has neither weddings nor births nor deaths; it has no love, no sympathy; it is as hard and soulless as a granite cliff. Once in debt, interest is your companion every minute of the day and night; you cannot shun it or slip away from it; you cannot dismiss it; it yields neither to entreaties, demands, or orders; and whenever you get in its way or cross its course or fail to meet its demands, it crushes you.”
There's a reason I called my membership community the Society of Independent Creators...
"To be industrious involves energetically managing our circumstances to our advantage. It also means to be enterprising and to take advantage of opportunities. Industry requires resourcefulness. A good idea can be worth years of struggle."
"A friend who owned some fertile fields complained to his sister about his lack of means. “What about your crops?” asked the sister. The impoverished man replied, “There was so little snow in the mountains, I thought there would be a drought, so I did not plant.” As it turned out, unforeseen spring rains made the crops bountiful for those industrious enough to plant. It is a denial of the divinity within us to doubt our potential and our possibilities."
"The ability to make repairs around the home, to improvise, to take care of our own machinery, to keep our automobiles running, is not only an economic advantage, but it also provides much emotional resilience."
Owners of creative companies-of-one need to wear many hats, but they also need to be able to handle anything that comes up. The business equivalent of understanding plumbing and machinery is understanding technology. Websites, landing pages, email, video, audio, publishing, social media, basic CSS and HTML, automation, and more come to mind, and I have to be able to do those things every day.
Learning how to solve problems rather than hire them out may seem onerous in the short-term, but the more you can do yourself, the more resiliant and self-reliant your business becomes in the early stages. Once you've grown and have profit, you can confidently hire out the things that are not your highest-leverage activities without breaking the bank.
Strive to Have a Year's Supply
"The counsel to have a year’s supply of basic food, clothing, and commodities was given fifty years ago and has been repeated many times since. Every father and mother are the family’s storekeepers. They should store whatever their own family would like to have in the case of an emergency. Most of us cannot afford to store a year’s supply of luxury items, but find it more practical to store staples that might keep us from starving in case of emergency."
For our business this means having a year's worth of business expenses in the bank. This is highly unlikely in the first few years, so reserve this for the future when you're profitable.
Always be setting aside a percentage of your income for profit, and "extend your runway" by first focusing on 1 month of expenses, then three, then six, then twelve. It will happen gradually rather than all at once, but any business that can get to a 12 month supply, where you're spending last year's income, is a resilient, profitable business that will be around for a long, long time.
Here's the link to the speech, The Responsibility For Welfare Rests With Me And My Family by James E. Faust.