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Episode 50: Creative freelancers, get your finances together!

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All Xero Gravity episodes

Hosted by Elizabeth Ü

“I sell a service that basically helps you not freak out.”

That’s Paco, founder and director of Hell Yeah Group, a boutique bookkeeping agency that caters to creative folks. Musicians, designers, writers, photographers and the like, who want support managing their money, but aren’t getting the personalized services and attention they desire, from the larger accounting businesses.

Indeed, Paco takes the fear out of finances by empowering her clients with bite-sized bits of information, working with them on skills like budgeting and estimate taxes, as well as through Hell Yeah’s workshops and monthly mentoring.

So contractors, freelancers and artists: tune in to Xero Gravity #50 to hear about Paco Nicole’s remarkable business journey, her espresso-fueled gallivanting adventures through France, Venn diagrams, and the things she loves most: giving back to the community and playing guitar. 

Small Business Resources:

Episode transcript

Host: Elizabeth Ü [EÜ]
Guest: Paco Nicole [PN]

EÜ: Hey everyone! I’m Elizabeth Ü, and you’re listening to Xero Gravity.

Music [Paco Nicole singing the song, “Wake Up” by her band, Sweet Bump It]

EÜ: Meet Paco. Paco is the founder and director of the Hell Yeah Group, a boutique online company that provides bookkeeping and financial planning services to creative professionals like writers, musicians, artists and designers. Paco is also a talented musician, in fact the intro music we’ve just heard is courtesy of her band Sweet Bump It. And the song is called “Wake Up,” from their (as yet) unreleased album. Paco talks to us about the unique way that she communicates with her creative clients.

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Guest soundbite

“I just try to come up with anecdotal, interesting ways to say things.
I try to cuss — that wakes them up. I don’t try to, I just do, actually.

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EÜ: So we have all of that and more coming up on Xero Gravity, right after this.

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EÜ: Paco, thanks for joining us on Xero Gravity.

PN: My absolute pleasure.

EÜ: So you head up the Hell Yeah Group. What fills up the rest of what I must imagine is also your Hell Yeah eclectic life?

PN: Oh man, I play in a band with six of my friends.

EÜ: Awesome!

PN: We play around Los Angeles. Yeah, it’s a lot of fun. So that takes up a lot of my time. I’ve recently founded a non-profit organization which is called Allies in Arts.

EÜ: Tell me more about that.

PN: Absolutely. So it’s an art space. Basically what we want to do is we want to help people who have been historically underrepresented. So I’m talking about women, queers, transgender minorities. And basically what we want to do is we want to provide them access to equipment to make stuff. And by stuff I mean it could be films, it could be short films, it could be a web series, it could be a music video, it could be a jingle. As long as it’s art— we basically want to help people make art.

EÜ: That sounds so great. And again the name of that is Allies in Arts. And can you say a bit more about what inspired you to start that?

PN: Yeah sure. I mean I am a woman who checks all three of those boxes: queer, minority, lady. And as I’ve gotten older and I’ve watched people with different backgrounds come up in arts really fast, and I’ve watched people with my similar background struggle with arts. So that’s been abundantly clear — that other people have had the upper hand. And basically the tagline with Allies in Arts is, “Let’s even the odds.” So we just want to have a level playing field. I guess we want to be like the Title 9 of arts, basically. We want to give opportunity to other people who historically and typically don’t have it.

I’ve also been in the situation where we’ve worked with a producer for our band, and he was like, “Sure we’ll record your record,” and we’re in the studio and he leans in to try to make out with me, and it’s very awkward. Yeah it’s super awkward, but when you’re faced with that moment you’re like, “Well what do I do?” I feel this weird, disgusting obligation to make out with this dude because he’s basically giving us free studio time. So just becoming an adult slowly, and just being more mindful of the world around me, and circumstances, and how those affect everything you do in the art that you produce. And whether or not you can even make art; that was a big factor.

And then my co-founder, Drew Denny: she’s a producer, she’s a writer, she’s a musician, she’s had a feature that’s gone on the circuit, and she’s really involved in the queer community. So this was her idea basically, and she was a client of mine, and she brought me the idea and I was basically enamored with it, and I was super super flattered that she even wanted me to be a part of it. So honestly, we’ve been building it for like a year and a half now, which is insane because we’re just putting in our 501c3, which is the non-profit status with the IRS, which is the application.

EÜ: Congratulations!

PN: Thank you. Yeah, so it’s been a very tedious, slow march. But things are starting to come together, and we got our first project, and I’m just stoked that I’ll be able to help people make art.

EÜ: I love that! And I’m so glad that you’re providing that service. I mean it sounds like such a valuable service that will really help folks that, as you described through your own experience, have had some particular challenges that maybe those of us who aren’t in that position might not necessarily understand.

PN: Yeah, absolutely.

EÜ: So exciting to hear that you’re in a band with six of your friends. Can you tell us more about that?

PN: Yeah, absolutely. So Sweet Bump It was formed at the end of 2012, more like the top of 2013, and I honestly think it was a result of everyone who was in the band at the time were kind of just itching for an outlet.

I had stopped playing music for two-ish years because I thought that’s what I had to do in order to be a real professional and to actually be successful, I thought I had to stop chasing this dragon of mine of playing live music in dark bars on Tuesday nights. But my bass player who I’ve been playing with since we were 17, like since senior year of high school basically, she went into law school and she stopped playing too, because we were both like, “Well this is what you do, you play in a band when you’re in highschool, you play in a band while you’re in college, and then you grow up and you’re like I’m out of here, I’m too old for this.”

But something really weird happened, I just started to feel crappy, just not good, and she started to feel crappy and we were like, “What is this weird feeling?” and we slowly realized it was because we stopped pursuing art. We were just becoming, you know, for lack of a, to sound like a cliché, we were just becoming drones. So I think everyone kind of — me and her at least — realized hey we need to make noise, we need to put out good vibes, we need to make art in order to feel like normal, functioning humans in society…

EÜ: Yeah.

PN: And we just, you know, we slowly tricked our friends into giving up a couple nights a week and slowly just putting in effort and energy and time, and it’s just a lot of fun. When there’s no pressure of, “I have to live off this” and there’s no expectation of, “Hey, I have to make a suit happy with a hook” and you can just literally hang out with your friends and work towards small goals and make art. It’s just so f***ing fun! And that’s what it is.

EÜ: Not only is it fun — I love that — I mean not only is it fun for you, I just want to say thank you because it’s that art that you’re making that makes the rest of our lives so much richer and worth, really worth living in the first place…

PN: You’re very welcome.

EÜ: But I’m curious. Keep going…

PN: I was just going to say that at the end of the day, that’s why I want to help the creative community. Because their culture. They’re creating culture. We are creating culture. Without that it’s so boring.

EÜ: I totally agree — love that. And I feel the same way. And finance seems like such a great field to be in after all of the richness and beauty of art and music. So how did you end up in the world of finance?

EÜ: So I decided to study finance and economics, and I think I decided this around like 2005, maybe 2006. It was right when everything was doing really well. You know, things were peaking. It was right before the crash. So I graduated the summer of 2008, right when the ass just fell out of the housing market and everything went to s**t. But before then I decided to study finance because I was just so — if you look at the Venn diagram of interesting, and I can totally make money and like have a life, have a career.

EÜ: Yes, I love that Venn diagram. Love it.

PN: So that’s where finance fell. It was finance and econ, and I like econ, because you put data to human behavior and I thought that was cool. I think I like econ. I still think it’s deeply flawed in the sense that why are we measuring everything with money, why are we measuring everything with output? There’s a lot of things that you can’t measure. But how can you even begin to have a conversation without measuring? So I understand why we use economics and why we use those numbers. But with finance,
I was like, “How are all these people making money, what the hell is going on, what is finance, like what does that even encompass?”

So I got into the field. I chose that as my major and there were just a s**t ton of things that you could have chosen, and I found that to be intriguing. I was like okay, this is interesting. The weird thing is, though I didn’t like my classmates, I didn’t like me peers and I…

EÜ: I was wondering that, I was going to ask you that.

PN: Yeah, you would think that I’m smart enough to realize like, “Hey dude, if you don’t enjoy your peers and your classmates and you don’t have any friends in your classes, maybe this isn’t for you,” but I was just too dumb I guess at the time, too naïve, and I just kept going to class and doing okay in class. And then when I wasn’t in class I was just playing in bands— jamming, being creative. And I never thought that there was an issue. And it wasn’t until I graduated and got a job in finance and had to do the whole 40-hour thing.

That’s when I was like, “My god this is tough.” But before then it wasn’t an issue, because the college life is amazing. You know you go to class two or three times a week, you hang out, you just do your work and it’s — I always joke because, why is that college? And then right after that you have to go into the “real world,” which is the exact opposite, it makes no sense to me why we do that to people.

EÜ: Well I love that. And you were saying, you know, that 40-hour thing, this is tough, and you had said earlier that you thought to yourself and your friend also thought to herself, “This is what you’re supposed to be doing, we don’t play in dark bars anymore, we’re adults.”

PN: Right.

EÜ: So how…

PN: Exactly.

EÜ: You described that a little bit. But can you say a little bit more about what it was, like that dark soul searching moment in the middle of the night? How did you know that it was time to bring music back in?

PN: Yeah well, so my fiancée, she’s an event designer and she’s an interior designer, so her company does both of those things; they design both of those things. And one of our friends got married, got engaged and was getting married in Rennes in France. So I went, we went together, a bunch of our buddies were there, all of our friends were in Paris gallivanting. And then we were in Rennes gallivanting and having a great time. And I just had such a cliché American classic experience where I went there and there were no to-go cups. Everyone was enjoying their espresso. Art was appreciated and respected. Art. Like being an artist was a respected thing, whereas here I never felt that art was a respectable career that I, that you could ever do.

Of course my ideas have totally changed on that. But I went there and it was just a very necessary repeated punch in the face, that I was so so focused on output and I was so focused on just like trying to grab a brass ring, because I thought I needed to grab a brass ring.

I was just mindlessly trying to become an executive for no damn good reason. There was no value behind it except that everyone around me in the office were all in that rat race too, so I was you know, you become your environment, you become whatever you’re continuously and repeatedly exposed to. And you know, maybe I needed to go to France so that I could be repeatedly punched in the face, maybe it’s part of the whole journey.

But that was the impetus for like oh s**t, I totally have to take a baseball bat to my life because it’s not working and it’s not sustainable.

EÜ: Wow, wow! What an amazing experience. And also, I’m really struck by how valuable it was that even though you might have thought, you know, it was so naïve to have gone to study finance and economics, and to have chosen these peers that you didn’t resonate with. But now you have this amazing tool that you can bring to that entire world of artists and musicians.

PN: Totally, totally.

EÜ: And so let’s dig a bit deeper into this episode’s theme, which is of course how creative folks can get their finances together. So first off I’m curious how you feel about the term, ‘creatives,’ because for me it feels really charged and I don’t know that a lot of my creative friends actually identify with that term. So what does that mean to you, and is there something that you prefer?

PN: Yeah I mean I would say that I also had a hard time settling into that label. And artist as well. Like I still sometimes — when people call me an artist–
I still kind of look over my shoulder and think, “You must be talking about the person behind me.” I don’t have any weird hang ups about the term ‘creative.’

Trying to describe to other people what I even do is a difficulty in and of itself, because it’s like I sell a non-tangible thing. I don’t sell a product.
I sell a service that basically helps you not freak out. So I feel like I definitely have to say that I help creatives because otherwise I’m going to get all these people who are not creative that I’m going to try to help and…

EÜ: Right.

PN: ...then I’m back in the same situation I was before.

EÜ: But you primarily work with freelancers. And so how do your creative freelance clients differ from the rest of your clients? Or are you only working with creative folks?

PN: I try to only work with creative folks. Every once in awhile somebody else slips in. I’ll get, like I work with the attorneys as well, but they are attorneys who are creatives, who also serve creatives. But if a doctor comes to me or an engineer I will probably – and I have — I’ve turned them away just because personality wise there’s not a fit. A and B. There’s lots of people in financial services who want to pick up those kinds of clients, and I just don’t — I want to help creative people.

They’re the ones who are so unbelievably lost, and I laugh so much because of how lost they are. And even when somebody emails me I can feel how much they’re freaking out. They’re emotional. I mean everyone is emotional, but creatives and artists are not afraid to wear that on their sleeves. And when it comes to finances — when you ask them for access to their bank account or to see their tax return or anything like that — they definitely freak out.

EÜ: Right.

PN: So yeah, there’s just a high freak out factor I guess with creatives, and it’s challenging for me to try to explain financial and economic concepts to them, because they don’t even understand why they would even need bookkeeping. They don’t even know that’s a thing, they have no idea what it entails, they have no idea that there’s software that needs to be used. They’re totally lost about all the different types of taxes, when the filings are. I mean everything freaks them out, everything they’re confused about. How do they even get an EIN? I mean basically everything.

EÜ: How do they even know that they should come to you? At what point do they realize that there is even an issue?

PN: When they’re filing taxes or they have an accountant that they work with. and then their accountant starts to try to explain things like, “Hey you should put money into an IRA” or usually it’s like an accountant will bring it to light. They’ll get confused by the accountant, so they’ll start to seek help elsewhere. But my business has been really built on word of mouth, so I’ve helped just a few creatives and they’ve just been kind of passing me around.

EÜ: Can you describe some of the different ways that you connect with people who are making a living through creative means, and how you present finances in a way that does resonate with them?

PN: Yeah, absolutely. So the first thing is I try to make it all about them. That’s the one thing that they can absolutely relate to, is like how does this affect my day to day. So I try to lay things out in a way that illustrates, “Hey this is important because it will affect your life, like it’ll be painful or it’s going to suck or we can avoid those things.” And that obviously helps, fear helps, but also I just try to come up with anecdotal interesting ways to say things. I try to cuss. That wakes them up. I don’t try to, I just do, actually.

EÜ: Yeah.

PN: And I try to have a normal relationship with them. We have dinner, we hang out, we go to karaoke together, we do all these things and just try to be a normal person.

EÜ: Yeah I think so often people who work in the financial field use a language that is totally alienating to clients and…

PN: Absolutely!

EÜ: I know that I really struggled hard to make sure that I’m describing financial or financing topics in a way that people can get their head around them. And it doesn’t seem like this intimidating thing, that it’s really something they can grasp.

PN: Right, yeah. I try and break it open to like bite-sized pieces as well. Especially with financial planning, there’s a lot to go over so I try not to just hit them over the head with everything, because then it’s a recipe for disaster. But yeah, if you can just make things in small digestible doses then, that’s great.

EÜ: So given all of your experience with clients like this, have you noticed any patterns in terms of misconceptions that creative folks have about bookkeeping and staying on top of their finances?

PN: Yeah, the funniest one to me is if you pay somebody, everything will be okay. They don’t realize that I’m going to make them do heavy lifting as well, I’m going to make them care, I’m going to get them engaged. So that’s been interesting that some people have an attitude of like, “I’ll just throw money at it and it’ll be fixed.”

EÜ: Well how do you get them engaged?

PN: I try to make it relatable for them, I try to tell them, “Hey, this is how this is going to affect your situation.” The way that I work — especially on the financial planning side — is I give everyone a number. You need to know your monthly income number. And that small guidance gets them engaged and allows them to understand how they should be living their life day to day. Because if somebody knows, “Hey, I have to make $3,500 each month to survive” that’s very tangible instructions on how you need to be operating day to day versus, you know, something that’s less tangible. Like, “We hope to save for retirement in 20 years.” That doesn’t mean s**t to them.

EÜ: Right.

PN: But what means s**t to them is, “Hey, we went through your budget line item by line item and all the crap that you want to achieve means you have to make X amount of dollars each month, so wake up and make it happen, you know?

EÜ: Yeah. And what particular challenge has come for creative people who don’t necessarily have a fixed monthly income? I imagine there’s a gig here and a gig there…

PN: Yeah, that’s exactly it. Cashflow timing is huge. Cashflow timing is a really big issue. For a lot of people it’s feast or famine, so a lot of times they have to come up with the patchwork of incomes or different revenues streams. And at the beginning at least, you either have to have a pile of cash that you can rely on or you need to hustle your ass off so you can build a pile of cash so that you have flexibility there in terms of cashflow timing.

EÜ: So in terms of various patterns again, that you may have observed, what are some typical financial holes that creative people are likely to fall into?

PN: They never save for taxes or their accountant is not giving a s**t about their client who’s not making a lot of money or enough money for them to care about them, to guide them and say, “Hey buddy, you should either pay quarterly estimated tax payments or you should be saving for taxes.” So that’s been a huge one. I’ve seen a lot of people who were behind the 8 ball with taxes and that’s really frustrating for me, to have a client come to me and have an accountant who wasn’t guiding them. That really pisses me off from the get go.

So there are holes there. A lot of them, again, don’t have enough in their emergency fund or their savings reserves in case something happens: their tires fall off their car or they get sick or something like that.

EÜ: Right, or all the band gear gets stolen out of the van.

PN: Exactly! Insurance is a really really unsexy product. There’s nothing exciting about insurance and it’s one of those things where you want to have enough but you hope to never use it. It’s a very funny product and oftentimes people are underinsured, grossly underinsured, so that’s definitely another hole. And then I’m just telling you like just blindness, not even addressing things, ignoring s**t in the mail and just not knowing how to take a breath and realize like, “Hey we can do this, you can do this.”

You just have to take it slow and you’re going to f**k up, everybody stumbles, everybody makes a mistake, it’s fine, you know? No one is going to throw you in jail unless you’re going out of your way to defraud people, you know?

EÜ: What are your tips for creatives? How can they stay on top of how much money they’re making? How can they manage a budget? How can they make sure they’re saving aside enough for taxes?

PN: Sure, so general rule with tax — so disclaimer: I’m not an accountant, I just get to hang out with them. So for taxes I would say look at your past tax return, look at how much money you made and look at how much tax you paid in. Talk to your accountant and see if they can help you come up with a quarterly estimated tax payment schedule which basically means every quarter you write a check for the amount of taxes based on the income from last year. So if this year looks a lot like last year or you expect this year to look a lot like last year then you would pay taxes based on that income number. Lots of people recommend just saving 10% to 30% of whatever check comes in, that’s a great way to kind of save for taxes there.

EÜ: There are people actually saving that. I mean, I think everyone – every time you’ve at least been late or not had enough to pay for your taxes, you know you need to do it. But how do you incentivize people to actually save it?

PN: Yeah I mean, some people are just good savers. Some people just have the personality and they understand if I put it over there I can’t touch it, and other people, they don’t.

I try not to wag my finger too much at people and I try to just be their friend and also give them good advice, and check in with them regularly to make sure that they’re doing it. But it doesn’t always happen and sometimes it’s hard especially if you’re not making a lot of money. But the good news is if you’re not making a lot of money chances are you’re not paying a lot of taxes.

EÜ: Yeah.

PN: Just having a tax savings account is huge, so I tell everyone to open up a tax savings account and every time money comes in just they need to implement the discipline of just making that transfer.

EÜ: I think that’s a great tip.

PN: Yeah, some people do it, some people don’t. But having the account is going to at least incentivize you to put money into it.

EÜ: And Xero has recently released a mobile app. It’s called Xero TaxTouch. It’s our contribution to helping creative folks or freelancers in any field keep track of how much they’ve made, how much they’ve been spending on business expenses, separating out business expenses from personal expenses. But the best part about it I think is, that you get this report that shows you here’s how much you need to set aside for taxes because this is what you’re likely to owe given various details that you can enter about your tax filing situation.

PN: That’s super sexy!

EÜ: We think so. Glad you agree.

EÜ: Paco, how can people find out more about Hell Yeah bookkeeping or your financial planning services?

PN: You can just go onto the web and enter thehellyeahgroup.com, and that’s where I exist. That’s my corner of the internet.

EÜ: Alright. We’re going to finish up with our question countdown. Five quick questions and five quick answers. Are you ready?

PN: Ready.

EÜ: What business book or idea has made the biggest impact on your life and why?

PN: [The book] Nobody Knows What the Hell They’re Doing. It’s impacted me because I feel fine just making things up as I go. It’s wonderful.

EÜ: What’s the one thing you can’t live without?

PN: Probably my bicycle or my guitar. My guitar.

EÜ: What’s the most useful app on your phone right now?

PN: A scheduling app called Sunrise. It’s awesome.

EÜ: In one sentence: what’s the greatest lesson you’ve learnt throughout your small business journey?

PN: It is important to serve your community.

EÜ: And finally: what skill do you want to enhance in 2016?

PN: Being a good boss.

EÜ: Well that’s all we have time for today, Paco. Thanks so much for joining us on the show.

PN: Thank you for having me.

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EÜ: That was Paco, founder and director of the Hell Yeah Group, which provides bookkeeping and financial planning services to creative professionals. Thanks for listening to Xero Gravity. Make sure you join us next Wednesday as Bobby McGill will be joining us. He’s the founder of Branding in Asia Magazine, and is going to give us some sweet tips on negotiating as a freelancer. We’ll see you then. Ciao for now.

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