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    Accounting tips for your creative business


    By Monica Ng

    One of the biggest challenges for creatives can be understanding and keeping up to date with the accounting side of their business. Understanding the numbers in your business is a vital skill that can remove much of the guesswork when you make decisions regarding the profitability of your work. When you have access to real data and can identify concrete trends across the profitability of the products and services that you offer, you can make decisions based on real information, not just a gut feeling.

    As a jewellery maker and designer myself, I completely understand that managing the books can be a difficult and tedious task, because before I changed to a creative career, I was working in the accounting industry. So today I want to help you gain a better understanding of your numbers and the areas where you generate the most and the least amount of money, by explaining two must-have ‘business report cards’ and guiding you through how they can assist you to monitor and assess your business profitability.

    1. Profit and Loss Statement

    Your Profit and Loss (P&L) statement shows how your business performed during a period of time. There are three main factors of a P&L statement:

    Revenue: Any sort of income you earn, whether it be from sales of products or services, commission etc; and

    Expenses: Any sort of expense you spend in the course of running your business like:

    • Cost of goods sold
    • Supplies and materials (raw materials you use to make your products – fabric, beads, glue, metal etc)
    • Rent
    • Advertising (Facebook ads, Google adwords, marketing materials like business cards, post cards etc),
    • Fees and charges (online shop fees, PayPal/credit card transaction fees, bank fees, EFTPOS fees, website hosting fees, stall hire fees, consignment fees)
    • Office expenses (stationery, printing)
    • Subscriptions (magazines/journals related to the industry your business operates in)
    • Postage
    • Utilities (electricity, gas, water, telephone, wifi)
    • Insurance (home and contents, theft, public and product liability)
    • Professional services (legal, accounting)
    • Repairs and maintenance (equipment your business uses)
    • Wages, superannuation etc.

    (Please note this is a example of the kind of revenue and expense items a typical business may have – yours may vary.)

    COGS (cost of goods sold): COGS refers to the costs directly associated to the production of a product. This includes any material costs, labour, shipping and other costs to transform the product to be ready for sale. Determining the COGS can be one of the more difficult things to calculate and the value changes depending on which valuation method you use when you’re doing your books. But to explain the concept simply, let’s go through an example. Let’s say, I have $100 worth of beads in inventory at the beginning of the month. I buy an extra $20 worth of beads during the month and have $50 worth of beads at the end of the month. How do I calculate my COGS?

    (Beginning inventory: $100) + (Purchases: $20) – (Ending inventory: $50) = Cost of goods sold: $70

    For more information or assistance developing your specific COGS, have a chat with your accountant!

    Now here are some key formulae for a P&L statement:

    • Revenue – Cost of Goods Sold (COGS) = Gross profit
    • COGS = opening stock + purchase – closing stock
    • Gross profit – expenses = Net profit/net loss

    Remember to keep receipts for EVERYTHING you purchase, whether it be offline and online. For online purchases I like to save each receipt into a specific folder on my computer (and I also back it up regularly). You might prefer to print out your receipts and keep them organised in folders dedicated to a single month or specific financial year.

    2. Balance Sheet

    Your business’ balance sheet shows your assets, liabilities and owners equity as at a specific date.

    Assets: Cash, accounts receivables (money you have invoiced your clients that you have not yet received), inventory, investments, tools and equipment and any other asset your business owns

    Liabilities: Money that your business owes (you have been invoiced for a service you used and have not yet paid or materials you have bought but not yet paid for), accounts payable, bank/credit overdraft and any other debt

    Owners Equity: Anything that is left over, once liabilities have been paid for from assets. If your equity is high, it means that your assets outweigh your liabilities, if your equity is negative, you’re losing money, and your business isn’t making enough money to carry the level of debt it’s carrying.

    The basic accounting equation for a balance sheet is: Assets = Liabilities + Owner’s Equity

    Ageing receivables and payables.

    If you sell products or services, you’ll need to keep a track of the ageing of receivables and payables. Ageing is usually broken up into four categories: 0 – 30 days, 31 – 60 days, 61 – 90 days and 91+ days.

    When you issue an invoice to a client or customer, the longer the invoice goes unpaid, the higher the likelihood that you may not get paid at all. It’s important to monitor invoice payments, so you can chase up a client if the invoice becomes overdue. A debt is said to ‘go bad’ when the client doesn’t pay or can’t pay, which may mean you need to write it off as a bad debt. Not getting paid is certainly not good for your business!

    Other useful accounting tips

    Set up a dedicated bank account

    It’s a good idea to set up a dedicated bank account for your business. Therefore, whenever you update your financial information, you don’t need to wade through all the transactions to pick out the ones that are personal and which ones are business-related transactions.

    Let technology help your keep track of your data

    There are lots of techonology options to help you manage the data your business sales generate, so you can turn it into information that’s accurate, relevant and timely for decision-making. If you’re just starting out or your revenue and expenses are quite straight forward, you could use something as simple as an Excel document to keep track of everything. Otherwise, cloud-based accounting software such as MYOB, Xero or Waveapps offer a host of benefits – though some might incur a monthly fee (but most have a free trial period so you can see if the investment works for your business needs).

    Make accounting part of your weekly or monthly routine

    Depending on the level of activity your business generates, you should update your financial information weekly or at least monthly to give you a good indication as to how your business is performing. Choose a day or even half a day each week/month, and dedicate yourself completely to managing and reviewing your P&L and balance sheets. Remember, this day is important to spend on your business and not in your business.

    Do your own books (or at least keep a close eye on them!)

    When you’re just starting out, I totally recommend you do your own bookkeeping so you can understand what is happening in your business, rather than outsourcing it straight away to a professional bookkeeper or accountant. As your business grows, and your business generates more activity, it may be worthwhile bringing on a professional to assist, so you can concentrate on the things you do best and provide most value to your business. Bu having said that, even when you have outsourced these tasks to other people, it’s still important that you understand the accounting and continue to review the numbers from month to month.

    Get started today

    If what you’ve read sounds great, but still a little overwhelming – never fear. Over at my website I’ve created a customisable P&L template for you – so you can use this immediately for your business! The template contains instructions to guide you. Try it out and I’m sure you’ll get addicted to how knowing how your business is going financially. Happy accounting everyone!

    NOTE: This article is intended as an EDUCATIONAL GUIDE ONLY and is NOT INTENDED to be taken as specific financial advice. Please discuss your business’ financial performance with a qualified accountant, solicitor or financial advisor.

    Monica Ng left her accounting career at the end of 2013 to run Geometric Skies, her Etsy jewellery business, alongside her jewellery and object design studies at the Design Centre in Sydney. Find Monica at her blog or on Instagram @geometric_skies.

    Posted by: Tess McCabe
    Categories: regular columns | Comments Off
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    How to integrate more travel into your creative work/life

    By Diana Scully
    To run and operate your own business and live a creative lifestyle is a dream I never knew I wanted… until now. The freedom, the flexibility, the autonomy, the decision making that gives me the drive and ambition – it really makes work so much more interesting and engaging for me.

    But I have found that to operate your own business and live a creative lifestyle is hard work and not easy to disconnect from, especially in the beginning. The expectations you set for yourself usually exceed anything you’ve experienced in the corporate/commercial world and are most often the hardest to fulfil with complete contentment.

    So where does travel fit into your work/life balance? Well, sometimes never for some of us. Working for yourself and doing something you love can make you a passionate workaholic and not the ideal candidate for putting time aside to travel.

    Why travel?

    1 / Sometimes a break from our daily routine and all-consuming lifestyle is what we need. To go somewhere where we can remove ourselves from the moment and feel untouched by others. To allow ourselves to breath and think beyond what we already know. I have learnt that this space and time is what helps fuel creativity and motivation in my business. For me, the greatest impact means immersing myself in another city, culture or the great outdoors.

    2 / To find perspective. In our daily rhythms, its hard to move away from our own set structure and routine. Travel offers perspective and allows us to let go more. When we can do this, we feel less guilty about slowing down and to making time for ourselves.
    3 / Travel opens up new opportunities and gives you a little more freedom to enjoy the creative process again. Sometimes even a little trip can be what you need to clear out the junk, change your perspective and help you start fresh.

    So it’s no surprise that integrating more travel into your work/life balance is the key to success in both work and life.  But this doesn’t always mean you need to plan a four week vacation to Europe each year. Not every trip needs to be a big one, somewhere faraway or an expensive one.

    To begin, start small.

    Sometimes all you need is to leave the office for a day and head out for a little R&R. But make it eventful and purposeful. Make sure you spend your time doing something for yourself (and not your business).

    Then, grow this idea into a weekend getaway. Recently I jumped into the car for a road trip down to Bendigo (2 hours from Melbourne) with my husband. I’ve always wanted to explore this country town but never gave myself the opportunity to do so. We spent the day walking the streets, visiting the museum, having a coffee or two and sharing a lunch together. On the road, we listened to our favourite tunes and allowed ourselves to indulge in conversations that did not involve work.What should we do this summer? What’s next to renovate at home? Who should we invite over for dinner on the weekend?

    The great thing about a short trip is that you don’t need to plan in advance or set up much preparation. If you wake and the weather is good, then just do it!

    But for some of us, a day trip is just not going to cut it. And I hear you… So try to work your way up to a vacation over a long weekend or extend public holiday period like Easter or Christmas.

    This will require a little planning ahead, so use this opportunity to inform your clients and suppliers of your absence. You can also set up social media posts in advance so you don’t need to worry about them while you are away, and if necessary, find someone to manage a few tasks until you return.

    This time frame gives you the opportunity to explore outside your city and home environment. Why not jump into the car and hit the road? Or better yet, grab a cheap air fare and travel interstate. If you don’t give yourself a break from home and your daily routines, you may find yourself running errands and tying up loose ends at home for the week. Making the effort to travel, spend some time in a new location or outside amongst nature will give you the time and space you’ve no doubt deserved for clarity of thought and rejuvenation.

    Why make a big change?

    But there are some situations in life, where we seek more from travel, than just an opportunity to break away for a few days. Sometimes its about taking a different direction or new path altogether to allow yourself to grow. Maybe its about bringing something to a close and trying something new. Whatever your reason may be, trust in your own instincts if its calling for you to make travel a bigger part of your life.

    And this no doubt can be scary and exciting at the same time. Taking time out from your daily demands and current work arrangements to give something back to yourself may help you determine which direction to take next. And for you, this may mean moving to a new city or better yet, a new country.

    In any case, I have found that travel is an essential ingredient to keeping life interesting and entertaining. It’s not about just traveling in your 20s and then coaching yourself to settle down and take on life as an “adult”. And for this reason, I want travel to remain a part of who I am. I want to find ways to integrate travel into my personal life and also my work too. Travel injects me with enthusiasm, perspective and an appreciation for interior design around the world. I not only learn what makes my home important to me, but discover what it means for others too.

    What next steps will you take to integrate more travel into your work/life?

    { All images courtesy of Death to the Stock Photo }
    Interior Designer, Diana Scully owns and operates her own interior design firm, Spaces by Diana that’s all about designing beautiful, personalised homes to reflect the people who live in it. Diana also has her own lifestyle blog, Spaces + Places, where she regularly writes about inspiring spaces to see and visit from around the world and shares her recent travel adventures. This year she has plans to spend time abroad in the US. Follow Diana on FacebookInstagram and Pinterest.

    Posted by: Tess McCabe
    Categories: business tips, regular columns | Comments Off
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    My Advice: Conquering creative doubt

    By Andrea McArthur

    CWC My Advice Creative Doubt
    Have you experienced the voice that creeps in – asking you: What if? What if it doesn’t work out, what if people don’t like what I’ve done, what if this is less than perfect? But what if you could be more courageous and positive, then you could accomplish your goals, be happier and even more creative. Today, we ask three CWC Members for their advice when it comes to conquering doubt in your creative work, projects and life.

    Kate James, Career and Life Coach, Total Balance

    Kate James

    Every creative person I’ve ever worked with has told me they experience days filled with self-doubt. Ironically, it’s often the people with exceptional talent who are afflicted most.

    When you’re going through a patch of creative doubt, it’s important to remember that you’re not alone, it’s completely normal and it does pass. You just need to make sure it doesn’t become an excuse to sabotage your practice or give up on your dreams. Try these tips to help you over a creative hump.

    Make space in your life
    Sometimes this is easier said than done, particularly if you’re balancing parenting with work. If possible, clear your diary for a day and give yourself time to rest and to breathe. Revisit your ‘to do’ list to work out your real priorities and give yourself time to recharge. A little bit of rest will do wonders for your creativity.

    Move your body, get into nature
    Get away from your desk, your computer or your studio and out into nature. Take a walk, go for a swim or just lie on the grass and look up at the trees. Let your mind move away from your creative challenges and as best you can, be completely in the moment.

    Stop comparing yourself
    It’s not helpful to look through Instagram and compare your life with the lives of others. It may look like people are doing way more interesting things than you but remember, even those who look enormously happy and successful from the outside have days of self-doubt too.

    Keep at it
    Once you’ve given yourself some breathing space, get back to your craft as quickly as you can. Break your bigger goals into manageable little chunks so you can tick one thing off your list today. This will feel like an achievement in itself.

    Don’t let self-belief come second
    Self-belief is a by-product of behaviour, which means you don’t need to wait until you’re confident to do something that takes you out of your comfort zone – just keep doing and the confidence will eventually come.

    Elizabeth Geddes, Creative Director and Copywriter, Chops for Tea

    Liz Geddes

    There’s always an answer, and often it’s right there in the [project] brief.

    Perhaps your doubt comes from the feeling of wandering aimlessly with no direction because the brief is non-existent, woolly or too generic. A good brief gives you boundaries, a measuring stick and finish line all in one. When starting a project, at the very minimum get your brief in writing in an email from your client. Or, after a conversation, write the brief yourself, email it to the client and get them to acknowledge it. With a brief you can prove you have answered what the client has asked for. Plus, if you have no written contract with your client then the brief is justification for getting paid.

    As for how creative the solution is depends on the creativity, aesthetics and bravery of you, the client, and people higher up the client’s chain of command. Always make sure that the person giving the final approval has signed off on the brief (and the costs!) before you even start.

    I’m about the idea first, execution second. You can put lipstick on a pig but that’s not fooling anyone. So here’s the crux: and it’s something I heard Siimon Reynolds say on one of those Andrew Denton TV shows in the 80s. Siimon was a creative director (famously of Grey at only 21) and so dealt in advertising concepts. For a brief he would exhaust his well of ideas — say 100+ concepts. Then he’d dig some more. It’s about getting all the expected stuff out of your head first so it doesn’t rattle around, and allows the more obscure stuff to be mined.

    Another thing Siimon said was use a dictionary (or any book really). Open a page, randomly take a word and build an appropriate concept around it. I still do this to this day. My favourite projects are naming jobs. A combination of the Macquarie dictionary, Roget’s thesaurus, serendipity and diving head first down rabbit holes from the Google search results page always gets me the right answer, and the confidence I need to quash any doubts that I’m not on the right track.

    Kate Taylor, Business Owner and Creator, Taylor and Cloth

    Kate Taylor

    Just create!

    I find the best way to conquer creative doubt is to just create! I know that not everything I make will be good enough to blog about or sell, but that’s not what it’s about for me anyway. I love making things and using my creative brain. I enjoy actively trying to come up with ideas and then taking the time to nut them out. If the ideas work and I’m happy with the outcome, then great! If not, but I really want the idea to work, I’ll talk to my Mum. She’s an old school maker! She crochets like a demon and we both get seriously excited about craft. So if the idea is good but it’s not working out like I hoped, talking about it with her will always lead to an outcome, either we find a solution, create a better idea or we leave it! In which case I just put it away and try not to stress about it.

    All creative ideas are relevant and more often than not they lead to others. For me its about the ideas that come while you are busy working on something. It can start off as one thing and then you have an idea that takes you in completely different direction and you love that idea so much more than the first.

    To break it down my advice for conquering creative doubt is as follows:

    1. The best way to conquer creative doubt is to just create!
    2. Don’t worry about the outcome, focus on the creative journey and watch one idea turn into more.
    3. Surround yourself with creative people or find a creative person you can bounce ideas off.
    4. Its ok to get feedback (read: personal cheer squad) as long as deep down you are happy with what you have created.
    5. Make creating the goal rather than focusing on the outcome.
    6. Above all, don’t forget to have fun.

    - – -

    Thank you ladies for sharing your own experiences and tips for conquering creative self-doubt.

    Andrea McArthur (www.andyjane.com) has a passion for all things visual and works as an Art Director and Designer for the Brisbane Festival. Design is her true love and she goes weak at the knees over strategic branding. You’ll find her sharing on Instagram @andyjanemc.

    Tags: business, Creative, doubt, my advice, positive, regular
    Posted by: Andrea McArthur
    Categories: my advice, regular columns | Comments Off
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    Interview: Roslyn Campbell of Tsuno


    By Keely Malady

    Sometimes a good road trip is all you need – this was certainly the case for TSUNO founder Roslyn Campbell. After studying industrial design, this self-described fiercely entrepreneurial lady had a great idea driving down the Hume highway one Christmas. But great ideas don’t just jump out from behind a road sign, and Tsuno was no exception; the synthesis of years of experience working odd jobs, discovering social enterprise and crowdfunding, and extensive travel in the third world, in particular becoming aware of barriers faced by women to attending school and work during their period.

    Ros recalls arriving at her parent’s place on Christmas Day brimming with enthusiasm for sanitary products, much to the bewilderment of her family. In the year that followed that trip, Ros completed a small business course, designed and sourced a container load of sanitary pads and successfully launched Tsuno using Australian crowd funding platform Pozible.

    Tsuno’s biodegradable sanitary pads are a functional, affordable, socially conscious, environmentally sustainable and beautifully designed solution to two problems – monthly sanitary protection and charitable giving. 50% of Tsuno’s profits are donated directly to programs that focus on empowering women, ranging from health initiatives, to education and small business. The first of these organisations to receive donations is the International Women’s Development Agency. To top it off, when placing you Tsuno order you also have the option of purchasing a box of pads for women supported by the Asylum Seeker Resource Centre here in Melbourne (surely one of the most worthy uses of a last minute ‘add to cart’ impulse!).

    Getting to know Ros a little better over the last six months, it’s become evident that this self-made social entrepreneur is no accidental vocation, but the result of years of hard work and self-discovery. I asked her a little more about her business journey from the early beginnings to her current day-to-day…

    Tell us more about why you chose to launch Tsuno via Pozible?
    Even before I had the idea for Tsuno, I was a big fan of crowd funding. It’s such a valuable tool for creative people to test an idea, kind of like market research, but in real time. Literally, asking the question ‘would you buy this’ ad then, ‘if you would, please put your money where your mouth is’, and if enough people do, then we’re rolling!

    Preparing for and running the campaign was a lot of work, but it was really the perfect fit for my goal to engage with my directly with my market. My target was definitely ambitious. Some of my friends tried to help by breaking it down to how much the campaign needed to make each day to reach goal. That freaked me out, because prior to that I was thinking a lot more abstractly, thinking that I only needed 2000 women to pledge $20 each, and how many menstruating women are there in Australia?! A lot! Having said that, I went through a time of extreme doubt, and found my best way to work through it was to ignore it. In the end the only reason TSUNO was possible is because of my friends. They started spreading the message.

    The double edged sword of doing research [into launching a new product into the marketplace] is that you know you’re prepared, but you also know how advanced your competitors are. Luckily I eventually learnt to switch off to the ‘comparison trap’, recognising that it wasn’t helpful to the project or to my own self esteem. I learnt not to doubt myself, sometimes just through naivety. I think one of the strengths of not being an expert is that sense of flexibility in your approach, that you’re more willing to just try things out, take risks.

    Towards the end of the campaign I had a great idea on how to engage my audience and pulled it together in a day. I like to think that that last push was the reason [the Pozible campaign was successful]. All the sudden pledges went from ten per day to one hundred. And it happened very quickly. It was awesome, but stressful at the same time. Possible sends you an email every time someone pledges, so my phone was vibrating like crazy for a couple of weeks!


    What is the greatest thing you have learned in starting you own business?
    Learning how to ask for help. It’s something that’s definitely needs regular practice. The greatest challenge was getting to the point of asking; thankfully the Pozible model makes it really quite easy for people to get involved once you’re there. The ability to ask for help is something I’m motivated to improve on, and I’m definitely getting some positive reinforcement at the moment with the Sanitary Tax Petition campaign. This was only made possible because I asked for help and found someone keen to take responsibility for the project under my guidance, meaning they are enabled to spread the word without me micromanaging or spending hours creating content. She is so enthusiastic and excited and brings a great new energy to TSUNO, I think it has been rewarding for all.

    What are you most looking forward to?
    Getting back into is product development. The first six months of TSUNO have been full pace: building the network, filling the Pozible pledges, getting the website up and running, moving warehouses too many times… meaning product development has really been on the backburner since launch. With an industrial design background, my mind is always thinking ahead in this area. Ultimately I want to build TSUNO into a brand that has every type of product that you might need during your period. I understand that some women don’t like certain products and others do, so I want to create a brand that caters for every woman’s needs. My foremost interest is adding tampons to the product range, which is in the plan for the next year.

    What is a typical day for TSUNO?
    (Laughs) I don’t have a typical day! A lot of it is battling with being self-employed, and trying to stay focused when my office is in my bedroom. I’m getting my head around it a bit more now, figuring out when I work well and when I don’t. One thing I’ve learnt is I have got to allow the morning to be slow, because I’m just not productive in the a.m. I get the same amount of work done in the afternoon as I would have in a whole day if I allow myself that time for slowness and gentle exercise in the morning.
    At the beginning I was just getting the basics done to make TSUNO possible, keeping everything very minimal. At the moment [I'm] putting processes in place to make things sustainable in the long run. The other thing that takes up a lot of my day is packing orders, which I would like to figure out how to be more efficient at. I spend a lot of time at the post office. I’m at the point now where I’m working out the best ways to do things, and generally trying to avoid moving warehouses every three months! 

    You can purchase TSUNO products from their website, and hey, consider adding one box to cart to be donated to a fellow lady in need! :)

    {Images by Hania Glapa

    Keely Malady is a twenty-something year old graduate architect living in Melbourne. Keely’s blog, Small Talk & Co. Aims to hold a space open for a new conversation on the wonders of the small things that make up a life well lived. Find Keely on Twitter and Instagram @keelymalady or on Facebook /smalltalkco.

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    Posted by: Tess McCabe
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