Building the financial foundations of a small business: An interior designer shares her journey and learnings

The economic roller-coaster of recent times has undoubtedly been challenging, particularly for Australia’s self-employed. However, while some have had no choice but to hibernate or halt business plans, others like Charlotte Weatherley of Studio Amble have taken an entrepreneurial leap of faith.

Studio Amble is an interior-design business started by Charlotte Weatherley.Credit: Lillie Thompson

Weatherley started her interior-design business during one of Melbourne’s early lockdowns in 2020. “I was freelancing for a few years, and then I had my son and COVID happened. The best way I could fit all these parameters into my life was to work for myself. It’s been a wonderful creative partnership while I raise my [now two] young kids,” she says.

Born during a period of heightened economic turbulence, uncertainty has been a constant for businesses like Studio Amble. But, as Weatherley indicates, it’s also influenced the strong financial foundations on which her studio operates today.

Knowing the numbers

Amid rising inflation and costs of living, a new survey shows that small-business owners are facing mounting financial pressures. According to Xero’s Money Matters report, 60 per cent report having cash-flow issues within the past year, while almost half (48 per cent) are concerned about the financial future of their business.

Weatherley emphasises the importance of cash-flow forecasting in successfully managing a small business.Credit: Lauren Bertiacchini Photo

In an unpredictable environment, taking control of your cash flow begins with understanding your financial position.

“I think that when economic turbulence happens, the consistency of work and the adjustment to your turnover can be substantial,” Weatherley says. “It’s important to know what your numbers mean and what needs to happen to the everyday running of your business when they drop.”

She’s talking about cash-flow forecasting. Based on an initial statement to determine the current health of a business, a forecast allows for planning (and flexibility) around future financial peaks and troughs.

“External factors aside, it’s important to have this kind of overview at all times — to always be on top of the numbers,” Weatherley adds.

Leaning on the experts

When managing cash flow, knowledge is power. But understanding how to act on your numbers and make informed decisions is equally important. Weatherley says getting professional advice is invaluable. On working with her accountant Braden Johnston, a partner at Fusion Financial & Accounting Services, she says: “He’s been golden to someone like myself, who’s largely accounting illiterate.”

And she’s not alone in this sentiment. Xero’s research shows that speaking to an accountant or bookkeeper is one of the proactive steps small businesses are taking (24 per cent and 18 per cent, respectively) to improve their financial position and manage cash flow.

Johnston, for example, set Studio Amble up on Xero and the pair share access. “We both input data and it populates through,” Weatherley explains.

“As a result, we can do our different roles without a direct handover of information. On top of him managing the Xero account and guiding me through how to use it, [Johnston has] always been a presence behind the numbers.”

With Johnston as the steer, Weatherley also adopted some of the financial principles of Scott Pape (a.k.a. the Barefoot Investor). “[Pape] talks about separating your money into buckets that are allocated to different elements, like bills, tax and super, overheads and take-home wages. This is how I started the initial financial framework for my business — by distributing gross turnover into categories,” she says.

Ultimately, this allows for deeper investment in the business. For Weatherley, though, money isn’t the only metric for growth. “I never wanted Studio Amble to be all-consuming,” she explains. “It’s a platform for considered work and, hopefully, great relationships. At the moment, my goal is to diversify the briefs I take on and take a forward step in networking to make this happen.”

With a new financial year on the horizon, like Weatherley, now is the time for small-business owners to think about their direction for FY24. No matter what your ambitions are tied to, creating structure around your numbers with the help of an advisor is a firm basis from which to grow — financially or otherwise.

Use Xero to get EOFY sorted. Get 50% off for six months to help you conquer tax time.

Head to xero.com today to learn more.