Overcome financial fear to grow your business (Part 2)

If you wanted more advice on how to overcome your fears of finance, then you’re in the right place, as Julie Wong is back with more tips and tricks in this 2-part episode special.

Get ready to explore how finance and marketing are intertwined, giving you valuable insights into how you can adjust your strategies to get the best out of both.

Discover how AI technologies are making it easier than ever before to start a business and learn how to maximise your resources when bootstrapping.

We are also trying something a little different in this episode, as we put Julie on the spot to answer some questions from our listeners on all their business worries and woes.

Here’s her unfiltered advice below:

• Understand the relationship between finance and marketing
• Bootstrapping hints and hacks
• Are new technologies making it easier for people to bootstrap their businesses?
• How to effectively juggle the demands of your family and your business
• Top tips to ensure your customers pay on time
• How to safeguard your business against bad weather if your business is dependent on good weather

Understand the relationship between finance and marketing

Bex Burn-Callander:

Let’s talk a bit more about that.

I love the idea of the overlap between marketing and finance because I think historically people think of them as being in different buckets or in silos in businesses, where they barely speak to each other.

The fact that you are bringing them together, do you feel like a lot of people fail to think about the cost of their marketing, the cost per acquisition of customers, the long-term value of customers when they’re doing marketing?

Are those things that can be quite alien to especially small business owners?

Julie Wong:

Yes. I mean it has become overwhelming.

You start thinking, “There are so many different kinds of metrics I need to think about and measure and oh my god”, and it’s like starting over.

So the thing with marketing and finance is they’re basically like the chicken and the egg because one drives the other, but at different points in your business, there’s different starting points.

So when you are a brand new business, you need to understand the market. So hence the addressable market, obtainable market, that sort of metric.

You need to understand what the pricing is before you even start. That’s when the business becomes marketing led to understand, “Okay, this is how big the market is. I think I’m going to be able to obtain 100 sales at £20.”

Then you start building up your financial plan.

Then you get to a point where you’re bigger in business and you’re like, “I need to be turning over half a million, £5 million.”

What does it actually break down into? How many sales do I need to make? What products and sales am I making?

So if you’ve got lots of different products and service lines that can be composed of that, so you think about which one you’re selling because you might have a different sales strategy and a different marketing strategy for each of those.

So you start breaking it down. I call it an onion.

Overall sales figure. What am I selling? Which products? Peel it back another layer.

What price am I selling it for? Another layer.

Who am I selling it to? You can be new customers and existing customers.

Then you start looking at how many products and services are my clients buying from me? Can I make them buy more, hence, it extends the lifetime value?

And creating enough products and services to keep them engaged for as long as possible.

So you start building it out, you have the introductory product, then you have the bigger product and you have the premium product.

If you start thinking about that, that helps you grow your business in that essence, products and service development or it’s a market development.

You’re growing into different age groups or demographics or location or geographical markets. So that becomes building what you want that number to be. You peel it back.

So marketing and sales is a tool for growing your revenue, in the same way price is also a tool for growing your revenue.

So it is reaching out for this tool, whereas the financial bit of it is basically the framework for your business. And so that’s where they hinge upon each other.

Bex Burn-Callander:

And it strikes me, this is really useful for businesses of all sizes. You could be diddy and you could be selling your prints for example, but it’s still useful to break down what is selling, what’s the right price point, what people actually prepared to pay? Are you underselling yourself?

Which I’m sure happens an awful lot.

Julie Wong:

It is. I mean, for example, me as a business coach, what do I sell? I’m a fractional finance director.

So for organisations that do not need a permanent full-time finance director, that is one service that I offer, it has a price.

Then mentoring, what is the interaction that I have with a mentee? Is it regular? Is it periodic? Do I do my strategy days? Do you drop in on a multi-person workshop?

You start figuring that out and you start thinking building that out into your numbers and going like, “Well, how do I reach my customers for the strategy days? How do I reach my customers for one-to-one?”

And then you look at the resources, “How much time do I have at the end of the day?”

If it all boils down to needing to work 48 hours a day, well that doesn’t really work out either.

So it then gives you a comprehension of what you need in terms of resources, financial bricks and mortar or whatever platforms. I call it a platform. What do you need to deliver that level of turnover?

So then that’s what builds out, “This is what I want to be turning over. What is it going to cost me in order to deliver that? If I want to manufacture cars, how many car building plants do I need to manufacture those cars? Ideally, yeah, I want to sell a hundred thousand cars, but do I actually have the resources to do that?”

Bootstrapping hints and hacks

Bex Burn-Callander:

And on that point, I suppose for the people who are early on in their entrepreneurial career, can you share any bootstrapping hints or hacks or tricks that you have seen work and help budget, a limited startup budget, go that bit further or actually bring more money in those very chaotic, very volatile early days?

Julie Wong:

It’s going to be different for everyone. I mean with bootstrapping, basically don’t spend as much money. And so that’s a classic one, isn’t it?

But really understanding how much value you are going to get from every single pound.

So if I had £1 in my pocket and I was hungry, am I better off going to buy some lentils and cooking a bag of lentils, which are far more nutritious than buying a bag of crisps? So, what return are you getting for your money?

And then also, if you can’t change the price of something, can you change what you’re going to get out of it?

So when you start looking at your costs and you have a staff member that you’ve taken on, on your payroll, if they’re not working at full capacity, then you’ve got to try. You can’t sack them. So you’ve just got to put them to more use.

It’s getting as much deliverable out of anything that you’re paying for as a fixed cost.

So if you are a business that has bricks and mortar and you can’t utilise your premises all the time, can you start sharing those premises?

If you’re a cafe, you only need it during the day. Can you double up with somebody who wants only an evening business?

It’s trying to look at all your resources and saying, “Can I make them multipurpose as much as possible?”

And then also really making sure that you are in control of your cash and so you’re not just going like, “How much cash do I have in the bank? Can I spend it?”

That’s quite dangerous because you can be making the wrong decisions for that reason.

If you think, “Okay, I’ve got £100 cash in the bank at the moment, but I can do this and I can bring in £100, then I can save the £50 I’ve got now to have a better return on spending a big amount of money, rather than throwing money out for ads.”

I mean, that’s a classic thing. Everybody just spends money on ads and branding.

And so many people regret spending a lot of money on building their websites, branding and marketing because they realise it’s not them 6 months down the line for starters.

And it also didn’t bring back as much return as they thought it would be.

Sometimes it’s better to just go and hustle than build something like a website because at least 60% of the business owners are in the early stage, and they regret some of their websites.

Bex Burn-Callander:

I hear that as well. And I remember interviewing this amazing, I think she was in her early twenties, this fashion designer who built a million-turnover business on Instagram.

She never even had a website.

She just took orders through Instagram because initially when she tried to get a quote to make a website and they quoted her like £15,000 and she was like, “Well, I’m not doing that then.”

I mean she did eventually get a website and it did grow, but at the beginning she built it all in the cheapest most hustle first way that she could and that ended up being the making of that particular fashion brand.

Julie Wong:

Absolutely. It’s questioning why you’re making that decision.

So people tend to think of websites as, “That’s how I’m going to reach my customers.”

When really, you need to think, “Can I reach my customers in a different way and look for alternatives.”

It is not the sake of having something for the sake of having it. It’s like what is the purpose of it?

So you question everything you’re spending money on, “Why am I doing this?

Bex Burn-Callander:

You’re reminding me, in season one of Sound Advice, we had a pair of some brothers come on from a T-shirt printing company called T-Mill, and they told us that they had £250 in their start-up pot, and they blew it all on business cards, only to realise that they were a digital-first business.

They were not meeting any customers and they never gave anyone a single business card. But it’s these things that help us to learn, I’m sure.

Julie Wong:

Yeah, just keep asking yourself, “Why am I spending this money?”

Bex Burn-Callander:

Yes, yes. What do we want to get out of it?

Julie Wong:

Yes, I think that a very critical thing.

Are new technologies making it easier for people to bootstrap their businesses?

Bex Burn-Callander:

And there are so many new technologies out there, do you feel like it’s easier to bootstrap than ever before?

Can you use ChatGPT to write some of your website copy?

What do you think about the potential of emerging tech to really help founders do more with less money and less time?

Julie Wong:

I think so, absolutely. I love all this tech stuff. I’m not very good at it, but I know it totally adds value.

In the same way as bookkeeping software, because it means that you can track your expenses far more easily just by popping things in, taking a photograph, it just takes the number crunchy bit away.

And you’re not having to sit down and go like, “I need to write this number down into a ledger or into a spreadsheet.” That itself helps.

If you think about it, we wouldn’t be able to do financial modelling if they hadn’t created Excel and spreadsheets, that level of complexity and looking to the future, that would never have happened.

It will always enhance our lives. It will perpetuate to things that we can do.

So the fact that we can forecast into the future at the moment requires a lot of brain power.

But if you start using AI, it can start learning as to the different patterns and trends.

I mean, at the moment, the software does exist for cash flow forecasting, but it’s actually quite expensive and it’s more available to accounting practice owners so that they can help their clients.

But for individual businesses, I’m sure there’ll be a slimmed-down version because it’s the storytelling but in numbers.

So I love the idea that the AI will be coming on. I mean, I use Canva and things like that and so I definitely think we are all going to benefit from it.

But I think it’s still important to know what good looks like because as much as you put something into ChatGPT, when it comes out the other end, sometimes you’re looking at it like, “That’s a load of nonsense.”

It’s badly spelled, the grammar is bad. But that’s where it relies on us and our intelligence and the fact that we are ahead of the AI, it becomes dangerous at the point where we are reliant, and we lose our own skills.

We are so reliant on delivery takeaways and ready meals because we don’t know how to cook. We don’t want to get to that position where we are wholly reliant on automation because that makes you very vulnerable because when it goes down you are messed up.

I mean, when my computer goes down, I can’t do anything and it’s just managing that level of risk.

And I mean, how would I cope if my spreadsheets weren’t working? It’d be a nightmare. So what do you do in the meantime?

So you’ve got to have some sense of alternatives, know what good looks like and not lose the skills. So when we delegate tasks, don’t abdicate the responsibility.

Bex Burn-Callander:

I like the idea of using tech to experiment and inform, but not to cut corners, if that makes sense.

So that you’ve always got, like you say, an idea of what good looks like, but also an idea of the path that you take on your own without leaning on any of these new techs or apps or whatever to get you there. I think that’s good advice.

How to effectively juggle the demands of your family and your business

Bex Burn-Callander:

Julie, I’m conscious time is marching on and I’d like to ask you some questions from our listeners if that’s all right?

Julie Wong:

Absolutely.

Bex Burn-Callander:

So we have one from Veronica who wants to know, “How do you deal with the demands of family members against the demands of your business?”

Now I’m taking this to mean perhaps the demands of family members.

You’re building a business, it’s all encompassing, perhaps your husband, your kids, your parents, they want more time with you or they want to understand more about why they can’t have fun with you or weekend or whatever it is.

I’m imagining this is what she means by the demands of family members.

What would your response to Veronica be?

Julie Wong:

I sympathise, would be the first one.

Whether it’s family members or not family members, when you become the owner of your own business, you are the chief of everything, officer. You have to do absolutely everything.

So time is always going to be the most precious commodity and it’s understanding what you spend that time on.

So when it’s family members and depending on how old they are, how do you communicate the message of what the time is being spent on and do you really know what your time is being spent on?

It’s like saying something, “Where did all your money go?”

It’s the same thing. You need to understand where your money went. In the same way, you need to know where your time goes.

So definitely if you don’t track your time, start tracking your time for a whole week and just analyse it.

And that becomes that time management because then you can identify what time you’re spending on running your business or delivering what you need to for your business or on growing your business because that will be where you start letting go of the different tasks and delegation, automation.

So you start letting go of the humdrum running business, need to answer emails, send invoices out, collect money, that sort of stuff.

So if you understand what time you need to spend in the business and then what time you need to spend with your family doing what they do.

If you’ve got very young children, you’ve got babies, they’re very much less self-sufficient. If they’re a bit older, teenagers, what can you do in your family life that you can look at the same way, run, deliver, grow.

So the feeding of them, the shopping of them, what task can you start letting go of? It’s all time management again.

Are you trying to focus on quality time, and can you bring in the delegation to older, more grown-up children, make them more self-sufficient?

Or bring them into the business so they can be engaged in the business. Because that’s where I started.

My parents had a restaurant, I did the washing up on an upturned washing up bowl, washing up things, washing up teacups and things like that.

I was a runner. I used to close all the containers for the takeaway orders and only thing I didn’t do was because I couldn’t reach because I was too short.

So for me it was fun. I got used to the idea. So that can be fun.

Can you bring your children in or your family in in a fun way so that they become part of the vision and part of the journey?

Because that’s how you learn and if you want to grow a family business, you might want somebody to take over at some point and you can’t suddenly land it on them when they’re fully grown adult child.

The best thing is to nurture them from when they’re very, very young, they get that absorption.

Bex Burn-Callander:

No, I love that answer. That feels like win-win.

If you can bring your family into the business one, they’ll understand the pressure you are under and what you’re actually doing with your time in a lot more detail.

So they’ll probably give you a bit of a break when it comes to nagging you to be at home.

But also, as you say, you might spark something in your kids, you might spark even your partner to think, “Oh, this is a direction I’d like to take with my career.”

You never know what could come out of it.

Julie Wong:

It is. You spark lots of entrepreneurs that way.

Top tips to ensure your customers pay on time

Bex Burn-Callander:

Question number 2, this is from Petter who says, “What is your best tip for ensuring customers pay on time?”

Oh, this is a doozy. What would you say? I mean this is chronic. This is the scourge of small business.

Julie Wong:

Absolutely, absolutely. Send in the heavy mob. No, not really.

I think it starts at the point of when you’re making a sale. So it depends on what you’re selling. Is it a customer at point of sale? Obviously they’re going to have the cash. So that’s the easy one.

The next one is when you’re selling services, is making sure that you have a standard process so that you don’t deviate because it helps you discipline yourself and then that disciplines your clients.

And you say, “It’s non-negotiable. These are the payment terms. You need to sign up with a payment in advance before I even start.”

Or if it’s a case of it’s a very large sum of money, then you might take stage payments and you say, “Fine, but then I will need you to set up automatic payments through Stripe or GoCardless.” You set up those payments, they’re all set up at the outset.

So being strict about what you can do with your clients at the beginning.

If it’s a really big contract, then you might want to consider checking their financial credentials because you don’t want to be delivering several thousand pounds worth of service only for them to say, “Well, we’re bankrupt” because you’ve sold something to the wrong person to begin with.

You don’t want the wrong client through the door.

Louis Vuitton doesn’t have somebody who can’t afford to come through their door in the beginning, people know if they can afford you or not afford you.

And if they really want to work with you, then that’s around your brand building, how important you are, and if you are offering value for money.

If you are selling at a low price, it’s a race to the bottom.

It’s always going to be a race to the bottom because everybody starts diminishing their value, their services, then somebody else will come in with a premium product because at the end of the day you’ll start diminishing the value that you can give to somebody.

If you hold fast, then you will survive in the longer term. It may take you longer to do that, but it will be more sustainable.

But what can you get in advance of delivering services?

Make sure that your payment process is as smooth as possible.

If somebody’s got to go find your bank account details in order to pay you, that is going to be so clunky. You want to make it seamless for them. Set it up so they can click on a link within the invoice, and it will automatically pay. Things like that makes it so much easier.

So removing all the friction points in the payment process, that also helps.

Chasing payments quite often is quite useful because if you are the person that’s delivering and you want to be the nice person, it’s better if you can get somebody else to chase that debt if they’re not paying.

So they are not emotionally engaged in getting that money back for you.

So it could be your VA that’s chasing for you. It could be you’ve done invoice factoring, so you sold the debt on. Make sure that you don’t alienate your customer of course, but you can start playing the good cop bad cop thing.

Whereas sometimes it’s quite difficult when you are thinking, “Well I can’t have this mid mentoring session, because you haven’t paid me.”

It’s really difficult to have that kind of conversation at times. So if you can segregate that responsibility, it can also help.

Also be aware of who has not paid you your money, because I’ve got clients that have carried on selling even though people haven’t paid the previous invoices.

And you’re in danger of incurring greater debts to you if they go bust because it’s a sign that they’re not financially healthy or they’re just taking the mick and you don’t want them as a customer anyway.

Bex Burn-Callander:

Yeah, that’s true. And I think mean this is the thing, the squeaky wheel gets fixed.

So I think you need to be prepared to make quite a lot of noise if there is an outstanding debt and not wait months and months to chase.

You’ve got to be at first it’s the gentle reminder and then it’s every other day and then it’s daily, twice a day. Where’s my money?

I think you do have to be the squeaky wheel sometimes and just kind of own it.

Julie Wong:

You’re not doing anything wrong by chasing money that they owe you because are they going to bad mouth you if you’ve delivered a good service?

Can they really legitimately bad mouth you saying, “Well they did a really good job. But I didn’t pay them, and they kicked up a fuss.”

I mean, who’s going to admit to that? And you are better off losing a bad customer.

It’s like a relationship. You don’t want the whingy partner, you want to bin them, so you can move on to a nice relationship because it’s high maintenance.

Because for every 10 minutes that’s cumulative of you chasing that debt, you could be spending those 10 minutes making a sale. It’s a waste of your time.

If you add up all the time that you’re spending chasing that debt, you’re better off just binning them.

Bex Burn-Callander:

Yeah, it’s the hidden cost of doing business, isn’t it?

The admin, the amount of time that you spend on things like resending invoices, chasing people, but just like the emailing and the just meetings about the work before you’re even getting paid to do any of the work.

I mean all this stuff adds up, doesn’t it?

Julie Wong:

Yeah. That’s why coming back to tracking your time, because people only focus on the actual delivering part.

So say for example, I’m delivering a workshop and I’m getting paid for delivering the workshop. If I’m not getting paid for the preparation, I’ve got to factor that in.

I mean me being a perfectionist, I can spend longer preparing that workshop that I do actually delivering the workshop. And then there’s the travelling time involved.

So you’ve got to be very careful about managing your time, which is a resource and it’s a cost to your business because you want to make that time as billable as possible.

How to safeguard your business against bad weather if your business is dependent on good weather

Bex Burn-Callander:

Oh, that’s interesting because then you might want to actually find several customers to deliver the same workshop, for example, to make it worthwhile all the time that you’ve spent building the modules or whatever. Which goes back to the financial strategy.

We’ve got time for 1 more question.

So we’ve got Julie who’s asked, “How do you safeguard your business against bad weather if your business is very dependent on good weather?”

That’s a tricky one, isn’t it? You see it with things like Christmas tree sellers, obviously they’ve only got a business for a couple of months of the year, but this is the sort of flip side where you’ve got a good weather business and when it rains, you’re in trouble.

What do you do?

Julie Wong:

This comes back to the forecasting bit. How long can you weather that bad weather?

So understanding your fixed cost base because if it’s bad weather, you are still outlaying those fixed costs. So try to minimise that as much as possible.

And if it’s a case of those fixed costs could be premises, how do you then repurpose those? Again, like I said.

So I’ve noticed in one of my local shopping centres in summertime, they sell Havaiana flip-flops, in winter time they sell, I can’t remember what else they sell.

Bex Burn-Callander:

Wellies.

Julie Wong:

Yeah, I think it’s the same business, but actually, they’ve got the lease on that shop unit, but they sell different products.

So it’s a case of, can you leverage your assets to bring in more revenue in a different way and how well can you forecast that and can you bring in a different revenue stream that offsets it?

So if you are selling something that is seasonal, what can you do that is matching the wet weather? Like you said, sell Wellies when it’s bad weather.

So it’s looking for alternative synergistic income streams and where you can redeploy your assets that you have, and that’s down to your individual business at the end of the day. How synergistic can it be?

I have a client or had a client, she realised that for her long-term financial goals, her existing business wasn’t sufficient to reach those goals.

So she went and acquired a different business which she hopes will match.

So it is like you’ve got different friends. Different friends have different purposes, and so do you have something else that can fill the gap for when you don’t have that friend to do something?

Bex Burn-Callander:

And I guess you need to just review your pricing.

If for example, you are running a boat hire business and people only want to go out on the water when it’s a sunny day, do you then need to perhaps increase the price to go out on the sunny day to cover all the rainy days where you don’t make anything.

And you might need to experiment a bit to see at what price point people start not wanting to rent the boat, but it’s worth giving it a go.

Or offering sort of a picnic hamper experience on the boat to kind of upsell.

It’s worth thinking how much you could get out of the individual sale to protect you in bad weather.

Julie Wong:

Absolutely. So this comes back to the forecast and the modelling thing.

So financial modelling is where you start testing out different scenarios. So I call it like financial play dough.

You think, “Well, I don’t like the look of that. And if I stick that bit on, well it looks a bit ugly.”

And then you go, “Well, if I make this bit bigger, then it looks a bit different.”

When you are playing with your financial modelling, so when you come down to the boat hire thing where you change your pricing, you start modelling it out and say, “Well, how many customers do I have on any sunny day? I might have 100 customers. If I can increase my price by another £2, that increases it by 2%, but I might have a drop-off.”

And so you’re playing with the volume and your price because that’s what your revenue is actually a factor of anyway, is your revenue is a factor of how many you’re selling, your volume, versus the price.

So you start tweaking that, “If I increase my price by 5%, but I’ve got a 2% drop off, what does that look like overall?”

So you start finding your sweet spot on paper before you start testing it out in real life because otherwise people start going, “You changed your price again?”

I mean it just confuses the market more than anything else.

And then what can you do to entice people out during the rainy season? So can you offer a canopy and make it a more fun experience?

So you’ll put a canopy over the boat or something like that and you go to these destinations and at this destination we set this up a marquee or whatever.

It’s trying to find an alternative way to bring people out of the house during the rainy season, giving them right weather gear or whatever it is.

Bex Burn-Callander:

Yeah, like whiskey, Wellies and wet weather boating.

Julie Wong:

Oh, I love that. Right, Rebecca. We’re going to start a business.

Bex Burn-Callander:

We’re going to start our business. Sorry, guys. Podcast’s over. We’ve got an idea. We’re off.

Julie Wong:

Wellies and whiskey. I like it.

Bex Burn-Callander:

It’s a brand that’s definitely, it’s happening.

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