In this Money Biz article we speak to Chello’s inspiring co-founder Lindsay Rogers, who in her first year in business cracked the $1 million mark and hasn’t looked back.
Here’s her money journey at Chello.
How much money did it take to start your business?
When my business partner, Tristan and I decided to launch Chello, we didn’t have a long lead time. We decided we didn’t want to be funded or go down the loan route, so we put in $10k each and didn’t take a wage for about five months.
We were very cost conscious, we walked to meetings, hired equipment instead of buying, we used cloud based subscription products such as Xero, the Adobe Creative Suite to offset upfront costs and worked with subcontractors on project rates so we knew we could make ends meet. Networks and friends were also very generous with offering us free desk space, borrowing gear, helping us out with moving etc.
What was your salary like in your first year?
We agreed we wouldn’t take a salary for as long as we could, to give the business the best possible chance, although we didn’t have a predetermined duration as it was dependent upon incoming work.
We also wanted the business to be sustainable long term and happy to personally do without if it meant we could hire really great people when the need came.
We ended up being able to pay ourselves a wage at month five and then eventually back paying the wages that we were unable to pay in the early days.
This definitely wasn’t an industry equivalent salary, it was much lower, but it was enough to live and bring us back up to speed. The business paid us back the upfront investment in two payouts within the first year upon advice from our Business Advisory company. It really was humble beginnings!
If money was a challenge in the first year, how did you make it work?
Fortunately for us, cash flow hasn’t been a huge problem. As our Business Director, one of my initial non negotiables was getting a Business Advisory company on board to set us up correctly, organise our quarterly BAS’s and tax returns as well as provide advice.
We now have 8-hours of contact time with them per quarter and it’s enough to ask any questions, run things past them and check in, we basically are paying for their experience.
What has become noticeable in our second year of business is the tax dues from year one. The ATO offsets the due dates of tax to your second year of business to help you get on your feet. Which is wonderful, until it’s all due in year two! We had this planned out, but I could imagine this would bite some businesses in the butt.
What has been the biggest financial investment?
We’re a content agency, so aside from people, our biggest outlay is equipment and technology. We need to have powerful machines and the best production equipment to deliver quality content.
Equipment and technology are constantly updating, so we’re often buying new things and it’s a battle between whether we ‘need’ it or ‘want’ it. Where there’s a battle, we try renting in the short term to decide whether it’s worth our investment.
We also decided to move out of our co-share office after 12 months in business and fit out our own space. We moved into a studio space 8x our previous space, fitted it out with a boardroom, 18x desks, a kitchen and equipment storage, which has allowed us to have our own meeting spaces and other luxuries we weren’t previously afforded.
The upfront costs were large however we’ve managed to offset the ongoing costs by co-sharing some of the desks we don’t (yet) use with other likeminded businesses. It’s also fantastic for the ‘vibe’ in the office. For us with a team of 10 and growing, it was a better investment to bite the bullet and fit out our own space rather than continue to co-share 10x individual desks.
And finally, what has been your best and worst spend in business?
The best spend is a bit boring but so important – file storage and management. We updated our servers this year from a $3k solution to a $25k solution which at the time was a big cost, but in our business, we need to have secure back up and access to all files.
Our worst spend has probably been some big ugly green fake ivy we were planning to put up in the kitchen area. When we threw out all of the boxes and realised our vision wasn’t quite on point, it was too late to return them. They now surround our dart board but I would be fine if one day they accidentally went missing. Permanently.