Financial Transparency — The 3rd 6 months at Flux from a 🤑 perspective
Here it comes again. Some philosophy of money. Some ups and some downs, where we’ve been (Profit & Loss), where we are now (Balance Sheet), and where we’re going (Cash Flow Forecast)
Money. What does it mean to us and why do we publish a regular article about it?
(scroll down past the waffle for the spreadsheets and numbers from the last 6months at Flux)
For me and Jon at Flux, money is the fuel that keeps our freedom machine running. Through a combination of hard work and luck, we’re in a wonderful position to be able to choose what work we do, who we work with, and how much we work.
We have a few simple principles that guide our approach to money:
- Live a good life with as little money as possible. The stress of maintaining huge salaries would be quite intense. We don’t need more than £40k (gross) each for now. So why waste our energy?
- Charge a fair amount, but often quite a high amount. We’re good at our jobs, and the partners we bring in are also very good. Together we help companies to do things that wouldn’t be possible without us. And that’s worth money. Those who can pay more, pay more. Those who can’t, pay less. We use a transparent calculator to arrive at a fee.
- Use profits to fund experiments. We make more money than we pay ourselves. We call this surplus our Flux Ventures fund. In the last 18 months we’ve written and published a book, spun-out a new training company, written another mini-book, started an online discussion series, built a failed online course, designed a few products, and had our own beer brewed.
- Do as little pitching / spec work as possible. We value our time pretty highly. And it takes a lot of time and creative energy to imagine projects and collaborations that might not even happen. Most of the time, the people who are asking us to pitch for work are being paid. So we think we should be paid to. We’ll put together simple proposals and sketches of what work together might look like. But we ask to be paid for our time as soon as possible.
- Spend generously but not frivolously. When we work away we like to sleep in comfy beds and eat nice healthy food. When we travel we like to arrive early and have time to relax before we start. When we make things we like to have the best tools available. We’re better when we create all of the conditions to be better. Sometimes that costs a little more money and eats into our margins. Often it doesn’t if we think smart.
- Give 1% for the planet. Inspired by Yvon Chouinard and Patagonia we signed up to the 1% initiative. This means that every year we give 1% of our turnover to what we consider are ‘good causes’. Last year we gave that money to a grassroots workers rights charity, a pro-democracy NGO, and charity supporting education for women in developing countries. It’s not much money. But we’re trying to give where it will make the most impact.
We’re super curious about other organisations’ approaches to money. Annoyingly, people seem to be really secretive about what and why they spend and earn. We think that’s a bit silly, and we’d love to hear what your approach to working with money is.
Now here’s the data you’ve all been waiting for. The last (3rd) 6 months at Flux from a financial perspective.
Profit / Loss (what came in and went out)
~ between Oct 24th 2017 and Apr 23rd 2018 ~
What do I think when I see those numbers?
Turnover is pretty low. Mainly due to Jon being away in Costa Rica for 6 months. I’ve been largely working solo and that comes with reduced revenue. But I’ve also been working super hard, on a lot of projects that ended in April. So if I look at the Profit/Loss for the 6 weeks after 23rd April, revenue is already up to half of the 6 months before 23rd April! It’s gonna be a good Summer for our bank balance 😜
Client 1 we flew a lot for. Which is neither good for our margins nor the planet. As we’re both back in the UK/Europe for a while, I’d love to get some more UK/London clients and reduce that travel bill.
We’re also changing the way we bill for travel. Early on we decided to just lump everything together in one simple price for a client, and we’d take expenses out of that. But it’s leading to wildly different margins. Especially as we do lots of remote work nowadays. So from now on we’ll charge our fee + travel and expenses.
Flux Ventures is the thing I’m most proud of. 6% of the money we’ve spent in the last 6 months has been on experiments. I mentioned all of the things we’ve done above, and it’s already starting to bring in returns. 3 bookings for the comedy training. Mini book requests coming in fast. New collaborations popping up all the time. Conversations with new people every day.
You’ll notice that my expenses are way higher than Jon’s. I’ve said it a million times to him. But I’ll write it here in the hope that he feels publicly shamed enough to change his behaviour. Mate, you need to get Flux to pay for your business expenses. This is one of the main reasons why limited companies are useful. When we buy books and read them and it makes us smarter, the business should pay. When we go to London to have coffee with someone who inspires us, the business should pay. When we have some tasty food after a hard day’s work before the flight home, the business should pay. £59.02 in 6 months is not good enough. You’re wasting your money. You’re making us less tax efficient. Get on it! (and make sure you add everything into Xero so we have less accounting admin work to do)
Balance Sheet (what we’ve got right now)
~ on Apr 31st 2018 ~
Pretty sweet. We’ve got some money. We’re owed some more money. We don’t owe much money. I couldn’t ask for more really.
Sometimes we worry about having enough money. We take gigs that we don’t particularly like because they help us to worry less. Especially as we have families to contribute to. But I think looking at this kind of data is important. It means that we can justifiably spend less time on low value work that is easy to get, and more time finding high value work.
Cashflow Forecast (what the next 4 months look like)
~ from May 2018 to Aug 2018~
Obv this data is a little old now. Our current balance (05th Jun) is £14,292.46. So the forecast was actually a little pessimistic. But this feels great. All of the hard work this year will mean that we can worry less after the Summer.
We’ve got a Corporation Tax bill coming in October, but we’ll be able to cover that. This also means that we’ll have the cash to pay someone to help with admin and marketing support, which we really need.
A note from me (Jim)
After a year of financial ups and downs I’m in a pretty happy place now. I’ve got £8,081.64 to my name (+ £450 in crypto 😩) which should be a nice cushion over the Summer. Add to that £9,300 of potential credit card credit. I’ll be good for a while.
But it’s hard to know eh. A few months without salary. A big van repair bill. It could all come crashing down. For now I’m trying to tread the line between enjoying the present, and making sure the future will be enjoyable too.
I’m into sharing finances because there’s this weird social taboo around talking about money. I think that’s a bit silly. So I’d love you to share yours too. I reckon we can all learn a lot from each other if we were more open about the stuff that we’re not open about.
A note from Jon
Money is a funny thing isn’t it?! I notice my mental and emotional wellbeing changing with it. Regular money makes me feel safe. Big spikes make me stupid. Not enough and I can become a panicky idiot. In the end it’s all made up in my head which is why money’s so interesting…
I’m only 18 months out of life as an employed person, so I think my ups and downs emotionally are more volatile than Jim’s when it comes to money (and in general!). It’s definitely something I’m learning. Meditation helps me a lot! I have noticed that Jim is right though: in 18 months of us doing this, never have we really had to worry. So I’m slowly starting to trust that a little more, but it still feels scary for me sometimes.
Overall, I think I’ll want a bit more soon, but right now I feel reasonably safe with what I get and with what flux has. I realise whilst I’m not saving loads of cash in the bank, my lifestyle is also pretty top!
Oh and finally, I also have some guilt (which as I regularly tell people ‘is not a useful emotion’) from the fact Jim worked really hard on whilst I was away and I didn’t contribute to Flux much financially. I want to do my bit now, but also not let my guilt drive my behaviour. These emotional quirks are what money is actually about. In the end it’s not really about numbers, it’s about our feelings and friendship.
Much love from Flux
