Running your own creative agency is an exhilarating experience. Following a dream and setting out into the big (not always bad) world of business, with nothing to guide you towards success other than your heart and your head. Arguably nothing is more rewarding than turning your passion into a full time gig. However, it’s very much a world of give and take. Highs and lows.
You win a big client; you lose another big client. Hire a new hotshot team member; struggle to find the right office space to accommodate your growing team. Splurge budget on a new office table tennis table; discover that no one in the team actually enjoys table tennis.
There are definitely a number of logistical mountains to climb if you want your agency to succeed. And more often than not they are intrinsically tied to your finances. This means that staying on top of the company’s accountancy is somewhere near the top of that list. But it doesn’t have to be an uphill struggle.
That is why we have outlined our top accounting tips for agencies to help you master the basics.
Keep on top of your bookkeeping
It seems like such a simple and easy tip, but you’d be surprised how many agencies out there don’t keep up with their bookkeeping.
All-year-round diligence is key here. Keeping on top of things will make a big difference when it comes to the end of the tax year. In practical terms, it means logging every receipt, every transaction and every invoice.
As expert accountants for creatives we recommend taking this to the next level using accounting software Xero. The platform is not only sleek and easy to use, but it also allows you to make decisions in real-time. Need to submit an invoice, expense a company lunch or pay your hardworking staff? Xero makes all this super easy for you.
The overall rewards for scheduling time to focus on your numbers are ten-fold. No frantic rifling through receipts, no last-minute compliance issues and a complete understanding of how much tax you need to pay will all help you run a smooth ship and not be prey to nasty surprises further down the line…
We’re not talking about a large-scale daily audit. But just performing little checks often throughout the day gives you a clear insight into the inner operations of your company finances.
Set your business up as though you are going to sell it
It seems like madness, we know. You’ve started living the dream of following your life’s passion as a job. So why on earth would you consider selling it!?
First of all, we aren’t telling you to line up the sale of your business. You are at the start of your business journey, so how you treat it is entirely up to you. In fact, you may never want to sell it!
We are simply stating that you should treat your business as though you do plan to sell it. Put yourself in the shoes of an investor. What would they want to see in a business such as yours? By doing so, you will approach company finances in a future-focused and diligent manner. This means planning for the future, having an expert check in on your finances and keeping everyone on the same page with regards to your business.
By planning for the future (i.e. the sale that may never happen in reality) you will allow your company to thrive in the present.
Don’t default to billing on time
Charging clients for the time spent on a project may seem like the sensible thing to do. It makes it easier to stay on top of how much work you should be doing and therefore what you are owed. Some other agencies play it safe and go for a middle-of-the-road service pricing strategy. Not the cheapest on the market. Not the most expensive either.
In reality, one of the top accounting tips for agencies that we provide is to charge exactly what you are worth. It may seem overly obvious, but it’s true. This means focusing on value-based selling – or focusing on the value that a product/service provides rather than what it costs. Beyond the fact that this will make your finances easier to manage, it also gives you the satisfaction of being able to charge what you believe you are worth rather than what you think people will pay.
You could also consider charging by the service, rather than the hour. We understand that balancing hours, costs and profit can make some people feel queasy. This makes finances much more digestible when it comes to handling a new project.
And always always get your margins right. Underestimation has been the pitfall of many a young business. Don’t let your company fall victim to a lack of true preparation.
Trying to digest all your company’s financial incomings and outgoings can often make you feel like your brain is filled beyond the brim. And that it could vomit up a slew of numbers, formulas and accounting jargon at any given second.
If you are looking to take your business to the next level and don’t have the time to juggle your company and your finances at the same time, it may be tactically shrewd to seek support. Not only does this take a weight off your brain, but it allows you to concentrate on the factors of your business that matter most to you.
We could go on and on with our accounting tips for driving your business to greatness. So that’s exactly what we have done! Click here for part 2 of our accounting tips for agencies!
As experienced accountants for creative agencies, here at Raedan we love handling numbers. And supporting creative companies on the next stage of their business endeavour we love even more. If you are interested in working with us so that you can focus on taking your business to the next step, get in touch here.