Mikleo’s Monthly Finances— July

A few weeks ago we decided we’d try another experiment.

If you missed the blog post, here’s an overview of what we decided we’d do.

For our second experiment, we’re going to start publishing our monthly income, expenditure and earnings as a studio.

Now, don’t get too excited, there’s only two of us, so you’re not going to see sky-high figures.

But what you will see, is accountability and honesty. You’ll see what goes in to our business, what goes out and the reasons why.

As it’s now the end of July and we’ve balanced our books, below, you’ll find an honest overview (that part’s important) of what’s happened within our business throughout July 2016.

Let’s do this.

Clients

For those of you who don’t know, we run a boutique digital design studio, with the majority of our clients coming in from overseas.

We have a few UK clients, but since Dribbble acts as our main lead generation tool, we get more enquiries overseas than locally. It’s worth mentioning that Dribbble isn’t a fantastic lead generation tool, unless you’ve put time, energy and love into your portfolio for years.

If Fabio didn’t have such a killer portfolio, then we’d do ALOT more business development and marketing too.

We can’t disclose the names of our clients for NDA reasons, but what we can tell you is how many we currently have (financials a little further down) and how many we’ve lost.

Currently we have:
- 6 live clients (1 retainer, the rest on-going work)
- 2 lost clients (more on this below)

So, you’re probably not THAT interested in the clients we do have and you’re probably much more interested in the clients we’ve lost, so let’s chat about that.

We’ve lost both of the above clients, because we couldn’t maintain a working relationship with either of them. We blame ourselves as much (if not more) than we blame them.

In one instance, we did the work we were asked too, the client u-turned, disputed a PayPal case against us and got a full refund (£1,500) from a project we’d put a pretty significant time investment into.

Our mistake here was working with someone who we were ‘friendly’ with, despite seeing the warning signs and doing nothing about them.

For the other project, we couldn’t quite get the synergy right. Some people clash, it’s a fact of life and we’re willing to accept that. The person we were working with was lovely, but not someone we could produce outstanding design work with.

In the end, we did the work that we could and parted ways amicably. As a gesture of goodwill, we didn’t charge them for our final delivery.

Revenue

This month has been a good month for us, we’ve had a decent turnover and set ourselves up quite nicely for the coming months, including any potential ‘dry’ spells that might crop up.

We’re also getting closer to building up a stable reserve to spend a few months away from client work, making a few exciting product ideas we have in mind (and have started).

Our Revenue this month (according to Xero) looks like this:
- Paid = £16,030 paid
- Outstanding = £9,000
- Final Balance = £10,301.01 (some carried over from last month)

Total revenue this month of £25,030

So far, that’s been our strongest month to date and ideally, we’ll do what we can to keep this momentum up. It’s tough, but definitely achievable if we keep working hard.

Some of the above revenue is VAT, but as we haven’t filed a VAT return yet, we’re not sure on the specific figure, we’ll update this as we know more.

Expenses

We’re not massively lavish spenders on anything outside of what the business actually needs.

We’ve paid for one-off’s, like international flights (to visit clients) or the occasional YO! Sushi team meal, outside of that we tend to eat the cost of travel and minor business expenses ourselves.

Our expenses this month look like this: 
- Accountants = £318 (including Xero) 
- Basecamp = £22.45
- Creative Cloud = £44
- Digital Ocean = £4.35
- Google Apps = £6.60 
- InVision = £210.90 (yearly) 
- ToDoist Premium = £24.92 (yearly)
- Typeform = £28.00

Total expenses this month of £659.32

This is probably the average running costs for our business and outside of the yearly subscriptions, this is unlikely to change too much month-to-month.

Expenses will increase when new tech comes out, as typically, we’ll need to buy new Android or iOS devices (including wearables) for prototyping purposes.

It’s a blessing that we get to work with the tech we love, on a daily basis.

Salaries

Both myself and Fabio get a wage from the company of £672.02 per month, drawing any additional income we need as dividends.

Dividends allow you to pay slightly less personal tax, but it means you pay much more corporation tax. It’s a double-edged sword really. The business takes a larger hit, but personally you’re slightly better off (but unable to get a mortgage or borrow money etc.)

Our salaries this month look like this:
- Cassius = £672.02 wages + £2,000 dividends
- Fabio = £672.02 wages + £5,000 dividends 
- Corporation Tax Paid = £1,400

Total salary for Cassius of £2672.02 and £5672.02 for Fabio.

For those wondering why there’s a big difference, it’s simple.

Fabio’s a seasoned, world class designer and developer of 10 years. His input into the business is invaluable and without him, there wouldn’t be a business, in my eyes he’s the star of the show.

I work my ass off and if you ask Fabio, he’ll say I’m as invaluable as he is (cause he’s lovely) but truth be told I’m not at his level.

It’s a blessing to work with him and I’d do it for much less. Thanks to him I’m living my dream and learning loads at the same time.

We’re both happy and above all, that matters most.

Goals

Products.

Since we left Brotherhood, our goal has been to take on less client work and create our own products.

Things we love, things we want to share with the world, things that could make a real difference to people’s lives (even if that difference is a smile).

That hasn’t changed, but how we get there has.

Previously, we thought it’d be easier to dedicate 2 or 3 days a week to client work, with the remainder on our own products…turns out that’s tougher to do than we thought.

When you fall in love with an idea, you want to do nothing else other than work on that idea, which is bad for building up a money buffer.

So, we’re doing everything we can to get to a place where there’s £20,000 — £30,000 in the company account, so we can take 3 to 6 months to work on exciting products, that could change the world.

Some people hate that idea and we’ve been told a few times to take on some employees, double our output and scale with a team.

We’re not money people, we prefer learning, we prefer happiness.

This is our ‘risk’ for happiness and we’re excited to take it.

Your Thoughts

As we mentioned in our last post, it’d be great to hear more from you, our lovely readers.

• What do you think to the above?
• Is there anything we should’ve spoken about but didn’t?
• Can we help out or give any additional advice?

As designers, we live and die by feedback, so we’d really value yours here. Comment, tweet us or send a carrier pigeon.

We don’t mind, let’s just chat more, thanks for reading.