Financial Transparency — The first 12 months at Flux from a 🤑 perspective
Still sharing our ups and downs, where we’ve been (Profit & Loss), where we are now (Balance Sheet), and where we’re going (Cash Flow Forecast)
A Year of Pivoting
Shit. It’s been a year. A year since we officially started the company. A year since Jon left his job. A year since we visited inspiring companies in California and New York and wrote a book in Mexico City.
We’ve tried loads of stuff out, some of it has worked and some of it hasn’t.
We’re both super happy in our personal lives. I live in the UK by the ocean in an apartment that feels like a cosy wooden boat with my dog and Ellie. Jon is moving to Costa Rica for 6 months to explore democratic education and living with his family.
But what about the money guys?
Making the Right Kind of Money
Did we make money? Basically, yes. We’ve made a load of money. In fact we’ve diverted £141,008.44 from going somewhere else, to coming into our bank account. We’ve worked with 10+ clients all over Europe. And we’ve done some genuinely awesome work.
Not bad for a couple of chaps doing it on their own (with plenty of help from our friends, partners, and cells network).
But it’s not all been good. Some of that money was easy and fun to earn, and some was (relatively) painful and hard. Some clients are awesome, and others really drain our energy. Some of the companies are doing lots of good in the world, and others are extracting more value than they create.
So, whilst £141,008.44 looks like a decent number, for me it’s a little tainted with guilt or regret that we could have put some of our energy into better things.
We basically said yes to every piece of work that came our way. That’s great because it means we had work and money. But it often meant that we weren’t always able to develop exciting new projects because we were sometimes tied up in client work for months.
Okay, enough waffling, time for the hard figures…
Profit / Loss (what came in and went out)
~ between Oct 24th 2016 and Oct 23rd 2017 ~
What do I think when I see those numbers?
Well after an okay turnover it’s galling to see that we spent 30% of that on Direct Costs (costs relating directly to delivering our services), and that the vast majority of those costs were for Client 1. Working with that client involved a lot of travel, accommodation, food, and contractors. And the actual time spent on that work was huge, especially compared with Clients 2–5.
Also we’ve not spent a lot on ourselves. Only £26k each this year in salary + dividends. Which is definitely a pay cut for both of us.
However, we’ve worked way less than if we’d both had full time jobs. We’ve travelled all over the place, had plenty of weekend breaks and holidays, and we live in total comfort most of the time. And that’s the point of all this. To live better lives, not make more money. We could have taken more clients and pitched for more work, but I don’t think it would have made us any happier.
1% for the planet
We decided early on that we’d keep some money aside each year to give to people and organisations who need it more than us.
This year, 1% of our turnover is £1,410.08. It’s not a huge amount, but enough to make small differences. So we’re going to split it 3 ways and give to 3 awesome organisations that work in the areas we’re passionate about: education, work, and democracy.
- Camfed tackles poverty and inequality by supporting marginalised girls to go to school and succeed, and empowering young women to step up as leaders of change.
- Labour Behind the Label is a campaign that works to improve conditions and empower workers in the global garment industry.
- Global Justice Now is a democratic social justice organisation working as part of a global movement to challenge the powerful and create a more just and equal world.
Big Lesson
Keep an eye on the margins, whilst not sacrificing quality or ease of delivery. I’m going to try to find the cost savings that end up being better for the work.
e.g. Cooking in an Airbnb rather than eating out is good for the mind and body, and it’s cheaper. Booking flights and trains as soon as a project is confirmed will also save a ton of money.
Balance Sheet (what we’ve got right now)
~ on Oct 31st 2017 ~
I’m really happy with this. We’re in a great spot right now. Lots of people owe us money (and are 100% able to pay us), and we’ve got some cash in the bank to cover the next pay run and other overheads.
The VAT bill is creeping up though. It’s so easy to just add it on top of invoices then forget to account for it in cashflow forecasts. The freelance, non-VAT mindset is so ingrained in me that I’m really having to force myself to take stock more regularly.
Big Lesson
Forecast often and forecast well. Especially when you have a similarly fluctuating revenue cycle. At one point we thought we had enough money to last us until June 2018, then I re-did the calculations and it leapt back to January.
If there’s something you’re not used to dealing with financially, I suggest attending the excellent HMRC webinars. They’ll teach you all you need to know.
Cashflow Forecast (what the next 4 months look like)
~ from November 2017 to February 2018~
This one doesn’t look so great on paper. We’ve got our VAT and Corporation Tax payments coming up, and whilst some of that will be deferred until next year, there’s a big chunk that needs to come out pretty soon.
As it currently stands, if we don’t get any more paid work between now and February (we definitely will!), then we won’t be able to pay ourselves after February.
Also, to be honest, it wouldn’t be that bad really. Jon’s got savings and I’ve got credit cards. We spent the first quarter of Flux in debt, and we managed to push through it into decent profits and recover all our money.
I had £3,400 in my account. Jon had £11,000.
Now I have £1,400 and Jon has £11,800
Since I started my first company 10 years ago, work has always come. And both me and Jon are pretty damn confident that it’ll be the same for Flux.
We’re in an awesome position right now. Work feels good, the future feels as clear as it’s ever been, and we’re starting to do the kind of work that we’re both really proud of.
Big Lesson
This Cashflow Forecast is just on the wrong side of safe to keep me on my toes. We’ve got about 3 months left in the Flux coffers, then another 4 months of personal finances to keep us going. That takes us to the end of May 2018.
No worries though. You just wait to see what we’re up to in 7 months time 😉
Just because things are the way they are,
doesn’t mean that’s the way they have to be.We help people to work, learn, and live differently.
A note from Jon
Money is a largely subjective thing. For some this may sound like a lot, for others very little. So it’s important to understand how the numbers above fit in with our intentions, stages in life and view on the world.
We create Flux to serve us and others, not for us to serve it.
As a consequence, our ‘work-life’ balance sheet is a clear net profit with awesome ‘well-being and life-satisfaction’ margins. And this is really important!
It’s important because we’ve been happy and have as a consequence hopefully managed to be good partners at home.
It’s important because we’re both healthier than ever.
It’s important because it’s allowed us to test a load out so that we’re really clear on where we’re going with helping people to learn, work & live in ways that suit them.
It’s important because we’ve got better at our jobs.
It’s important because a year after starting this journey, we’re great pals who work through it all together, ups and downs included.
So what this picture maybe doesn’t show is our ‘anxiety levels’, which has peaked at various points, but overall is not too bad and we are happy to say that Year 1 of Flux has provided a wholesome net contribution to Jim & Jon’s lives and hopefully many others.
To those others, thank you for a great year! More to come as we learn and grow (as opposed to get bigger).
To work that works for us all.
Jim & Jon
