Mentoring: 3 common budgeting mistakes
The more mentoring I do, the more I find that many small creative startup founders go through similar experiences, making the same mistakes, which can be easily avoided. Budgeting is definitely one of them. For the sake of any business survival it is something that any startup must master from day one. The most common complaints I hear all the time are: “I can’t do this or that because I don’t have the budget for it. Or, “If I had the budget, I would do…”. If that sounds like you, here are 3 common budgeting mistakes and suggestions on how to solve them.
- Spending money you think you don’t have
Here is a scenario for you: I spoke to one of my mentees and we were brainstorming on some ideas for marketing campaign and while we were trying to figure out the way of how to do photoshoots with literally no budget, how to design promotional materials with literally no budget, how to approach press, bloggers, friends, collaborators – yes, you guessed it – literally on no budget, she briefly mentioned that she has a nail salon appointment the following day and that she needs a break and is trying to save up for one week holiday… abroad!!
So I said to her: “So you DO have money. How much do your nails cost?”
She replied: “Both, mani and pedi plus bio gel, £70.
£70? Are you crazy?, I said. “Do you know how much you can do with that?!?”
I then explained to her that she actually had more than she thought she had, and how much potential there was. She could do so much with that and things could be so much easier in fact. The reason why I’m sharing this story is because I believe it’s about the mindset. When you transition from working for someone else to working for yourself, at the beginning there are certain adjustments you should make. My mindset is: everything I’ve got I’m pumping into my business. Because that’s my future. I’m not spending, I’m investing into my life and whatever is ahead of me. I used to have a beautician coming to my house doing my nails every 4 weeks and I had a hairdresser too. I cancelled them both. That allowed me to have extra £800 a year, which I can utilise and budget in for my marketing activities and any necessary expenses. I’m not saying that you have to turn into a nun. This is not as a sacrifice you’re making but more short term, necessary adjustment.
Another scenario I see a lot is not being resourceful enough. What I mean by that is instead of asking “why I can’t do this or that”, ask yourself “what CAN I do with what I’ve got available to me right now?” You have to realise that most skills and experiences you’ve had are transferrable. The key here is the mindset of having:
1. open mind
2. willingness to learn
3. ability to face and embrace challenges
So what have you got that you can use right now? What skills, knowledge, connections and things around the house have you got? Think creatively!
To me, I can express my creativity through design but also through business activities. I absolutely love creating campaigns, doing mailshots, networking, speaking to people, creating pitches, doing follow ups etc. I love finding different ways of doing things on small or no budget at all. I run a very tight ship. It’s challenging but it’s not a rocket science. Everything is solvable.
HOW TO SOLVE IT:
Record anything and everything you do and ask yourself:
1. Where can I save money?
2. Where can I get money? (meaning, what can I sell apart from my products or services?)
3. What can cost me less?
Many creative startups, including moi, make this mistake. The idea of undercutting your competitors in a hope that you have a slice of the cake sooner is a business suicide (same applies to overpricing actually). In most cases underpricing, or working with tight margins, is something that initially may sound like a good idea but without allowing enough wiggle room you’re heading for destination Major Problems. Fine-tuning your pricing structure is, again, not difficult. Asking your customers, being honest and transparent, and having a multi-tier structure definitely help.
HOW TO SOLVE IT:
Go through your pricing structure and all your costs – direct and indirect! How much do you have to sell to cover them a month? How much discount for special offers can you afford? What is your market positioning in terms of pricing? What can be your pricing strategy?
Which leads me on to…
- Not having a clear strategy
Do you know where you want to be eventually? Do you know how to get there and what strategies you need to implement? If not, breaking down your goals and creating manageable and achievable tasks are super important. I think this part is about trying, testing and adjusting. There is no one formula or template to follow. It’s about sitting down, writing a plan and executing it. After that, you analyse the data and adjust. Your advantage is that you’re small and flexible. You can change within a day. Don’t try to act like the big boys, you’re not them. You’re you. Build your business slowly and steadily. There is no such thing as overnight success. And, you know why? Because you need to go through all the lessons, which will prepare you for anything that’s thrown at you in the future. Embrace it!!
HOW TO SOLVE IT:
This, of course, is very obvious but not so straightforward and easy. I suggest you sit down somewhere quiet, somewhere you can focus and write down your ideas. Research, analyse, read case studies, learn and brainstorm first yourself and then with someone else to validate your ideas.
Then, ask yourself:
1. What can I do to achieve xyz?
2. How do I do it?
3. Who do I need to contact?
4. Where do I start?
5. What is the timescale?
Hope this helps. Kxx
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