I wear a few hats here at Motion Sickness.
Sometimes I work on interesting campaigns, sometimes I schmooz the people that need a schmoozin’, but on a regular basis I’m also overseeing boring business admin, and all the cold hard cash.
If you’re looking for lofty business advice, or some vaguely-worded inspiration, then you’re in the wrong place my friend. That might be next month’s issue – but this, this is the nitty gritty. Mostly.
There are key aspects of “that entrepreneurial life” you sure-as-shit won’t see on social media. Ain’t nobody grammin’ pics of themselves sitting in their undies, with a cup o’ joe on a Thursday morning, while they reconcile their bank accounts. But trust me, that’s the reality. Mine anyway.
This blog is about that boring, far-less-sexy stuff, that is actually really important. Basically, it’s the things that I’d love to go back and tell 6-years-ago Alex while he tried his best to figure out the difference between an invoice and a tax invoice.
Now please note that these are merely opinions. They relate to our experience in growing our company to where it is today. Unfortunately we take no responsibility for you following this advice and things going badly. If things go well, then yeah, tell them Alex helped you. (There you go, your first tip for free: avoid lawsuits whenever possible). Also, please don’t think we have every single aspect nailed. Bettering your business is something to constantly work towards, and some of these points outlined below are of a “do as I say, not as I do” nature.
Obvious? Yup. Often overlooked? Yup x2.
Simple fact is, almost all of us are in business to make money. Even if your goal is much better for humanity than that, you still need the books to balance to ensure you can keep doing your good-for-humanity-thing for as long as possible, as opposed to 16 months of awesome ideas followed by bankruptcy and grumpy, unpaid staff/contractors.
I’ve been guilty of being so caught up in work, and doing the job, that I haven’t spent enough time and focus on our money and cashflow. Now, if it’s not your cup of tea, that’s okay. But you better hire someone who’s cup of tea it is, and take enough time out of every week to take a big old swig. You need regular, comprehensive updates to make sure things are on track.
What is your expected cash in vs. cash out for the next week, month and 3 month periods? If you don’t have an answer, that’s okay, but go find out asap and write it down. It doesn’t need to be high-tech, we use google sheets.
At the bare minimum, you need to upskill yourself to the point where you can read a P&L, a Balance Sheet, and a Cashflow Forecast. Don’t make excuses about “accounting not being your thing.” Make it your thing. Business isn’t just about long lunches and nice sunglasses. It’s about numbers friend.
I’m not going to sit here and pretend I know what RAM means, but these days you don’t need to have a computer science degree to make the most of what the world wide web has to offer.
Employing the right software can make your life much more simple – specifically the software relating to time and money. Obviously it’s really important to spend time keeping your accounts and numbers in check, but keep in mind that those hours are not productive, i.e. they’re not actually earning you money (usually). So if you need to spend $75-$100 /month on software, but it saves you 5 or more hours of admin every week, then it’s a no brainer. Buy the software.
Depending on your situation, the three pieces of software that I would consider: Slack, Xero and/or Hnry.
Slack. Unless you’re completely alone on your business journey, get slack. And even if you are alone, probably get it anyway. This software has revolutionised how we communicate with both our team, and our clients – these days we get far fewer emails. It’s basically instant messaging for business, and I can’t recommend it enough. Slack.com can tell you everything else you need to know.
Xero. Kiwi company, changed the game with accounting in my opinion. Everything is cloud-based, syncs with your bank accounts and is just an all-round enjoyable user experience. You’ll still need an accountant, but a tidy Xero setup should mean they don’t need to spend as much time on your accounts. And trust me, accountants aren’t cheap. The user experience part is really important for me. If I’m looking at a piece of software almost every day, it better not look shit.
I should mention the existence of myob, as I’ve heard it’s good and I see people using it. I’ve recommended Xero because that’s what we use, and I find it great for our requirements.
Hnry. This is a relatively new one, and I’m pretty sure is also a Kiwi company. It’s perfect for self-employed people because it deducts and handles all the niggly tax-filing stuff before the money hits your bank account. This way, you know that every dollar coming in to your bank account is spend-able (not that you should spend all of it). I’ve recommended it to a couple of our contractors and so far so good.
– Having your accounts dealt with if you’re a contractor but not a tax expert
– Recommending to your contractors to make their lives easier
There are a bunch of other helpful things hnry offers. Again if you’re curious, have a nosey at hnry.co.nz
Inventory or time management is a different ball game, but if you’re interested in what we use, it’s another Kiwi company called Roll HQ. Check them out.
This is important. You charge for your product or services, and then you charge GST on top of that. In reality, you’re just holding on to this 15% before you pay it to the government.
I’ve heard of businesses getting into strife when they use that GST money to fund their day-to-day business – then, when it comes time to pay the piper, they don’t have the cash available.
Bonus pro tip: When you get paid, take the GST portion of the amount, and put it away into a different account. When it comes time to pay your GST bill, you’ll hopefully have some left over. That cash can then repeatedly accumulate into a nice little rainy-day fund.
Now I realise this isn’t possible for some businesses due to cashflow complications, but I think the most important thing is just to be aware that the GST portion of an invoice or payment was never your company’s to begin with, and so you should treat it as such. It’s only the left overs that are yours, once you’ve paid the GST you owe for a particular period.
For some reason, New Zealand pays late.
I don’t know why, or if other countries are the same, but we’re late payers. Also I think we often find it awkward to talk about money, we’re not natural hagglers. Some more pro tips:
Sometimes there’s simply a miscommunication between the person holding the money, and the person waiting for the money. For example, Company A only pays invoices on the 20th of the following month, but Company B states on their invoice that they need to be paid within 7 days of sending it. Who do you think wins that one? 9.5 times out of 10, Company A wins, because they have the Ernest Rutherfords.
The problem often lies somewhere in a lack of communication. If you require payment within 7 days, but you don’t tell anyone about it until you send your invoice, that’s a problem. By that stage, your invoice is with an accounts person who is under strict instructions to do a pay-run on the 20th of the following month.
My advice? Have an early, clear, respectful conversation, about what needs paying when, and why. Get it agreed in writing, and then get the contact details of the accounts department. If you have any questions or queries, you need someone to contact.
Chase it up. If a company is late (with a mutually agreed payment date) chase it up immediately. If they’re still late on payment, respectfully press the issue. If it gets ridiculous, then consider whether you can stop work altogether until you get paid. Obviously you’ll have to assess every situation on its merits, but unless you agreed to volunteer for this role, or didn’t deliver, they need to pay up.
On that note, for cashflow planning a safe assumption is that everything will get paid at least 2 weeks late. You definitely don’t want the business to be running invoice-to-invoice, because if someone does pay late, you’re in trouble.
Get Down-payments / Deposits. We do this every time, primarily because we start to incur costs as soon as we agree to embark on a piece of work. But for vulnerable businesses with questionable cashflow, this can be a life-saver. This way, you aren’t expected to front the initial costs yourself, and whoever is paying the bills has skin in the game from day 1.
I could probably go on for longer, but maybe we’ll do a part 2. Last but not least, is the sheisters.
I don’t want to come across cynical, but that whole ‘grain of salt’ thing is a good one to keep in mind. Roughly 99.9% of people we have dealt with in our Motion Sickness adventures have been honest good-sorts that just want to crack on with great work, and be fair to everyone. But man alive, we’ve met one or two shiesters in our time, let me tell you.
Ironically, I’m not going to tell you. But general rule of thumb is: if what you’re hearing sounds way too good to be true, well, you know the rest. Don’t shut them down, but don’t invest all your resources into it either. If in doubt, get a deposit/down-payment. Cheers.
Bet you didn’t see that one coming. It sounds off-topic but bear with me.
I recently listened to a podcast with a sleep scientist named Matthew Walker. It was very long and changed my life, but the not-so-surprising conclusion was that sleep is seriously important for everyone.
The old Alex used to get up stupidly early, and think he was getting ahead. I got a fair bit of my daily admin done before 9am but by mid-afternoon I was a pretty average human and couldn’t concentrate. By the time I got home from work I was ready for bed. Nowadays, I’m happy as Larry, and get far more done than I used to. Before you start thinking you’re one of those people that can run on bugger-all sleep, my famous podcast mate tells me that’s less than 0.001% of the population. So you’re probably not.
And how do I wrangle this round to being relevant in this blog? Well, all this business admin requires razor sharp attention-to-detail and lots of rational decision making. Both of these things suffer greatly when you haven’t had enough sleep. Bet I couldn’t have made that come together so well if I’d only slept 5 hours last night.
That’s enough for now.
So there we have it. Quite a long first blog, with some of the practical advice I’d like to have received when we were starting out. I don’t feel like I’ve covered everything off by any means, so if I can think of some more, we’ll do a part 2.
In the meantime, if it’s early in your early business journey, and you have any specific questions/problems that you think I could help with, then reach out. I can’t say I’ll have the answers, but I’m sure I’ll have a strongly-worded opinion.
Until next time friends.