Does accounting and finance intimidate you? We get it
When you start a small business based on a passion, it can often be the element that you least enjoy. It can feel quite alien from the expressive world of creativity in the arts – but it doesn’t need to be.
Sound familiar? We hear it all the time, and to be honest we don’t blame you for thinking that way. What we can do, however, is give you the answers.
Where do you start?
The best place to start is to decide on a goal or target. For example, do you want to simply break even each year? Or perhaps you might have an amount that you want to grow by.
Once you’ve got an end goal, you can work back from there to understand where you are now, and what you need to do to achieve the goal you’ve set. Ask yourself what do you need to measure to see if you’ve hit your goal?
A good place to start is going through and noting down everything you spend each month
A good place to start is going through and noting down everything you spend each month. From rent to staffing to teabags, you need to make sure you keep accurate logs of the money you’ve got going out. This will help give you an understanding of where you are and how you can regain financial control.
Taming the financial beast
Once you’ve got a clear picture of where your money is getting spent, the next step is making changes to help you hit the goal you set at the beginning.
It’s important to not overthink this bit, when it comes to spending the big opportunities should jump off the page.
The key here is to be self-critical. Just because you’ve always spent money on certain things, doesn’t mean you have to keep doing it. Try and justify every single item by asking “does this item give the organisation as much or more value than I spend on it each month”.
The next part is looking at the money you’ve got coming in, where does it come from? Where are the gaps? This might be an individual age group, discipline, or even location. If you can pinpoint the low-hanging fruit, you’re going to be able to make a change more easily and get quicker results.
For example, what are your goals? If you’re aiming to breakeven yet you spend more on staffing costs than revenue and 40% of your classes are sitting with one person in them – then the answer is to trim cost by closing or combining some classes.
In another case, if your goal is to grow the organisation by 20% each year, all your classes are full, profitable, and with healthy waiting lists – the answer is to look at how you can invest that money into expanding your classes, and maybe look at a new venue.
So, how do you make the change?
Identifying what you need to change is the easy part, actually making the change is far harder and relies upon courage and discipline. If you need to cut costs, make sure your team know why you’re doing it, and what the goal is. A level of transparency is key in order for them to buy into what you’re doing and actively support you.
If growing your revenue is the goal, having a clear plan is important. Winging it is not an option if you’re considering taking on a new venue and doubling your outgoings. Again, how are you communicating your plan to your team so that they can help you?
Taming your finances and getting ready to grow your organisation is not a lone crusade, it’s important that everybody in your organisation knows what the goal is, and what needs to happen to hit it.
Your next steps
- Decide your goal
- Find out what you spend and earn
- Create a plan
- Communicate your plan
- Deliver the plan
- Review your results
It really can be that simple if you take control of the numbers. The fog will start to lift, and you’ll be able to work with a newfound clarity, helping you to achieve your goals year after year.
Want to know more?
Interested in getting more hints and tips to help you run your organisation? Join us at our upcoming webinar Set the Stage for Success, hosted by Founder of The Playing Space, Gabi Maddocks and our very own Senior Strategy Team who will be discussing ways to sustainably grow performing arts businesses and increase revenue.
Interested in seeing the benefits LoveAdmin could bring to your organisation? Book a demo with one of our dedicated consultants here.
