Ep 6 - Bootstrapping a Business
You're a freelancer with too much work, so you start hiring contractors. Suddenly, you have a business! You've got to start thinking about money differently. This week, Shannon gets very real about how much money she was making as a new business owner (umm, not very much) and how she got the guidance she needed to be able to bootstrap her branding and naming agency, House of Who.
Special shoutout to CFO, Robin Puro & Puro Kinstsugi.
Kerri: Hi, It’s Kerri. Welcome back to ArtistCEO. In our last regular episode, Shannon had started building what would become House of Who by contracting out work while she pursued her acting career. Hiring other people to do work for you is the first step in running a company and not just being a freelancer. The second step...is making a budget.
Shannon: A friend of mine, Robin, who I met at a writing workshop happened to have a background in finance. So we sit down to look at the books and she says you really need to budget differently if you’re going to be able to scale. That really for me was the moment that Who got started. I made the decision to take a lower salary, portion out specific amounts to overhead and subcontracting services and create a shoe-string budget to start working House of Who as a company and not just a sole proprietorship.
Kerri: As Shannon changed her mindset from freelancer to incorporated, House of Who landed bigger projects that allowed them to hire more people. A project manager. A designer. Another designer. An executive assistant. A content manager and strategist. A naming and brand strategist. Robin is the handling the books as director of finance and eventually steps up to be CFO.
But working with a team of contractors didn’t mean that Shannon was raking in the big bucks either. She sent me this audio diary she recorded while taking one of her regular reflective walks.
Shannon: I think my team thinks I make more money than I do…Especially when I was starting out I think I made like $1000 a month more than the contractor who was putting in the most hours. And her hours compared to mine were like a fourth. If you put it out hourly I was probably making minimum wage. Anyone who thinks they’re going to go into business and make a bajillion dollars right away...it might happen! But just be prepared for, not that.
You may go into business for yourself and whether that’s small business or you’re reaching to be the next Twitter - you may just make it. And was we all know, it only takes a unicorn or two to take your average 22 year old into a millionaire. But if you are going into business for that and expecting that to happen, may I just say to you, you better prepare to be disappointed.
Kerri: CB Insights crunched the numbers. Only about a little over 1% of companies become unicorns. And even if you aren’t a startup looking for that, 50% of small businesses fail in the first five years.
Shannon: You may find that you could make more working at Peet’s Coffee than you can starting your own business. Just saying!
Kerri: Robin, the woman who sparked this change in financial management, isn’t just about the numbers, she’s also a kintsugi artist. Kintsugi is the Japanese art of repairing broken pottery with a gold lacquer. In Robin’s pottery you can see where the cracks were and how she put the pieces back together to make something whole and beautiful. So in honor of Robin - the gold in her art and the gold that she manages in business, we’re going to be talking about money. You think it’s hard to make enough money as an artist? Try bootstrapping your own business.
Shannon: I just gave myself a raise. And it felt pretty awesome to be able to do that. It definitely made me feel more insecure about interacting with my contractors and feeling like I had chosen my personal income over either reinvesting in the business with those dollars or spreading the wealth - which I feel like I’ve been trying to do as I go along - at least what feels like its sustainable with this little nascent business. And I was feeling so flush, like “Oh my god i’m going to be existing on more than $30,000 a year!” And then I had taxes taken out (laughter). It’s like oh right, when you give yourself a raise and go into a higher tax bracket, you get more taken out. And the fact that I’m having all the taxes taken out for all of the profits for the company out of my salary and distribution because it’s an S-Corp, so it’s a passthrough. Little note to you, if you’re incorporating, look into the difference between a Sole Prop, an LLC, an S-Corp and a C-Corp because they have very big implications on your tax structure and how you go about handling all that kind of stuff.
Kerri: You hear that, folks? If you are trying to grow your business, find someone who knows how to structure it.
Shannon: I actually think I’m pretty good at money. I think I’m pretty well versed and well educated in good money sense. I grew up with parents, both of them, who liked to talk about mortgage rates and refinancing and 401ks and CDs around the dinner table. So I grew up thinking that money and finance and economics were really interesting - and I still do. I like money and I like making money - a lot.
But I also know that when it comes to your own business and taking a really hard look at what you’re dealing with - just like art or doing your own branding, it always helps to have an external eye, ear and brain because you just can’t - well maybe you can, I can’t - be fully objective when it comes to money in the face of rapid growth and when working with a lot of different factors. Including how many hours are you working, your personal lifestyle, working with various personalities, there’s so much that factors into the decisions that I make about money from the business point of view that having someone who is even more savvy and also really neutral really helps. My director of finance is both savvy and neutral and incredibly grounded to boot, so she often anchors this business when I supply the fire and she supplies the earth.
Kerri: Funny astrological note. Shannon is Aries, which is a fire sign, Robin is Taurus, which is an Earth sign. Scarily accurate. And if anyone’s wondering - I’m a Gemini, an air sign.
Shannon: I wish someone would have laid out a checklist for me like, “Here are all the things you’re going to have to think about, start making decisions now!” Check check check! But the truth of the matter is, I don’t think it happens like that. You can get an MBA and you can even go to an incubator - I’m sure they’re amazing. I guess that’s not the path I’m on. As usual, as I’ve done with my creative life, my artistic life and now my business life I’m sort of finding my own way by carving my own path. It doesn’t mean you have to reinvent the wheel, but if something doesn’t feel authentic I don’t do it. And if a certain path doesn’t feel genuine to my soul, I don’t walk it and I find another way of doing it. You work your way through it and on a case by case situation run it past both your mind and your heart and hope that you can please both of them. And you can’t always, but you try.
Kerri: Next time on ArtistCEO, Shannon learns a lesson about doing one thing at a time when her 2nd business, running artist studios, fails. Yes, during all of this, Shannon had a second business. You’ll hear about what went wrong, where she’s headed next and a crazy story about the time she had to gas up a generator just to to take client calls. You don't want to miss it.
But first, you’ll hear an inbetweenisode, this is part one of Shannon’s interview with Amanda Peterson, her professional fairy godmother that got Shannon back into branding after Vietnam. But it’s not like Disney - she’s actually funny.
This podcast is brought to you by Arthouse of Who, a division of House of Who, Inc. Music by cf watkins and www.cfwatkins.com. My name is Kerri Lowe, you’re listening to the story of Shannon DeJong. Signing off.