EPISODE 79: The Costs Involved in Running a Business

Jessi:
Welcome to the Brand Your Voice Podcast, where we’re digging into how you can create personality-driven content that connects and converts. I’m Jessi…

Marie:
…and I’m Marie. We’re the co-founders of North Star Messaging + Strategy, where we support business owners in outsourcing content without sacrificing authenticity.

Jessi:
Every brand has a unique voice that sets it apart. We're digging into how to capture the way your brand communicates from the words you use to the stories you tell. So you can create more compelling content that strategically helps you meet your business goals.

Marie:
And if you choose to outsource that content, you'll be able to do so with confidence, knowing your brand voice is in good hands and you can reclaim your time. We're so glad you're here and hope you enjoy this episode.

Jessi:
All right, welcome to another episode. And it's just Jessi today, and I'm excited to join you to talk about a topic that may not seem exciting on the surface. Today we're talking about the cost of being a writer. We've had a lot of episodes up until this point, that talk about how to set boundaries, how to price yourself, how to make sure that you are making a living wage, how to make sure that your clients are paying you. I wanna spend a little bit of time talking about the flip side of that which is where that money is going, what that money is helping to support. Obviously, part of that is your take home pay. Part of that is the money that you yourself are bringing home, putting in your personal bank account so that you can meet your personal financial goals. But some of that money is also going back into that business. And that's what we wanna talk about today. I say we, even though it's just me, cause I'm so used to recording with Marie.
But today I wanna really dive into this idea of what it takes to run a copywriting business. And I wanna preface this with it will be different for everyone based on what your specific business looks like. That said, everyone is going to have some sort of cost to running the business. And I don't really like to think of it as a cost. I like to think of it as a reinvestment in the business, but it is going to cost you money in order to run the business. And there are a lot of different ways to go about this. You can be very lean and very bootstrappy in the way that you do it. You can be a little bit more free with the way that you spend your money, but at the end of the day, we want to make sure that the money that you are bringing in is more than enough to support both your desired take home pay and the operations and growth of the business.
So I wanna dive in by just kind of reflecting back on the very tumultuous path North Star has taken in order to find some sort of comfort level with this idea. I still vividly remember in the first couple years of running a business, it must have been after our first or second year, sitting on the floor of Marie's house, in her spare bedroom, which we were kind of using as a office as well for business meetings. And we were just surrounded by tax forms and papers. And it was overwhelming. There were so many forms and so many things that we had to fill out. And up until that point, we'd just been running our business. We'd been offering our services, making sales, delivering on the services. And we hadn't really been thinking about reinvesting the money. We hadn't really been thinking about the cost of operations. It was the very early days of our business. We didn't have a lot of costs and we didn't really know where to invest our money. So when tax time came and we had to fill out all of this stuff, we were like, oh my goodness, there's so much to think about.
This episode isn't specifically about taxes, but that feeling of, oh my gosh, there's so much to think about I think resonates through all of the different expenses that come up with running a business. We were just sitting there wondering what the hell we'd gotten ourselves into. We were thinking this isn't worth it just to write, to figure all of this stuff out. And spoiler alert, we're still here. So obviously it was worth it. But the lack of direction that we felt around our finances really came from a place of fear around money. And I think we've talked about this in past episodes about how money can be a very scary, emotionally tense topic, especially if you're just starting out or maybe if you've been around for a little while, but your business feels like it's been a lot of ups and downs and stressing, and... it can be a loaded topic. And so the big struggle that we'd run into up until that point was that we weren't really thinking about the money that we were spending. We were just thinking about the money that we were making. And as our business continue to grow, so did our expenses. And that was scary. Kind of made us like freeze up a little bit. Everything felt like it cost money, web hosting, email clients, course platforms, scheduling software, business, registration, payroll taxes, the more we grew, the more we needed to spend. And that was really scary to us. Both Marie and I in our personal life, we always kind of frugal. And so the kind that we needed to in order to continue our business was a real mindset shift for us.
And it took us a while to figure out a system. It took us a number of years of really feeling lost and stressed before we sat down and decided, okay, we need to find a way to understand the cost of being a writer, understand the cost associated with running a writing business and have a plan for spending that money in a way that makes sense or not spending that money if it doesn't make sense. Once we did that, we felt so much better. Which isn't to say that there aren't moments or haven't been moments since then, where money has been tight or where we've had to make shifts.
The onset of the COVID pandemic is a great example for that basically overnight, we lost 70% of our revenue and had to shift and pivot and rebuild very quickly. That was a very stressful time for money. And it would've been more stressful if we hadn't implemented some systems already to know how to make decisions about money. It doesn't make the decisions easy by any means, but it takes some of the emotional weight off of them.
So what we believe at North Star and what we kind of operate based on at North Star is this idea that money shouldn't be scary. So if you are thinking about money, if you're listening to me talk and your reaction is I don't wanna think about it's too painful. Take a moment, take a beat, take a breath, exhale. It's going to be okay. The longer you put off looking at your expenses, the bigger of a monster those expenses become. And we wanna like de-monsterify all of the expenses that come with running a writing business.
So first thing that we believe is that you need to look at your expenses. You need to have a good sense of what they are and what they will be. So that's looking at what you've spent in the past, what you're spending right now, and what you think you're going to be spending moving forward. You hide from those numbers, those numbers don't go away. So step one is just being willing to look at them. Second thing that we've really found is that having a system for making decisions makes this emotionally fraught idea of dealing with money, much more manageable. If you are someone who maybe wants to hide from your operating expenses, maybe doesn't wanna think about them or maybe tends to make emotions or make decisions based on the emotion that you're feeling around money, having a system in place for making those decisions will help a ton. Because it will take the kind of twisty stomach feeling or on the other hand, the, oh my gosh, I have so much money right now out of the equation so that you can make logical decisions based on the reality in front of you. Because this is kind of a two side thing, right? If money is tight, you're gonna wanna make decisions that like squeeze everything a little tighter. If you're in a period where business is really good, you might find yourself spending money on things that aren't always the best thing to spend money on.
So we wanna make sure that we're sort of using the more, I don't wanna say feast and famine, because of course we wanna get out of a feast and famine. We wanna regulate our revenue across the board so that there is no famine, but in case there is you wanna use those higher revenue periods to help supplement the lower revenue periods or unexpected things that might happen, like, you know, a worldwide pandemic.
So systems will help make that emotionally fraught realm of money, much more manageable. I mentioned logic before. I'm a very logical person. I tend to go towards logic as a way for making decisions. If you do not operate that way, if you tend to operate based on your gut feeling your intuition, things like that, there's nothing wrong with that. However, I would challenge you to integrate this into your gut check so that you have both to play with. Similarly, if you're like me and you're very logical minded, my make sure you check in with your gut too. Don't let either one be the 100% decision maker, but make sure that you have both the numbers and the reality in front of you and your feelings. And you can kinda check in with your feelings and see where they're coming from.
All of that's to say that you need to know what it costs to run your business. It will be different if you're riding solo. If you're building a team, if you're building an agency, if you are building a business that operates primarily virtually, if you are building a business that operates in person, all of this will shift the costs of your business. And at the end of the day, the cost of being a copywriter or content creator is not that different from the cost of being any other type of business owner. You're going to have the same sorts of things to think about. Obviously your own salary, obviously taxes. And then operating expenses, you may have some that are a little unique to you like professional development for your copywriting skills or for content strategy. You may have specific coaches you wanna hire, you may have specific software that helps you do your job better. Maybe you buy a subscription to Grammarly. Maybe you use the paid version of Hemingway. All of these things are expenses to consider that are unique potentially to copywriting on top of just the things that most business owners, at least in the virtual space need like an email platform. Maybe you can use a free version for a while, but at some point it makes sense to do a paid version that has a little bit more flexibility, some more bells and whistles, things like that. So you have to know the base cost for running your business so that you can accurately know how much you need to make, know how much you have to spend, know whether what you're spending it on makes sense, things like that.
So let's talk a little bit about how to do it, and I'm not going to give you the full step by step here's exactly how you do it within your business. Because as I said, every business is different. However, even though every business is different, every business has the same base and the same foundation of expenses. And so the best resource that I can give you is the book Profit First, by Mike Michalowicz. It is the foundation that we used in our business in order to figure out how to make decisions about money. We've mentioned it in past episodes. We'll probably continue mentioning it in future episodes because it has really been a game changer for our business. And the philosophies within Profit First can be applied to just about any business. And the book goes into way more detail than I could go into in a brief episode here. But I wanted to present that as a first option.
And then I wanted to encourage you to spend some time pulling the monster out from under the bed, sit down and document all of your expenses. Every penny you've paid in the last three to six months, and every penny you expect to pay in the upcoming months, take some time to look at that, look at those expenses and figure out which ones are essential, which ones are nice to haves, and which ones might just be a little bit of unnecessary things that you thought might be a good idea at one point, but have decided are not as helpful for your business now.
I kind of relate this to, in my personal life, the add-on of different streaming services, you know, you start out with, oh, I'm gonna get Netflix. And before long you have Netflix and Hulu and Disney+ and Peacock and Stars and HBO. And you're only watching Netflix, but still paying for all of them. And so having to sit down with yourself to see what you are paying, because there may be things you've forgotten, and figure out, okay, is this something I use regularly? Is this something I'm going to use regularly? Why am I using it regularly? Is it actively contributing to the growth of my business, will help you make better decisions around whether it stays or goes or changes its form?
So for example, we had our email service and we were paying a higher amount because of our number of subscribers. But we realized that a lot of those subscribers were actually old email addresses. So we did a period of time where we were trying to reengage them, getting rid of people who were bounces and people who were no longer good fits. We culled the list essentially. And that allowed us to drop down to a lower tier. We've gone up again since then, but now we've gone up with people who we know are good fits for the list. So little things like that can help. You may be paying for more bells and whistles than you need to in some cases, or in other cases, you may need more bells and whistles.
So looking at your expenses and taking a real honest look at why, what you're spending and why you're spending it, set a budget meeting with yourself. If you have an account or a bookkeeper, great loop them in, if not meet with yourself, maybe if you have an accountability buddy, or a business bestie or something like that, you can do this together. But set a budget meeting that goes through this, all of this, your expenses past present future, and then have that meeting regularly on your calendar so that you're not looking at it and then shopping it back under the bed. So that you're looking at it, taking some time to let some more expenses roll in and some more revenue roll in and then sitting down, looking at it again so that you can always be making decisions. Take a look at it before you make a big purchase, too. You're getting ready to buy into a new coaching program. So you're getting ready, ready to buy a new software for the business, something like that. That's a good time to take a look at your budget and just make sure that it fits within it.
And then this one might be a little hard, especially for those of you who may be putting themselves out there monetarily, but at the end of the day, yes, taking risks is a part of business. And sometimes you're going to want to do that. But at the end of the day, most of your money decisions should be based on your money reality, not your money dream. And what I mean by that isn't don't invest, because you should always be investing in yourself in your business in a way that makes sense. But it doesn't mean invest in every opportunity that crosses your path. It means invest strategically invest in a way that makes sense.
Sometimes spending a lot of money on a specific coaching experience or a specific mastermind program, or a specific software may not look feasible according to the budget, but the ROI will actually make it much more effective and lucrative for your business in the long run. I'll use an example from our own business.
Back in 2016, we were looking at our first long term coaching opportunity. We wanted to hire a business coach and the cost of the program. It was a 12 month program was scary. It, especially based off the amount of money that we had made in the business up until then, if we looked at our budget, it didn't quite make sense. Our money reality was saying on the surface might not be the best investment, however, because of the way the program was structured and because of what the program would allow us to do, it made sense as an investment. So I would never go to pass me and advise, you know, get this coaching program and also these four other coaching programs. That would be based off of a money dream. That's a little too detached from reality. So what I wanted to do was kind of do the happy medium of the logic. Plus the gut check, the logic was like, okay, this is gonna be a real stretch, but the gut check said, you know, you need to do this in order to continue to grow your business. And that particular coaching experience has paid off in dividends over the years. I've, Marie and I both have met some of our dearest friends through that, fellow business peers. And there's been a lot of really good stuff that's come out of that. So it's not just about logic. It's also about the intuition piece, but it's also at the end of the day about finding the ven diagram between your money reality and your money dream and making sure that you are not stretching so far outside of your comfort zone and so far outside of that reality that you are digging a deep hole for yourself.
And on the other hand, it's making sure that you're not staying so rigid with your boundaries with your boundaries, I don't wanna say boundaries because boundaries are always a good thing, but so rigid with holding on every penny that you're not ever making those investments in your growth. So it's a balancing act and you're going to find the best place for yourself. And that may not be my place that may not be the best place for another writer, it's a very personal thing.
So that in my I'm going to give you a little homework and this is going to be an ongoing homework assignment based off of what I just went over. I want you to grab a notebook, open a spreadsheet or Google doc somewhere where you can jot down all of the money you've spent so far on operating expenses. You can do it for this year, or if you're listening to this in November or something like that, maybe do it for the last three months. So the last quarter or so. Everything you spend on operating expenses. Then continue the list forward based on what you know is coming up in the next 90 days. And that'll give you a good starting point around your expenses. Now in mind that if adding in your own salary, if you're thinking about ok how much do I want to make and take home myself, this number should, depending on how much money your business is making your salary and your operating expenses should average out to be pretty close to each other. So about 50% of your revenue would be your take home pay, and about 50% of your revenue would be everything else. That's a very loose representation of what's in Profit First, but that's kinda an easy number to go over now. So for your homework, grab a notebook, grab a spreadsheet, something like that list, all of the operating expenses you spent expenses of the last 90 days and of the next 90 days.
Take a look at your revenue. Does it exceed your expenses, especially once you add your salary in, don't forget that part. Does your revenue equal that 50 plus 50% plus 50% or even more, if not, then you need to increase your revenue or decrease your expenses. Start with operating expenses if you have to decrease. Look at that before you look at decreasing what you're taking home for yourself. At the end of the day, your business wants is there to support you.
So think about it that way, and then repeat this exercise either monthly or quarterly. We do it monthly. I advise doing it monthly, but if you are just kind of wrapping your around, looking at your money regularly, maybe do it quarterly at first and work up to monthly.
I also really suggest taking some time to listen to some experts around profit first, around making money decisions, both within the copywriting realm and outside of it. Tara Newman has a wonderful podcast, all about making money decisions in your business, all linked to it below. Of course, I recommend that you grab the profit first book. And if you wanna have conversations with other writers about how they're managing their expenses and the cost of being a writer. I highly recommend joining us in our community group, which will link to in the show notes where we can dive even into this conversation.

Marie:
Thanks for joining us for this episode of the Brand Your Voice Podcast. Make sure to visit our website, northstarmessaging.com, where you can subscribe to the show on iTunes, Spotify, and more.

Jessi:
If you found value in this episode, we'd love for you to leave us a review on iTunes and share it with your friends. Thank you, and happy content creating.