EP #22 | How to Prep Your Business Finances for Ebbs & Flows with Jenny Karlsson
Welcome to the Designers Oasis podcast. I'm your host, Kate Bendewald, interior designer, mama, and CEO of a thriving interior design business, built on authentic word-of-mouth referrals. It wasn't that long ago that I stepped away from my corporate architecture job to build my own dream, one that would allow me more time with the people that I love, the ability to serve my clients at the highest level and to make a great living. It wasn't always easy, and I've made my share of mistakes along the way. Fast forward to today, and I've learned a thing or two. This podcast is for you - the inspired, creative, ambitious, and let's admit it, occasionally overwhelmed interior designer who shares this dream of transforming lives by transforming homes. Join me and my guests each week as we walk through practical ways to build an interior design business you love, and help you transform your client's lives. You can do this.
Kate Bendewald
Today we're meeting with Jenny Karlsson of Financials for Creatives. . Jenny is a certified money coach with a special focus on helping creative entrepreneurs. She's also the creator of the money compass deck, a powerful and practical tool that allows you to connect with the energy of money. Jenny is on a mission to help creative entrepreneurs heal their money blocks and manage money with confidence. Jenny is also the wife and a proud mama to a two year old little boy. Today we're talking about how we can set up our business finances so that the naturally occurring ebbs and flows that happen both internally and externally. Don't shake the foundation of your business. What I love most about Jenny is her compassionate yet no nonsense approach to helping empower women, women, business owners, women entrepreneurs, to take control of their finances. So please welcome my friend, Jenny Karlsson. Hi, Jenny. Welcome.
Jenny Karlsson
Hi, Kate, thank you so much for having me.
Kate Bendewald
Oh, my gosh, it is so delightful to have you. today. My guest is Jenny Karlsson with Financials for creatives. And you have heard me talk about Jenny on this podcast, at least two times that I can recall off the top of my head. I know, I mentioned you and one of my very early episodes that I talked about some of the things I did to sort of shift my business and one of them was to work with you. So you're certified money coach, with a special emphasis on working with a creative entrepreneurs. And I was at this moment, this sort of pivoting moment in my business, and I hired you and it was absolutely life changing. And so today, I would also call you not only a coach and a mentor, but a dear friend. And so I'm so so so, so thrilled to have you today.
Jenny Karlsson
I'm so glad to be here. It's just fun to see how the you have really grown over time since we first got to know each other. And you know, you're creating something beautiful with the signer. So as is one of the first things I asked you back in the day was Who do you want to be your How do you want to role model your relationship with money with your kids? And I feel like you're doing that so beautifully with the change you're making in other designers lives.
Kate Bendewald
Hey, you're not supposed to make me cry right at the top of my show. Okay, sorry. Tara. Thank you, Jenny. Well, I just have to say that designers oasis. I have to say it wouldn't exist if it weren't for you, but it wouldn't exist at the pace in which it has grown and developed because you were really pivotal in helping me sort of figure out the plan for transitioning to this world longside the design business and so I really give you a lot of credit for helping me work through some of those some of those things along with some other, you know, financial things that I wanted to take it through. Also, I know nobody can see us but we're both wearing almost matching for plaid flannel. So I feel like this feeling of hanging out with a friend and better coffee. And so we're gonna talk today and I'm just gonna say I this is this, there's a standing invitation to come join us on this podcast, because there's so much we could talk about money blocks investing, leaving your nine to five, all of that could be conversations. But today, we are specifically here to talk about preparing your business for the ebbs and flows. There's natural ups and downs that happen in business, whether they're internally within your own business, or externally, maybe that's a shifting market, maybe that's the seasonality of the design work that we do. And so I wanted to hear from you how to make your business more stable in the face of these changes. And you were game to talk about this today. So I'm thrilled. But before we get into that, I love a good backstory, and now I know your backstory. But I think it's such a fun and interesting one, I'd love for you to just start by sharing our audience a little bit about your journey and how you became to be a money coach, and specifically how you chose to specifically work with creative entrepreneurs.
Jenny Karlsson
Sure. So I am a Swedish native, and I moved over to the States after college initially was just for kind of a summer project, but I was offered a full time position at the University of Pittsburgh. And it was kind of that opportunity that you can't say no to, because it completely changed my entire life. And I then ended up going to business school on the side with kind of a set trajectory for where it was intended that I would, you know, end up sort of in industry and working with the kind of equipment that I was working with in cell biology. But I fell in love with business. When I went into business school, I didn't actually think I would it was kind of like I was already so crapped on what was going to happen next. And then I realized that, oh, business is all about learning different languages, so that you can look at the world through different lenses. And kind of somewhere mid journey, I started picking up a camera to just, you know, have a creative outlet. And, you know, some sanity I guess, between working full time and studying part time. started photographing and assisting at weddings realize that weddings was not for me, what I was meant to do was photograph the connection between pets and their people. I would much rather document six ginormous dogs and try to get them all in one picture versus standing at the front of a church
Kate Bendewald
maids and wrangling the mother and why.
Jenny Karlsson
There's, there's something for all of us. Yeah. And it's really important to recognize where our strengths are. And I grew up my my family had dairy cows. And so I grew up on a farm and so animals and nature came really natural to me. But I still approached it with a different set of eyes looking at the connection between people and their pets because their family members. But what happened then, as part of doing that was that I recognized that I I was figuring out a plan how to leave my job. And I did so three years into the business. And then other women entrepreneurs in my community started coming and saying, Hey, how did you do that? I mean, I have completed an MBA in finance. And I was in the very research focused jobs of spreadsheets was like my every day. Making sense out of numbers is my language. But so it started just off in meeting my friends at coffee shops and scribbling numbers on pieces of paper and when one of my friends was able to leave her job after or three months after our initial meeting, I was like, hmm, there's something to this because it really lit me up. And when I would say, to talk about numbers in a way that makes you feel that you have more clarity and confidence in making decisions, I was showing up as my full self. When I was showing up as the photographer, I wasn't showing all that analytical, you know, side, that is a big part of me. So I realized that I needed to pivot and focus on helping creatives pivot. More from operating from that internal motivation as an artist, and start thinking more as a CEO, as an a business owner.
Kate Bendewald
I love it. And so this was your way of blending and marrying this creative side of yours, which is really taking these clients and people that you work with, and sort of understanding what their goals are as creative individuals. That also flexing that analytical side, I just, I think the alchemy of those two things is beautiful. And the way that your brain can flex between the creative side and the analytical side is is really, really brilliant. And, and real quickly, in addition to so now you work with creative entrepreneurs doing one on one coaching, related to money, but you also created the money compass deck, do you mind sharing a little bit about the money compass deck,
Jenny Karlsson
I would love to, which I have
Kate Bendewald
here in my office.
Jenny Karlsson
So I recognized in working with creatives, and in our society today, it is so rare that we actually hold the physical money. And it's created this distance to money, we, you know, we swipe a card, or we used to put our fingerprint and a purchase would go through and now we just have to show our face, I mean, and double click and then we'll go through. But the decision, well, I don't know if I should call the decision because it happens so fast that the brain doesn't even have an opportunity to think it through. So a lot of times we make impulse purchases before the brain steps in with the logic and say, Hey, have you looked at your bank account lately? So I wanted to create a tangible tool so that you could record you could connect with the energy of your money. Money in and of itself is neutral energy. But in most of our lives, money feels very emotional. And it's important to recognize that those emotions, that's all us that's from the way we were brought up whether money was something positive or something that brought up a lot of conflict and arguments. And then we go to school, we get our first job, we're in relationships, we start our business, all of this compounds into the relationship we have with them on the asset is today. And my idea of creating the money compass deck is to look at money as a partner, I really believe that money wants to, to help you to be employed for your highest good. And it's no different from any other relationship, whether it's a professional relationship, or a romantic relationship, you need to be able to set the emotions aside and come into this neutral space where you can look at it as like you're on the same team. And if you could ask money, anything, how to strengthen that relationship, then in return, you receive an action for what to do. So every card in the deck is an action and you're then invited to ask a how or what question in order to ask a question that will allow you to move forward. So it's really important when we work on our relationship with money to take it in bite sized steps, and that's really what the deck does.
Kate Bendewald
Like I never stop learning from you, Jenny and what you just said about money you and money are on the same team is just I think, really powerful. Because you're right and I and this is something that I'm constantly having to remind myself that you taught me long ago that money use neutral rating. And in for me, the original reason I came to use I was, I had been, I love, I love the show the Prophet with Marcus Lemonis. on MSNBC, it's like business stories, and it's got a little bit of drama. But one of the things that he does with these these business owners is he sits down and goes through their finances and, and helps them understand where all the money is going. And even though I had, of course, you know, my, my balance sheet and all of that with my business, I didn't struggle to earn money and make money, I didn't have a way to organize it, or how to know where to put it. You know, like, how, how do I organize this. And so that was originally why I reached out and I ended up going so much deeper than that in our journey together. But I remember one of the very early things that you, you know, helped me understand was that money is neutral. And the energy we give it comes from us. And sounds like you've incorporated this into the deck. In I thought it was important. I think it's interesting, too, that you say, when you sort of have this conversation with yourself through the money deck that you ask, what were the two questions, because it's not why
Jenny Karlsson
questions? No, because,
Kate Bendewald
like, wow, always escape my hands money.
Jenny Karlsson
Exactly. Why are you leaving me? You know, why? Why questions require a totally different set of tools. That's where money coaching comes in. Because you have to go a lot deeper to why you're asking those types of questions. The how, or what type questions are much more action oriented. And so it really puts you in the mindset of taking action. And thinking as a business owner,
Kate Bendewald
makes so much sense. I love it. Well, let's get into it. So I want to hear well, let's talk about, we're gonna get into some strategies and a little bit about how we can set our business up to go with the ebbs and flows of, of of business. But I think it's always important to start with asking, why is this important? And it's just kind of a fundamental question. But why do you think it's so important for women, specifically, creative entrepreneurs, specifically, to make this a priority for themselves in their business.
Jenny Karlsson
So I would stand on the fire every day, for women's empowerment around money. I believe that women need to know how to trust themselves with money and make decisions and also to have their own assets. So that you have freedom and flexibility to, you know, never be stuck. You, you want to be able to, you know, not rely on someone else when it comes to, to money. And I know women in particular. I see it a lot in online forums, how women stay stuck, because they don't have their own finances. They're afraid of touching money, talking about money, figuring out how to handle money. And there are a lot of, you know, domestic abuse. And also, you know, not a lot of focus on retirement, a lot of entrepreneurs I see and work with have very minimal retirement savings. And that is a big, big problem. I mean, we're very purpose oriented, but it's also about being able to live the life you want to live. And I feel like the moment you start to trust yourself, you're able to really tap into how money can help you.
Kate Bendewald
Would you say that it's true that when you choose to not take ownership of your money and your earnings for yourself that that's giving away some of your power as a woman?
Jenny Karlsson
Oh, absolutely. And I hear that a lot in the dialogue around money that I've given away too much power around money as a business owner, and now I don't Know how to make sense out of my, my data like looking at the profit and loss statement, not knowing what to do with it, how to ask questions of the bookkeeper or the accountant or, you know, knowing even how profitable your business is all of that, you know, it's time to call power back to you. And really use that as a way to, you know, know how inherently powerful you are.
Kate Bendewald
Oh, my God, some goosies. Jenny, is the alternate, like, the hypnotic voice is like, I'm listening to it. And I'm just like, yes, everything you're saying with this, like hallelujah moment, so. And I think to that, would you agree that for most people, that it's that just like any relationship, this relationship with money continues to need to be nurtured and reviewed. And I guess I know, this is true for myself, like, I'm always finding myself. You know, you taught me about the the money archetypes and the different types, and I will catch myself wanting to spend money on something or not focusing on you know, the organization of money from time to time, and I'll catch myself and be like, whoop, I really need to spend some time and get centered in a way. And it's just like, just like any other relationship, a human connection, human relationship, your relationship with money, needs constant nurturing love and attention. And why do we struggle with that?
Jenny Karlsson
Well, yes, I agree, it is a lifelong journey, because our life changes all the time. And it's important to, you know, the more tapped in you are to money, the more you're able to, to navigate that. So the ebbs and flows can be the seasonality of your business, it can also be navigating transitions, like becoming a mom, or going through a divorce, or figuring out who you are, when your kids are all grown up. And you're trying to figure out, what is my you know, what is my purpose? And what am I going to do now. And so, partly why we struggle with it is because it wasn't necessarily taught in school. That should be a mandatory course, seriously. And it's also very often mixed up with your literal literacy level, in terms of being good at money, and being good, or being good at math, sorry. I hear entrepreneurs say all the time, that I was not good at math in school, I failed math several times. And they internalize that to be that they're, they're not good with money. And that's not true. You, you don't have to be a math expert to be good with money. The that's where structure comes in, and being really focused on what it is you want money to do. So even I, you know, I have memories of when I was in first grade, and I was in a very small school. So we had like, first or third grade was in the same classroom. And one of the boys in third grade saw me when I was counting on my fingers. And I'm still like, to this day, I'll count on my fingers, but then that memory still pops up. And like Oh, so you know, we all have those stories around what it means and it can also, you know, it's also from how our parents interacted with money or even our grandparents there are a lot of transgenerational patterns and behaviors that keeps moving on until you decide to shift it. So it's really a lack of literacy and an opportunity to learn how to speak the language of money.
Kate Bendewald
The time is now to stop reacting to your business and flying by the seat of your pants. You're done. All right, why not design your year? Let's make 2023 your best year yet. If you're ready to gain clarity in your business, get control over your finances and have peace of mind. With laser focus heading into the new year, mark your calendar, on November 10, I'm hosting the annual master planning workshop. And I've got to see with your name on it. In this workshop, I will help you effectively look back at your business and identify what's working and what's not. Plus, will map out your revenue and vacation goals for the next year. I want you to get in the right mindset so you can achieve the results you want in your interior design business. Get ready to design your year with intention, head over to designers oasis.com forward slash plan. As always, the best experience is the live experience. But if you're catching this after the live workshop, for a limited time, we'll offer the replays so you too, can enjoy a year of intention and clarity, all while crushing your goals. Again, that's designers oasis.com forward slash plan. Oh boy, okay, so here we are, we're we're scratching the surface of these strategies that I know you're itching to share. And I'm dying to get into and listen to us. So let's go through some of your strategies on what you would recommend specifically creative entrepreneurs start to do to set them their finances up their business and their personal finances up for kind of those ebbs and flows of, of business.
Jenny Karlsson
So the question that I get all the time is, how can I make more money? And the question should really be how can I keep more money for myself? Because when you're starting out, as we all do this, we all want more money. But it's important to recognize that when you shift to think about your bottom line, instead of the top line revenue, if you're setting your business up to be profitable, and when you know how profitable the business is, it is a lot easier to make decisions, and you avoid burnout. Because if the business is profitable, it means you're getting paid. And that's really, really important. I imagine with the having just come out of the pandemic, that you know, your industry interior design saw a big boom in business because everyone were forced to stay home. And so money went to, you know, update the kitchen, or what have you, the parts in people's homes, they couldn't stand it any longer. That's where money went. And there's a lot of flux influx of money then. But there might also be a fear around unpredictable times ahead that okay, that was kind of an anomaly in how much money was coming into the business. And maybe, you know, this better case, but in terms of how many in your audience, started their business really launched our business during the pandemic, and perhaps they grew so fast, that, you know, they had to expand really quickly add employees, and suddenly, it's like, oh, shit, the this is, you know, things are moving really fast. But as a business owner, I don't know what's happening. So that's kind of where the practical advice comes in to kind of figure out the cash flow piece in terms of looking, zooming out a little bit and creating structure around the cash flow to know where money needs to go, so that you don't get behind on taxes. You get paid all your business expenses get paid. That is, that is the fundamental principle of setting your business up for success. To really think about you first, the making sure But that's not an afterthought where you get to transfer money to your personal life in case there's some money left over. That's how you will lead to burnout. But to actually look at it, okay, how much business is coming in? And how can I divvied up over a certain amount of time to make it more structured. But on the most simple, the simplest fundamental level, is to make sure that the business and personal finances are separated to not commingle money. Anytime you're mixing things up like that. You're creating more work for yourself.
Kate Bendewald
Oh, my God. Yes. Yeah, that's
Jenny Karlsson
the thing. It doesn't matter. We're talking about money, or we're talking about time. It's a management of boundaries. And the more simplification you do, the easier it is to run everything smoothly, and not spend extra time trying to, you know, put out fires and, you know, run your business at the edge of your seat, you know, oh, my
Kate Bendewald
gosh, exactly. We're actually getting ready, in about a month to do the annual master planning workshop that I do every year, and some of this stuff I learned from you. So that is stuff I've learned from Profit First and from time management, but it's exactly what you're talking about. And we the workshop is sitting down and looking at your operating expenses, looking at your revenue goals, and mapping out how you're going to get there, starting from January on Okay, what's your goal? And it's a very, for me, I'm such a visual person, and I think a lot of our audiences, but so the tools that I've created for this workshop are very visual. So it's like, Okay, starting in January, how many? You know, what's our goal for new discovery calls, you know, and how many of those we want to turn into consultations and then into projects. And, of course, signers can customize this for whatever types of services they might provide. But it gives them that foundation and then looking at that alongside their, their operating expenses and their calendar, because what you just said was also how you spend your time. And so we don't start by putting in those financial goals until we first looked at the calendar and said, Okay, how much time do you have to actually work? I know that my breaking point a number of years ago was that I wasn't looking far enough ahead on the calendar to understand that this was about the time my kids were starting to, they were in daycare at the time, they're now in, you know, elementary school, but they just there would be all the school closures and I wasn't prepared for them. And I had client work and it was stressful than it would have to hire a nanny. And that's so yeah, looking ahead. And you know, and I'm using the example me with kids, but even if you don't have kids, you know, looking at holiday time that you want to spend with your loved ones, vacationing, whatever it is, but looking at the calendar first, and blocking off the time that you will not be working, whatever that might be for the entire year. And then how many hours a week do you have to work? Are you 40 hours, 30 hours, what's your average, and then backing in your income into that, versus over 52 weeks. And that time piece is so important, and I and I think that when I finally was able to figure out how to overlay my capacity of working with my financial goals, it was a big aha moment. And in you know, time is money. I mean, it's cliche as it is, it really is. But um,
Jenny Karlsson
and it's and it's all energy, the way that you manage money, it will likely be how you manage time manage other people. Just relationships in general, because it's all energy. So you can always look at one of the areas or if you're working on your money piece, it will likely have ripple effects in how you value time. So I love that you pointed out that Kate? So manage cash flow is like the ultimate practical thing to do. It's but I agree, the more specificity you could add it to better. And in interior design, you also have a very big chunk of cost of goods and inventory. So you want to make sure that not all of your cash flow is locked up in inventory. And to remember that if it's cost of goods, if it's part of a job that you're doing for a client, that's money that doesn't belong to you. So it's easier to open a separate bank account where you put the cost of goods money, as a very physical reminder that this is money that is going out again, and same thing with your taxes, so that you don't end up making decisions with your emotions.
Kate Bendewald
I'm just going to jump in real quick, because that's something that, you know, early on a lot of really young designers or who are just starting out, you know, it's just a it's a big step to even get your own personal or sorry, business checking account. Yes, that alone is kind of a big step. But the really important step, and I mean, that's, that's like day one, doing that, the really important step is to take that even further and have an I loosely practice the profit first model, but at the very least, I say, you know, a business checking account for your operating expenses. And that's where money for services gets deposited, and then a separate checking account for product that your client has paid you for. And that's a cogs, a cogs account, or I call it a trust account. And then the third savings account for four taxes, both sales tax, and actually no, well, you could do that our sales tax actually comes out of our cost of goods account, income tax comes out of that savings account. So those are just at the most simplistic level, the three accounts that I recommend, and then what also makes it really easy to, again, because I'm so visual, they're just like these two different funnels of cash flow, two different credit cards, one credit card is for operating expenses, and it gets paid every month. And one credit card, it's one credit card is for operating expenses. So that's paying for your internet, your software as a service type things, your designers a waste its membership. You see what I did there, investing in your business, whatever that might look like. And then the other credit card is specifically for cost of goods sold. So those are going to your trade accounts and and being handled that way. And they each get paid out of those separate. That's super smart. And then quarterly, looking at your revenue and your profit from your cost of goods sold from your from your product sales, and drawing on that and then deciding, you know, how much of that? Do you want to save? Keep spend invest? Whatever? Yeah. Because yeah, having intermingling your clients money and your business money is it will it will crack you?
Jenny Karlsson
Yes,
Kate Bendewald
yes. Don't do it.
Jenny Karlsson
And I mean, it's a very eye opening exercise in looking at where your pricing is at, and how much, you know, you get to keep for yourself. So that the account I would add is also an owner straw account, so that you can see what kind of a buffer you have to pay yourself. And that way, it's easier to say, Okay, this is how much is in there. This is how much I can pay myself over the next couple of months if I drip it out. I mean, ultimately, go ahead. Yeah, sure. That finish it. Sorry. No, it's just ultimately that's like the big challenge. And a lot of times when we're starting out as business owners, and as creative entrepreneurs, we live with a lot of unpredictability, so it's not, it takes time to get there to see that you can pay yourself the same amount every month. But it's you know, in the beginning, I think everyone's like, okay, there's this amount of money in there. And I need money in my personal finances, I'm going to take it but that can really bite you later on. And so the more you can start to think long term, and tie it with your personal finances to make sure you live within your means. So you're not like if you have a big month you pay yourself a huge salary. And then you have you know, going through the feast and famine cycle, but it it's easy for money to disappear when we have more money. And so you can you can build the muscle to Get through the ebbs and flows, the more you put those boundaries in place of knowing exactly how much you will pay yourself and work yourself up to what you want to pay yourself. So always tying it, you know, that between the personal and the business finances?
Kate Bendewald
I want to ask you a question personally about this? Because I would imagine if I've got this question others do, too. So what I do is I have an auto draft payment that comes from my operating expenses account to our personal checking account. And it's a set amount each month on a regular reoccurring schedule, and then quarterly, any additional income that I may have earned from, say, cost of goods sold or that sort of thing? We look at it that way. But what are you seeing that you would suggest actually having a separate owner's draw account versus where we might put that or is that kind of the same thing of what you're talking about? It's,
Jenny Karlsson
it's kind of the same thing, it sounds to me, like you have really implemented the structure. And you have gotten to a place where you're able to draw the same amount every month. That's the, that's the goal. You, you have done that. So you know, gold star for
Kate Bendewald
wasn't it I wasn't, I wasn't scratching for that I just was
Jenny Karlsson
doing it just wants to do I just wanted to paint that picture. That's what we all want, we want consistency. Because with consistency comes the feeling of safety and security, that things will remain stable. Even if you know the economy flips upside down. When when you have built a strong foundation, it's a lot easier to stay calm, stay focused on the things that you do really, really well. And know where your revenue comes from.
Kate Bendewald
I want to get to this next idea that you have because I think you're onto something but sounds like you would promote even if even if it's just $500 a month, like if that's all you can pay yourself to start, put it on autopilot, know that it's an it's an expense coming out of your business each and every month. Because that's gonna get you into the habit of, of knowing that that's money that you have to pay yourself and then gradually increasing it over time as you grow. Is that what you would suggest people do?
Jenny Karlsson
Yes, there's a yes. And yes, yeah. So that's a really important muscle to build, to make sure that you actually do get paid as a business owner. Especially being a creative entrepreneur and an interior designer, I imagine. Just like me, it started as a creative outlet. And, you know, the internal motivation to build a business around to create is great. But you have to put the business hat on, so that you see money come into your life and you feel compensated for all the work you do otherwise, it will start to be this internal monologue of like, I work so hard, but I have nothing to show for it. So yes, start small and then grow from there. It's the same thing if you're trying to build savings, but you've never had savings before. It can feel really dangerous to the nervous system, and they will try to make it go away. So use you start incrementally, or like start small and go incrementally, incrementally. And then. But the first step is to understand your numbers, understand your profitability, know that there is money to transfer to your personal finances, because if you transfer it, but they're the money isn't there, it likely means that you're taking money from the tax account. And then you might end up getting behind on taxes. So that's kind of a slippery slope too. But make paying yourself be a priority. Because in general, I believe I mean women are the main decision makers and Uh, in our households, and probably with a lot of your audience, and, for me, it's really important to be able to contribute financially, we, as women, we can contribute in a lot of ways. If we have kids and, you know, in our family, but there's something so rewarding, with being able to pay for the things we want, and there's an incredible power boost in doing that. And when you prioritize it, it's kind of like, you put on the oxygen mask and everything else will fall into place. Mm hmm.
Kate Bendewald
Oh, yeah. And a and I, what I'm hearing, too, is, is this reminder that, you know, the importance of sitting down, you know, there's going to be some things you're gonna want to do daily, weekly, monthly, quarterly and annually, right. It's not like we have to be absolutely focused on this 24 hours a day. But there is sort of a financial rhythm that I think it's important to get into.
Kate Bendewald
An Okay, I'm gonna, I'm going to make fun of myself a little bit here, whenever I have to sit down because I have these money, dates, and they're generally a couple of things each week and a couple of things each month, you know, quarterly, but I have to sit down and kind of psych myself out, like, I treat myself to a Starbucks, which is kind of hilarious. I pull up the money compass deck, I have a minute, I get into some good vibes. It's the absolute first thing that I always do. It's where they say eat the frog, right? Because I don't just think a lot of us were creative entrepreneurs, this is not the thing that comes the most naturally to us. It's the most fun. But the minute I get into it, it's like, okay, I'm on a roll this, that we're doing this, we're doing this, blah, blah, blah, go through my things. And there's something about getting into that mindset that just when I'm done, I'm like, hell yeah, I deserve that Starbucks, even if I go before. And it just feels really empowering. And then it's done. And then I just feel so much more clear. And, and an understanding, you know, what's next, right? And so, in the alternative of not doing this is you find yourself scrambling, you find yourself saying yes to clients that aren't a good fit. You find yourself taking on projects that don't light you up, you find yourself taking on too many projects, because you How do I know this personal experience? You find yourself? You know, saying yes to everything, and then all of a sudden, you're like, holy shit, how am I going to serve all of these people at the highest level possible and give them a great experience. And then all of a sudden, you're overworked, you're overwhelmed, you don't know what to prioritize you sure as hell don't have time to sit down and focus on your finances. And so just spending a little bit of time in the in this rhythm, and then these dedicated times just sit down focus, get it done, get organized, will give you so much more clarity so that you have more time to be creative, to nurture your clients to really think about where do I want my next project to come from? And what do I want that person to look like to be like? And how do I you know, what kind of projects are going to light me up and feel confident enough that I can say no to the ones that are not a right fit, and leave that door open for the ones that aren't going to be the right fit. And then you start to feel like everything just starts to hum instead of us constantly feeling this nagging, like pit in your stomach of like, Oh, God, I haven't looked at my checking account and two minds. And so I just I want to promote this idea of just getting into a rhythm and putting that time in as an investment in your own well being your own creativity. And your just general feeling of being okay.
Jenny Karlsson
Amen. It really allows you to stay focused on the areas in your business that brings in the most amount of revenue for the least amount of effort. Otherwise you you might be hustling and doing all these different things because you don't know where you stand. And it's really easy then to you know, enter into a fight flight mode and you start to get distracted and they're all the shiny objects on the sides and oh, maybe I should Add the service or start doing this thing. But the problem is, if you haven't done the money piece first, those same issues, they don't just go away, they will still be a management issue. So as you're saying, the more crystal clear you are, the easier it is to, to operate up to your at your best.
Kate Bendewald
I want to I want to ask you about this because I believe wholeheartedly that designers to an extent, should diversify their income. And I want you I want to know if you can paint the picture of how to strike a balance between diversifying your income and hustling and trying to do everything for everyone so that it leads to burnout. Because when I say when I say diversify your income, I'm talking about having a ladder of services that are complementary to one another, that in no more than three, like, one, two, maybe three service offerings, and that would include a consultation would be a service conference. But also, you know, selling product, you know, and there's a number of ways that you could diversify your income. But, you know, the product sales to your clients is another way that I would consider being diversification. So how can you paint the picture of the difference between diversifying your income versus hustling and trying to do it all.
Jenny Karlsson
So I think it's really smart, the advice you're giving, and to have different services, the thing to keep in mind, if you are selling products, or you want to open a retail space, or something like that, in challenging times, I would, I would recommend going more and focus on the service based income, because with the product based, you'll have more money tied up in inventory, and, you know, paying for lease and those sorts of things. And then you if it's not a necessity, let's say, we go into a recession, interior design is not treated the same as it is with going to the grocery store. But it's also, you know, I was just doing a lot of home improvements over the summer. And the, the business that we hired, they focused a lot on the exterior of the home and homes in general. But they also do flooring and kitchens. But when I talked to the business owner, when we were wrapping up the project, and I was starting to think about the interior projects that I want to do down the line, he's like, Yeah, flooring. That's, that's kind of an easy thing. But he was steering away from kitchens, because he said, with the supply chain issues right now, it can take six months to get a kitchen. And I don't want my client to have a gutted kitchen for that long, because then that could reflect poorly on them as a business. So those are the sort of things that you have to keep in mind that there are economic factors and supply chain factors when you're targeting product, but when you're talking about service based revenue, that's your time. That's from your expertise. There's no additional expenses involved. So if you can be really good with your time boundaries, and how you price those services. That's how you can really increase the profit margin and in effect, how much you get to keep for yourself. Yeah,
Kate Bendewald
yeah, no, I hear what you're saying. And in the case of the guy who was working for you, it sounds like he was being smart in the sense that he knew that doing kitchens and phasing that in was not his wheelhouse. Whereas somebody who is an expert in kitchen design, they're going to know how to sequence that project so that a client isn't without a kitchen for six months. Exactly. Meaning they're going to stage it get the cabinetry there before any demo starts. But he knew he knew to see us on his area of expertise, which is what we're talking about here. And I would say you know, one distinction about inventory and cost of goods for interior designers. In the traditional interior designers who are buying for an individual client, and they're going, let's say to a warehouse, that sort of thing, versus a brick and mortar retail store, I agree with you wholeheartedly that the brick and mortar retail store and inventory is something that has to have a, you have to have a very strong handle on your, your numbers and your cash flow. With traditional interior design, generally, this is what I promote. You're getting products approved by the client and the client is paying for them upfront in advance, and then you're, you're simply ordering on behalf of them. And so the cost of goods sold should be relative to your income. So
Jenny Karlsson
I think that's a much better model.
Kate Bendewald
Yeah, there's there's and I promote also getting paid for your time to procure an order and do that. So that is a service offer. And so in that case, you you have the potential to be incredibly profitable, by selling furniture, to your clients, who have already paid for it. And yeah, make and you're making a margin, ideally, a healthy margin on that.
Jenny Karlsson
And you're staying, you know, you're staying focused on your zone of genius, you know, how to negotiate those wholesale accounts and things like that, and where to source things from an, you know. It probably is, like, a dance for you. Like, there is a structure but also flow because you're you're in the zone, you know how to do it. And that's really important.
Kate Bendewald
That is true. And and that is a distinction, I would say for designers that to in order to make that business model work. If you're talking about diversifying your income, it is important that you are working with wholesale on to the trade account so that you're you're maximizing your profits, and this is not at a higher expense for your clients, it's the same price that they would be able to go by it themselves. They're just getting that turnkey full service experience when you when you do it for them. And that's and that's part of the services that are offered with full service design. Um, you touched on something a minute ago about just staying in your wheelhouse. Did you want to add anything to that? Because I I want to know if you know, do you have? I am kind of laughing inside because what am I like dreams is like, one of these days, I'm just going to open an interior design shop with all the cute things that I love, and I romanticize this idea. And I think to myself, but really do you want to be working holidays and do holiday order buying in July? And yeah, what like I romanticize it, but then there are days where I I know better? What would you say to me the next that while?
Jenny Karlsson
I? Well, I would say if you really know your, your numbers where you're at, I mean, you've worked on your relationship with money for a long time now. And it's paying off you are you have a financial foundation, and you keep improving it, you are tapped into that. So that allows you to make much smarter decisions whether to you know, scratch that itch and and go for it. You have to have done a lot of personal work and a lot of professional work around your your boundaries to to move into that space, because you're I mean, you're putting everything to the test. And suddenly you have employees. I mean, you may have contractors or employees in your interior design business too. But like it takes it to another level. And it it's like is it something that is a fun to have? Or is it a natural extension of the foundation that you've already created?
Kate Bendewald
I love that. I think that's a perfect filter to think about if anybody who's thinking about you know, adding services or diversifying that you love knowing your cash flow, knowing if it's a natural extension of what you're you're already doing. Makes a lot of sense. Okay, so we talked about cash flow and knowing your numbers and instead of asking how can I make more how, ask yourself, How can I keep more of what I have? Looking at that bottom line of profitability. We talked about paying yourself consistently and keeping your money organized. So your business money separate from your personal funding The answers and keeping your business finances category organized. And sticking to your wheelhouse, but you know, diversifying to an extent. But with the strong, you know, foundation of everything else we talked about? Do you have any other strategies that you'd like to share for maintaining balance when times are changing? Um, you just mentioned employees and contractors. And I think one thing that comes to mind for me is, I think there's a lot of fear for designers, either who are wanting to hire make their first hire, or they're feel the pinch, like they really need to hire more help. Yeah. And I think that that can be hard to because you're like, Okay, I want I need help today. Yeah, things feel like they're, I need help today to get through these projects, few things feel like they might be shifting a little bit, I don't want to have to hire somebody, then let them go in six months. So how do we balance these decisions? In terms of hiring, and also managing cash flow? And I mean, I've personally felt very responsible to my employees that I've had, and I don't take hiring lightly. So how would you speak to
Jenny Karlsson
that, it's important to remember that there are two things that come to mind. If you're making decisions from an emotional space, when things really ramp up, then you can suddenly see yourself have more employees than you can actually pay for, and then you end up not getting paid. And there are growth pains with adding employees to. So it's important to kind of figure out how, how fast you're able to sustain growth, to not add too many people all at once. So that suddenly you have a a beast, that you're trying to tame in how much it costs to run the business. So baby steps is probably what I would recommend there. And it will be essential to be tapped into what your numbers are, how your numbers look like, and to recognize that, you know, adding employees come with unforeseen expenses to that you might you end up paying payroll taxes and things like that I'm not licensed to give tax advice. So this is just from the conversations, I hear from working with entrepreneurs, that who who grow and suddenly they hire employees, instead of having them as contractors, and then they say, Oh, now No one warned me for, you know, the additional taxes, that I now have to pay to have employees, but I need employees in order to expand. So it still comes back to really be tapped into what your numbers look like, so that you can make the right decisions at the right time, and not get pulled into scarcity mentality, that, Oh, if I say no to this project, then I'll never get another project. The, you know, trust, trust that what you're doing will continue to expand, be strategic about it, but operate from as much as possible from an abundance mindset versus a scarcity mindset.
Kate Bendewald
I agree with that. And I guess the way I've kind of thought about it in the past, and yes, you're right. I have learned that from the hard way, the difference of employees and contractors. And it wasn't that it wasn't worth it to have the employee versus the contractor. And because there are benefits to having an employee versus contractor. And it's something that I think you just need to educate yourself on before hiring. And that yes, you know, I think is a good place to start is to talk with your bookkeeper and CPA so that you understand what those additional expenses are. I mean, just for me alone, like with QuickBooks, we had to upgrade to QuickBooks payroll. And then when I moved away from employees back to contractors, I was I still had to pay the extra like $25 a month for QuickBooks payroll because they were on payroll for one month in January. It was like a little things like that. So, it's just important to do do your research. But, you know, I think when you talk about baby steps that that really was a lightbulb for me. And a couple of ways I know I've done that is either starting with a part time contractor, and what would I, for those listening, I know, you know, it's been a contracted person is somebody who's paid hourly for the work that they do, they get to set their own schedule, you guys can agree on that. And they're required to provide their own equipment, usually, that's a laptop. And the goal there is you tell them what the end result needs to look like, but not maybe necessarily exactly, specify how they get there. It's nuanced. We're not going to get into that right now. But versus an employee where you have more control over when they work, how they work. And you're expected to provide the equipment for them. And so there's some pros and cons to both, but the baby steps could look like hiring a contracted person part time hiring a virtual assistant, which we've talked about here. But also, for me, one of the things that I that it's helped me with employees is, this person can not only help us get out of this hole of work that we have to just feels like a mountain of work that we need help getting through, this person can not only help us get through this faster. On the other side of that, it opens up our capacity to take on more projects and work through them more efficiently and quicker, which ultimately, is more profitable. And also that, you know, typically you're marking up your employees, to percentage so that you're you're able to earn some income on what they work, while paying them well. And it also gives you a buffer so that not all of their hours are going to be billable to the client, right. Or you may go over on hours if you're on a flat fee project. But having that built in buffer gives you that freedom to go over a little bit on hours, if it comes to that, without finding yourself in a financial hole. Or, you know, allowing your, it gives you also the ability to let's say, take one of your your contracted employees to high point with you so that they can see product because you've been able to earn money on top of their work, or let them take a course you know, if they need to build their skills in a certain area. So, you know, earning income on top of your employees hourly work is is I get I hear a lot of fear around that or like is that ethical, and I'm like that's business. That's what,
Jenny Karlsson
that's what you have to do.
Kate Bendewald
It's a common business practice. And it's the only way that you're going to be profitable, if you are just if you're paying them dollar for dollar, God forbid, they have to do something that isn't billable. And that money is going directly out of your operating expenses. Versus
Jenny Karlsson
Yeah, because time is only one factor of it. And you have to set aside for taxes and operating expenses. And to have some savings. I mean, you're describing beautifully. The importance and the beauty of having cash reserves built up and the more of a cash reserve, you're able to have with the intention to have contractors or employees that allows you to see when you can bring someone on. But also, you know, part of it is also trusting that more money is always flowing to you. And you know that with the right people, you're able to expand like, sometimes when we contract we get super focused on okay, I need to cancel this, this, this and this, but then the other side of the coin is okay, how how do I make more money now that I've created a good financial foundation?
Kate Bendewald
Yeah, absolutely. I think I think this is where those money arc types come in. And we'll save that for another another discussion? Because yes, I do. I do feel like, you know, those moments when I'm operating from a place of abundance and trust in the world and trust in my abilities, that even if I can't see exactly where this is going to come from, I know that it is flowing my way. And it always shows up it does every single time. And sometimes it's because it just lights a little fire and all of a sudden I am hustling a little bit to follow up with that person or follow up with that person. And all of a sudden I'm like, Oh, we got two full service jobs here. Let's do it, you know, and then there are those times where I'm like maybe operating from a place of scarcity. And it just you can feel that energy too. So yes, yes, really important distinction. Oh my gosh, Jenny, this has been so much fun. I could just sit here
Jenny Karlsson
The refill of coffee going
Kate Bendewald
on a break. Oh my gosh. Okay, Jenny, can I ask you, before we wrap up, I'm gonna ask you a couple of things. I want you to paint the picture for our audience, if they were to do start to like really dig their heels in and take this seriously and start to do the strategies that you talked about today, really getting serious about looking at your cash flow ins and outs. Consistently paying yourself staying in your wheelhouse, even if you're diversifying, hiring with intention, operating from a place of abundance. What do you think business life is like on the other side of, of these practices.
Jenny Karlsson
Calm is the word that comes to mind, there's a calm in knowing being so tapped into your relationship with money, that it becomes a tool. And that is not driven by emotion. So you're suddenly able to keep more of the money you make, you are a lot more clear on what is a good business decision, you're able to contribute to your family finances. And I know for myself, that's a really big one. You also start to tap into what knowing what enough is instead of chasing money, you know, when you have it, you know, when you have what, what, what you need, so that you can get into that healthy detached space of trust and believe that more will flow to you. But you're not running after every dollar and cent because then money is running away from you. So it becomes less emotional years, suddenly, looking at your bank account. And it has cash reserves that you can use to to grow the business the way you want it to be and surround yourself with support. So that you're not working so hard and not seeing anything in return for it. So you actually, you're compensated for all that expertise and time that you put in, and you get paid consistently, you're able to make better decisions. And at the end of the day, you have stronger boundaries, to craft the life in a business that you love. I used to think that money equaled freedom. And after I became a mom, I realized that money is flexibility. I think as women business owners, and especially when we enter into motherhood, we are constantly asked to be you know, to flow. You know, we're headed into season, colds and things like that. And so you're constantly asked to surrender and to, but to show up for it. But money gives you flexibility, whether that's in having people on your team that then can step in and keep things running. But flexibility is where it's at.
Kate Bendewald
Yeah, oh my gosh. And I'm sure that makes sense for so many people, whether they're parents or not, you know, I, my, my mom is no spring chicken anymore. And I can see the need, you know, at some point where I'm going to need to be flying to visit and help take care of help my brother take care of her. And I've already had to do that. And it is nice knowing that I have that flexibility to take some time off to help her as well. And, you know, if I've got a friend that needs a ride to a doctor's appointment, or whatever the case may be that yeah, I feel like I have the space to do that. And so I think that resonates for a lot of people. Okay, this has been so good. Do you have time for three rapid fire questions? I do. Yeah. All right. In one word, good. Design is
Jenny Karlsson
timeless.
Kate Bendewald
Yes. Love that. The one book that has changed your life and I think I might know the answer, but I know there's a lot of books out there. So go
Jenny Karlsson
ahead. Yes. Profits first.
Kate Bendewald
Oh, that's not surprising. Yes, that has been a game changer for me as well.
Jenny Karlsson
Which one will you go? Which one were you thinking?
Kate Bendewald
Oh, the money archetype but the
Jenny Karlsson
yes money magic. But yes, it has been fundamental in In approaching finance from a behavioral perspective, coming from a science background, I used to jump straight into the, you know, the nitty gritty of practical. But in working with creatives, I recognized very quickly that all the resistance around money came up. And you have to look at what's in that black box. First of all, why? What are the limiting beliefs and sabotage patterns that are preventing these practical systems from coming in to form? So? Yes, money magic is an equal. Partner, you said one, and Profit First was the first one, I first implemented it in my photography business. And then when I switched, to really prioritize coaching, I did Profit First from the get go. And that, you know, the sooner you can implement that kind of structure, the better you set your business up for success.
Kate Bendewald
I love that. And I'll be sure to link to both books, because they're both definitely game changers. And I will just say, if any of you listening, choose to work with Jenny, just be warned she will break you down, she will crack you into in the best way possible. Start from the bottom and work your way back up and go through that money story. And it was the hardest, best thing I've ever done for myself. So I just want to shout out for you there. And we have one last question. The thing that you were looking for the thing you're most looking forward to right now is
Jenny Karlsson
the holidays. Yeah. I love the synchronicity of both of us wearing flannel, totally unprepared. You know, it's, I love fall. I love the colors, but especially I love layering. And I think candles and drinking a cup of chai I mean, in your house, I'm sure. Yes. And you know, growing up in Sweden, where it's super dark, around the holidays, light is really important. So that's an important part here too. So I love this time of year when we start to make a cosi and spend more time at home.
Kate Bendewald
I am I could not be more with you on that. All the candles, all the little flickering lights, all the things Yeah, I did not plan this. But it is a good segue just to remind our listeners that the annual master planning workshop for interior designers is coming up. It's on November 10. You can go to our website, it's designers oasis.com forward slash plan. And in this workshop, we do what I talked about a little bit earlier where we look at the year ahead, map out how much time weeks days you have to work building some flexibility there of course, and then working backwards and setting your your revenue goals and also taking a look at your your operating expenses and giving you some tools to work on that. And then also your clients and what's been working this year, what hasn't worked, what do you need to change, and then your marketing goals for the next year. So it's a lot of fun. This will be our third year to do it. Again, designers oasis.com forward slash plan cannot wait to see you guys there. Okay, Jenny, where can these beautiful folks find you?
Jenny Karlsson
So you can go to Financials for creative stock calm to take the money type quiz, we've kind of alluded to it a little bit but that's kind of the first step if you want to understand more of where you are in your relationship with money and look at any sabotaging behaviors that might be coming up or if you're really tapped into the practical and you know trusting side with money. So it's a beautiful lens to look at that. If you also want to find out more about the money compass deck, you can go to money compass deck.com and I'm super excited. I just got my second print run in like two months ago, and that's really fun.
Kate Bendewald
I'm just gonna plug these two because when the money type quiz, first of all who doesn't want a quiz, but this one is super eye opening go take her quiz, but also the money Congress duck it just it feels good. You put so much thought and creativity and I knew you were with a graphic designer I think they're just beautiful cards to to work with. If and I've loved having them in my business and my personal life. So I really hope that people will go check that out as well. Jenny, thank you so much. This is not the last time we're gonna have you here on the podcast. Go enjoy your cozy coffee or cocoa and snuggle up. Yeah, baby
Jenny Karlsson
Kate, for having me.
Kate Bendewald
Always a pleasure, Jenny. Thank you so much for letting me spend part of this day with you. If you're loving this podcast, please share it with a friend who you think might also love it. Or perhaps you can take just 30 seconds to open your podcast app and leave us a five star rating. And if you have just an extra minute, go ahead and leave a review. This helps me so much and it helps other designers like you to find the podcast. It also adds fuel to my motivation to keep making great episodes just for you. However you choose to help. Please know I appreciate you so very much. Thank you, my friend. Have a wonderful rest of your day and I'll see you next time.
