The Biggest Financial Mistakes a Voice Over Professional Can Make
You spend hours behind the mic day in and day out, but somehow you are not getting ahead financially.
Does this sound like you?
The reality is, in a lifetime of a voice over career, 40% would lose money, 30% would just breakeven, and only 30% would make marginal profits.
One reason is that some voice over professionals manage their careers as a freelancer rather than a business owner. The lack of financial understanding can lead to mistakes, and possibly turning your back on your dream career.
Know the biggest financial mistake you can make and immediately put some steps to address them.
Financial Mistake #1 – Not Charging Enough
It is not wise to charge too much as you may not win the projects you are hoping to get, neither would it be wise to charge too little. And a lot of voice over talents have this dilemma, especially when starting up their business, and they eventually end up undercharging so that they can just get their shoe in. But by doing so you are already setting yourself up for failure. Not getting enough profit in would mean not having the monies to sustain voice over business.
You should try to strike a balance. There are three aspects to consider when setting up your fees:
- Knowing what you are worth (considering all your experience, training, credentials, etc.)
- Knowing the current industry rates
- Knowing the actual costs to run your business, and still make a marginal profit
Financial Mistake #2 – Not Knowing Your Breakeven
It costs you a certain amount of money to run your business each and every day. Operating expense is your day to day expense doing your normal course of business. This includes the use of your studio and equipment, the costs of providing the service, in this case, including your salary, and any expenses associated with doing your job (rent, utilities, insurance etc.). Breakeven is the base amount you have to earn in order to keep your business running. Not laying out your operating expenses and overheads would make it difficult for you to put value in your services that would give you marginal profit.
Financial Mistake #3 – No Cash Reserves
It is not a matter of if, it’s a matter of when you will need some cash reserves to get through seasons of slump in projects and you still have to maintain the operating expenses and business overheads. Gradually building up some cash reserves overtime from today onwards will ensure you have a buffer for such situations. Start off by getting at least one to two weeks’ worth of operating expenses and ideally move up to having 3 to 6 months built up in cash reserves.
Financial Mistake #4 – Not Paying Yourself a Salary
To run your voice over career as a proper business, it is important that you pay yourself as an owner and talent a salary just like any other employee. This allows you to run your business in a proper business model versus paying yourself drawings just when you have the cash available.
You may think, “Why pay myself a salary when I am my business?” This ensures that you keep your personal expenses out your business expense, and by doing so allows you to invest in activities that will grow your business – upgrading your tools and equipment, marketing, website, etc.
Start off with a minimum pay, as long as it is consistent. If you cannot pay yourself a consistent salary, there is something missing in your business model and it needs to be evaluated.
Financial Mistake #5 – No Reporting or Review
At a minimum you should be reviewing a profit and loss, balance sheet and cash flow forecast for your voice over business every month. These three reports give you an overview and bigger picture of the results your business has produced and its future.
The source of many financial challenges are rooted from lousy bookkeeping, so ensure that your bookkeeping is accurate and up to date, and reviewed regularly.
Plan out as many weeks or months in advance as you can based on your predicted work intake and your work history. This allows you to deal with challenges proactively rather than last minute.
Reviewing these reports would help you evaluate what has been done in order to achieve the profits you needed and what you need to adjust in order to sustain and improve it.
Some of the above mentioned mistakes may go over your head and you may not know where to begin in order to fix it. You can start with making yourself more financially literate by going online and search for resources for Financial Management for Small Business or Sole Proprietorship. It is also important to get guidance from a professional, like your accountant or a financial adviser.
Recognizing the mistakes your are making and then seeking the help and guidance you need is your first step in addressing any financial mistakes in your business, setting you up to a more sustainable and lucrative voice over career in the future.
How financially literate are you? Are you running your voice over career as a business or as a freelancer?