Ean Price Murphy is a business owner, business coach and Certified Profit First™ Professional. She enjoys sharing her perspectives on small business, bookkeeping and the strategies companies can use to better manage cash flow and maximize profit. We shared an insightful, entertaining and fun conversation last week on my Embark podcast. Here are five more questions for Ean.LS: Creatives are notorious for being allergic to numbers. Talk a little about your own experience.
EPM: I didn’t start out comfortable with numbers. I still can’t do math in my head to save my life! I like to think of financial literacy like learning a new language – you don’t need to be fluent, but it makes a trip much more enjoyable if you know how to communicate the basics. After a personal bankruptcy in my twenties, I was highly motivated to become financially fluent, and then to simplify what I learned and share with others.
LS: What’s the greatest obstacle to creatives, or small businesses becoming profitable?
EPM: It is a bunch of small things, rather than one big thing, and they are all interconnected. Mindset is huge, but it isn’t the only thing – external realities of energy, time, and the economy also affect how easy it is to make a profit with what we do. Let’s take an example of Pricing. You can’t make enough money if you aren’t charging enough. Most people worry about pricing too high and not making enough sales, without realizing that pricing too low is a guarantee you will always struggle. For some, there is a comfort with struggle that needs to be overcome to move past that. And pricing isn’t completely up to us – there are also market conditions that affect pricing … but if we can communicate the value, pricing is less of a concern. We need to know how much we need to live comfortably and sustainably and find the right balance between how much to charge and how many people want to buy.
LS: How much control should I retain on my own accounting? I’m a little nervous about turning over part of my business to someone else. Or what tasks should I do myself, and what can be outsourced?
EPM: The only thing you should never outsource is your values. Everything else – everything! Can be outsourced. That doesn’t mean it should be, but it is an option. Many artists don’t even fully create their own art, and this has been true for centuries. So, it is important to know what you want to outsource and that is usually the things you don’t like doing and aren’t amazing at anyway. When it comes to accounting, usually it is easiest to start with delegating the oversight (report creation, data hygiene, reconciliation to statements, etc.) and keep the data entry – since you know what you spent on and why people are paying you. If you want to delegate everything, you will need to have a system to communicate. A bookkeeper should be able to guess what your Verizon bill was for, but if you use Amazon it could be nearly anything, so you will have to let her know. Outsourcing comes down to saving money or saving time so you can go make more money. You want to continually “earn” your way out of most of the jobs you perform until you get to the stuff you love doing and want to keep.
LS: What should I look for in a bookkeeper?
EPM: You want to look for someone who has good communication skills, which is a little hard to find in a task-focused person like a bookkeeper. You ideally want someone who is willing to show you what they do and how they do it so you can feel like a part of the process. I’ve also seen, far too often, that suddenly a bookkeeper just disappears for weeks/months, so you want to make sure you are in control of your own information. Ideally, you set up a bookkeeper email address – even if it just forwards to your bookkeeper’s own email address – so that you keep the historical conversations.
LS: So, what if you don’t even know what to charge for your services. How does having a bookkeeper help with that?
EPM: While pricing assistance isn’t a bookkeeping task, knowing what your expenses are will help you know if you are charging enough. A good bookkeeper will help you organize your information into three categories: “how much did I make?” (income), “how much did it cost me to make that?” (direct costs or cost of goods/services sold), and “how much is my overhead?” (expenses). If you know how much you would like to pay yourself each month and you know how much your overhead expenses are, it is a simple math problem (… and you thought you’d never use Algebra!) to figure out how much you need to bring in to cover all that. I know many folks don’t want to be bothered with those kinds of calculations, but I love them! It is why I have a job.
If math isn’t your strong suit, and you want to outsource your bookkeeping, talk to Ean here.