Ughhhhhhhhhhhhhh, money. We need it, but damn, it can really make life hard for an entrepreneur (or anyone, but you’re in business owner territory here). So let’s talk about it.
This was originally part of one really long blog post, but I split it up into two. If you want to read what became the first post, the rest of this might make more sense to you.
Everything is going beyond great now, but that wasn’t the case in January and February. I hit a real rough patch financially, and I was not expecting it. Happy New Year to me, right? I wasn’t bouncing checks or not paying bills or anything, but I built myself a lovely little psychological prison where the bars were made of Fear and Sadness and the ruthless guard looked suspiciously like me. (Spoiler alert: It was me.)
I’ve owned my company for ten years and have grown it from a one woman, part-time gig to a seventeen person, full-time-and-then-some-for-me company. I’ve never been shy about the fact that the first five years were a struggle financially. But I knew I had to push through those and get into the part of entrepreneurship where you not only make a profit, but you can do things again. I turned down countless invites over my first five years because I knew I had only enough money to pay for my business expenses and barebones personal expenses. And when I got through it, it was glorious. (The other post goes into details about just how glorious it was, and how I view money.)
If you are a new reader (in which case, welcome!), let me first tell you about my ridiculous life. From April until January, I live in Newport, RI. That’s my college town, and as my friend Amanda and I say, that’s where my soul is. It is where I have lived for the bulk of my adult life, and even though I didn’t grow up in Newport, it is my home. In the winter–and I am not retired or a trust fund baby–I live in Charleston, SC, which is where Amanda and I decided my spirit is. (My heart is in Nashville, if you’re wondering.) Living in Charleston during the winter is one of my favorite things about my life, but it is not cheap.
That’s okay though, because I know how to save and budget. I don’t buy a lot of “stuff” for myself, because I’d rather put money towards the perfect winter apartment and plenty of spending money for grits and Bloody Marias. I did my first snowbird winter in January and February 2017, and although my rent was so expensive I almost lost my lunch when they told me the price, it worked out perfectly. I had saved enough for both rent and spending money, so I was completely fine.
This past year, I leased an apartment in a way better Charleston location. And even though it was a 3.5 month lease, it ended up actually only costing a few hundred dollars total more, taking all expenses into consideration. I had saved like crazy again in 2017 to prepare for snowbirding in 2018, but the perfect storm of expenses hit me hard at the worst time.
About three weeks into my 2018 snowbird winter, I noticed that my bank account was looking very lean. It was normally 5 – 10x larger (depending on the time of year) than it was this past January. At first I thought Oh, we just need to book five or six more jobs and things will be normal, but it was a quiet month in terms of booking and big month in terms of expenses. I had to dip into my savings–something I haven’t had to do since I started even having a savings account four years ago–to pad my account. And that killed me.
How could this happen to me?, I thought. I’m the person does a monthly budget and knows exactly when each dollar goes out. The person who use pro discounts and coupon codes and could make a dress out of the CVS Extra Bucks coupons she has used. Sure, I spend money on going out and treating my friends, but that’s not every day (or even every week) and I don’t spend a ton when I am out. I realize paying for three rents (Newport apartment, Newport beauty studio and Charleston apartment) during my snowbird winters is crazy expensive, but I had pulled it off in 2017 with zero issues, so I assumed 2018 would be the same.
After some thinking, I identified a few causes of my bank account blues. It came down to a lethal combination of unexpected expenses and timing. My attorney increased her rate right before I needed some legal work I didn’t anticipate done in December, so that was a big chunk. My website domain cost jumped up and my studio rent always increases in January, so even though I knew to budget for one, I didn’t know that the domain would increase by so much. I also had a sizeable security deposit for my Charleston apartment temporarily out of my bank account, which is something I didn’t have to pay during my previous snowbird winter. And, I had taken my “Find a Winter Home” trip to Charleston in November plus another trip in mid-December to get my keys and get my apartment set up for my drive down in January. The previous year, I only took one trip before January, and I had stayed with a friend. In November, I stayed in a hotel, and it wasn’t cheap. The costs from that trip had to be paid in December, which is typically not a high revenue month for my company.
But still, I was surprised. It’s not that I go around spending money on whatever I want, but I really hadn’t had to worry about my bank account for a while. I’m talking for several years. Sure, I had some expense-heavy months in the past few years, but there was always enough cash moola, baby, to absorb those hits. I looked at my company’s wedding bookings in January, worried that maybe business wasn’t as good. But it was great! We actually had more weddings and other jobs booked for 2018 than we had in January of 2017 for that year. The difference was that for the 2017 season, the bulk of our bookings starting coming in in December 2016 and January 2017. For the 2018 season, the bulk of our bookings started coming in in September of 2017. So although business was better, a large amount of payments hit the bank account during my snowbird winter in 2017 but before it in 2018.
Also, when comparing our 2017 numbers to this year, we had more corporate work in January of 2017. Most Januarys are not that busy for corporate work, so 2017 was kind of a fluke. But between that and all of the December 2016 and January 2017 payments, the beginning of the previous year had nice little cushion, which allowed the normal expenses and the Charleston expenses to land nicely. It just wasn’t the case this year.
This year, January was the perfect shitstorm of high expenses and a lower income month. Either one on their own would have been fine–and looking back at 2017, I had encountered those exact factors without even really noticing, since previous months had padded the bank account–but together this January, they made an impact I actually felt. All bills were still paid and I wasn’t late with anything, but I did not like the way my business bank account was looking.
So, I did the only thing I thought I could do–I starting a spending freeze (for non-essential items). I only know how to do things in extremes, you know? And I am well aware that the the small things add up. Dropping $50 on dinner and drinks may not seem like anything when I compare it to my regular income, but that was equivalent to my electric bill in Charleston. I held off on going out to eat, meeting friends for drinks and buying anything I didn’t absolutely need. It was a huge bummer, but it felt foolish to me to spend when things were lean. I still don’t take full days off when I’m snowbirding, but in 2017, I was able to take a decent amount of half days off and I loved it. My Charleston life is generally a little slower paced, business-wise, so that I am able to take half days off more often. But for the first six weeks of 2018, I didn’t do much socializing because of the freeze, and that really bothered me. It felt like I was wasting my snowbird winter, but my financial state made me feel paralyzed.
Maybe this all sounds crazy because I was not technically broke. I had money in savings and room on my credit cards (since I pay them in full every month) if things got really bad. But the savings money was my Charleston in-case-of-emergency-fund (the emergency being a slow business year that didn’t leave me with enough to snowbird off that year’s income) and I had worked so hard to get out of that credit card debt. So while those solutions kept me fed and housed, I was still scared. I kept having this irrational thought of What if we stop booking?. Not completely, as that’s highly unlikely for a company that’s been in business for ten years with yearly growth. But I started thinking What if we start booking half of what we usually do? What if I burn through my savings and wrack up credit card debt? Then I would be the 2012 Allison who constantly checked her mail for client payments and reluctantly maxed out her credit cards because she had no other choice. She lived with constant financial stress and fear that one big unexpected expense could wipe her out.
On top of the stress of waiting for a higher income month to balance out the bad months and replenish my savings, I also felt embarrassed. How could I be in this position after a decade in business, the past four of those years being virtually financially worry-free? I thought I was a better business person than that. I really beat myself about that, and it felt so shitty. A lot of it came from this fear of being back in the true broke days of my early years in business, when I carried around so much financial stress that I’m surprised I didn’t fall over. When that stretch of bank account blues ended, I was elated. A huge weight was lifted off my shoulders and I told myself I would never be back in that position again.
On my rare good days (more like scattered hours) early this year I thought, Maybe it’s actually impressive that I had such a good four year run of no financial stress. I don’t know what other small businesses encounter in terms of profit and loss ebb and flow, so I started to think what I was experiencing could be normal. That thought sent me on a search for stories of other established small business owners who had been in this position (and ideally, a happy ending of them getting out of it!), but I couldn’t find many that went into detail about how they felt during their rough patch. They were mostly information on how to solve the problems (which is valuable, but not what I was looking for) or quick mentions of bad times/failures that were overcome prior to great successes. So the idea for this post was born.
When I’m in any type of shitty position, just knowing that other people have been in my shoes helps me feel better. Since other entrepreneurs may also be looking for financial struggle stories that they can relate to, I this could maybe make one person feel better.
It’s not considered polite to talk about money, right? Then fine, don’t read this. (Too late if you’re already this far into it, you weirdo.) But I think especially as an entrepreneur, it is important to talk about it. Unless your business is in the accounting or financial advising industry, money might seem scary and confusing to you. But if you run a business, you have to really understand it. And it’s hard to understand something that many consider tacky to talk about, since that can prevent us from asking for help and advice. If you are an entrepreneur without a good grasp on finances, I think it’s easy to make a lot of mistakes. It’s also easy to feel like you are the only business owner going through a financial struggle, but honey, that couldn’t be further from the truth.
I started this post in mid-February, as I was emerging from my spending freeze, and am finishing it now in June of 2018–a record-breaking month for sales for my company. This is likely going to be our best year ever, breaking revenue, booking and company size records. It started out rough, but has completely turned around. Having the rough patch happen forced me to take a really hard look at my monthly income fluctuations and expenses, and I now understand them in a way I didn’t before. That is an extremely valuable realization. It’s allowed me to devise a new plan to prevent anything similar from happening next winter, and I feel confident that it will work.
If you are an established business owner going through a rough patch financially, I feel your pain. I feel your fear, your anxiety, your stress and your embarrassment. If you can figure out the causes of your financial rough patch, there’s a good chance you can correct them and/or prevent them going forward. In the meantime, try to recognize the fact that it’s probably just a tough couple of months. Business ebbs and flows but unless we are talking about some disaster that hit your business or a disruption in your industry that negatively affects your company, you are going to be okay.
Have a beautiful day 🙂