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Scaling your business: 6 amazing tips that will help you

Posted on by moneycoach

We hear the word, “scale” thrown around a lot in business, particularly online when they say you need to scale your business.

According to The Startup Finance it means: “Make more revenue faster than it takes on costs.”

Using that definition, you want to start scaling as soon as possible. That is how you can become more profitable because you will have more income at a ratio to lower costs.

That is actually always a good place to be in business. Here are a few tips you can start using now if you want to start scaling your business.

1. You can create very low overhead products these days.

One way to add revenue with minimal costs is to create a digital course or product that can be sold online.

Another popular low overhead service is online memberships. By adding revenue, and not adding costs to produce each item, this can help to scale your business quickly. You are serving more people without taking on more costs.

2. You can create multiple reasons to buy from you with multiple offers.

Again, without increasing costs you can create a new offer that can be resold to your existing audience. Or perhaps an existing offer can be repackaged for gifts. Or maybe you can add a fun bonus to an offer and give your audience a new chance to buy from you. You are serving your same people again without taking on more costs. 

3. You can keep the costs low by minimizing debt.

Small businesses and start-ups can begin to scale more quickly if they keep business debt very low, or if possible, non-existent.

Using my Breakthrough number approach, everything above the business four walls is profit, and from that amount we must pay debt. Without debt you have more revenue and more money going into those profit parking lots.

4. Scaling can cause short term bottlenecks to push through.

This is one side effect we don’t talk about but, as you are generating more and more revenue, if your systems aren’t in place, it may cause a bottleneck where you can’t generate more or serve more without more money for systems.

It happens and a way to minimize this risk is to have some support in place as a temporary or project-based cost until you get to the next income level. You cannot scale all by yourself. You need support.

5. Always watch your pricing.

Increasing revenue without being aware of any potential profit leaks can defeat some of your scaling efforts.

Generating income at a faster rate than you take on expenses is a beautiful thing! Keep your eyes on the profit margins as your business expands.

Remember that every line of business should be profitable, but they don’t all have to be equally profitable.

Need to get your Breakthrough number? Join us inside First Steps to Profit to get your finances organized, learn your numbers, protect your business and scale your business. Visit this link for more information:

https://entremoneycoach.kartra.com/page/firststeps

How to know if you are just self-employed or a business CEO?

Posted on by moneycoach

If you are running a business, you are a business CEO and it can be hard to see it at first and hard to grow into.

Actually, I recently coached a client who was still doing everything in her business. Just like we all do when we start, because she wanted to make “more” before she delegated some tasks.

These days you can get recommendations for temporary support for almost any business related task, and you can look for project contractors and freelancers who are on Fiverr and Upwork.

The fact is, there is a mindset shift when you see yourself running a business, and not just as a self-employed person. 

As the CEO you will do the research and set a financial goal to get that new team member or contractor in place. As the CEO you have a vision for your company that goes beyond paying yourself a comfortable living. To bring that vision to life, you must step into the role of the company leader.

So, how did we address my clients need to step into the CEO role? First, I asked her to please define “make more” before you begin to hire out certain tasks that are not in your zone of genius.

“More” is an ambiguous term and an amount you will continue to raise because you can. You can never reach it because you didn’t put a line in the sand.

“When I make $2500.00 every month, I will add…” is much better than, “I will add a… once I make some more.”

Next, we made a list. What do you want to get off your plate first? Her answers were bookkeeping (a top fave for most entrepreneurs!) and social media. Awesome! How can we get this done as fast as possible? Here are a few things to think about:

1. You can start small.

You don’t have to hand off everything all at once. For example, hire someone just to schedule your social media content. The hour it takes to schedule a month of posts is an hour you can be making sales, creating items, generating leads or just being in your zone of genius.

You can get something off your plate NOW. Think about it and start small. What can you hire out this month?

2. You are your best brand ambassador.

A key to letting go a bit and getting started with a team is to understand that you are the best person to make the sales, to promote your company, to generate the leads, to build the brand.

You are sold out to your vision or, if you aren’t, let’s get that way. If you are scheduling posts, writing newsletters, bookkeeping, creating graphics, etc., you aren’t doing the major things that grow the company. Like making the sales.

Let someone else do the things that aren’t directly related to your making money for your vision.

3. If you are nervous about the money, what is a comfortable budget?

It is always nerve wracking to take on a new expense in your business. Many times, we allow fear to stop us from boldly stepping into the CEO role because we may not “make enough next month.”

If someone quotes you a number that gives you hives right now, what is your comfortable budget? Have you ever given it a thought? And back to number one, if your budget is truly small, start with just one thing.

You are the visionary, and you have the vision for the company. Where are you going? You cannot get there if you are bogged down doing everything for your business by yourself, particularly as things start to take off.

Make the decision today to step into your CEO role and make the plan for the next stage of your business.

By the way, the Profit Accelerator closes in a few days! Our signature program will get your business making more money and keeping more profit in just 6 weeks. https://entremoneycoach.com/accelerator for details.

Remember, you can switch from self-employed to business CEO. It just takes analysis and good prioritization.

 

How To Set Reachable Financial Goals For Your Business

Posted on by moneycoach

“When you aim at nothing, you will hit it every time” – Zig Ziglar

This is the quote that reminds me to set my business goals, and that includes financial goals.

Some entrepreneurs are a bit timid in setting income goals because they just want to sell as much as possible. Others set super stretch goals that they will never reach with the belief that “if you aim for the moon and miss, you will land among the stars.“

I understand both approaches. I want to offer you an approach that falls somewhere in the middle.

 

If you don’t typically set goals right now

 

How much money do you want to make, and in what timeframe? That can feel like such a loaded question.

Does reading that have you thinking, “What if I set it wrong? Too low or too high? Am I going to be disappointed? What if I miss it?” right away.

I hear you. The fact is goals don’t have to be arbitrary or decided by throwing a dart at a bunch of numbers. Here are a few questions to help you narrow down a good goal.

 

1. What am I offering, how much does it cost?

 

How many can I sell? This question will help you look at your capacity to make more money. This may be limited by your time, by your production model, or by your own working guidelines.

If you don’t know the maximum that you can comfortably make with each offer in a month, you can’t begin to set a goal, because you can’t figure out what to sell and how many.

 

2. What is my best sales month ever?

 

What made it so good? Was it a new ad? Did you host a challenge? What was it?

These questions can help you to examine what you did in your best sales month, and whether you can duplicate it or do more now. What are you available to do to hit your goal this month?

 

3. What is the purpose for the money?

 

Having a purpose can definitely help you gain clarity on your goals. If you to make $3,000.00 so you can launch a new thing,  then that’s a pretty clear purpose for the money.

Get laser focused on what you want the money for and what it is going to do for you and your business when it is earned.

 

If you set arbitrary goals that you always miss

 

First, follow the questions above! And check on your capacity, availability, and purpose for the money and the goal.

Then ask yourself if it would be better to keep the lofty goal as a “best” goal, but add in a “good” and a “better” goal that is more attainable.

For example, if you set your goal at $10k for the month, but your best month has been $2k and you don’t have the availability to do more than $6k, you can set a “good” goal at $3k (attainable) and a “better” goal of $6k, the “best” (or stretch) goal of $10k.

There is a real psychological boost to you as an entrepreneur as you reach your financial goals. For each of the three goals, make sure you have a clear purpose for the money.

It takes just a few minutes to set your financial goals. It can be for the week, month, quarter, that is up to you. But make sure you have something to aim at and then define the availability and steps you need to take to hit your mark.

By the way, The Profit Accelerator is open again! Grab one of the 12 spots inside the signature program that has helped entrepreneurs focus on making more money and keeping more profit in a six-week sprint. Visit https://entremoneycoach.com/accelerator to learn more.

Wishing you the best with your business goals!

 

Stack the Financial DECK in Your Favor

Posted on by moneycoach

Business money management doesn’t have to be intimidating or complicated. I’m going to give you a four-step foundational framework for your business that covers the four key areas that I believe are the most important to help your business thrive financially. This framework can easily be remembered using the mnemonic “DECK.” Discover your Breakthrough Number, Establish your financial protection, Create your money management system, and Keep more profit. 

 

Discover Your Breakthrough Number

 

This first step is critical to knowing your numbers. You cannot begin to plan or to project anything without knowing your minimum number that you need to bring into your business. This number consists of your four walls of business; access to buyers, critical operating expenses, inventory and product spend, and payroll and payroll expenses. This is the first number that tells you how to be self-sustaining and includes your own paycheck and taxes.

 

Establish Your Financial Protection

 

Now that you know how much it really costs to stay in business every month (at the bare minimum), how do we protect it? Creating a cyclical fund for annual expenses and an emergency fund are two ways to protect your operating account and monthly cash flow. The Cyclical fund is created by making twelve small monthly payments to cover the amount you need for those larger annual expenses. Just add up the license renewals, memberships, and other fees you pay annually or semi-annually, divide by 12, and deposit that littler amount into a fund every month to cover expenses without a huge hit to the budget.

 

For the emergency fund, your first goal should be about three times your breakthrough number. This will ensure that you will cover all expenses including your paycheck. That number may look at little big at first, but adding a little to the fund each month, or committing to a percentage of profits until it is full will get it filled quickly. Once it is full, it just sits there! You don’t have to do anything with it, unless there is an emergency.

 

Create your Money Management System

 

This is the step that many people overlook or ignore because it may seem intimidating. You don’t need fancy software or complicated spreadsheets with calculations to manage your money. You must have a system to track what comes in and goes out (every dime) and a system to plan for future expenses and projects. Because you have your breakthrough number already, you know what your minimum expenses are. We add in any debt payments or project costs here, and make sure that we have a written spending plan.

 

How you write it is up to you! Do you like using an app on your phone? A spreadsheet? A notebook? A template you created?  The beauty of this step is that you decide which tracking and planning system works best for you!  The key is to find the system you will love and use again and again.

 

Keep More Profit

 

My first rule of business is, “don’t lose money.”  My second rule is, “keep your profit.” The first one everybody gets. It’s the second one that I find people tend to overlook. Once we start making money in our business, we seem to find a place to spend it! It seems that there is this point, a bottleneck if you will, where everything coming in is going out. Knowing your profit on everything you offer is critical to avoiding this issue. You must make profit on everything, but the profit doesn’t have to be equal across things. For example, you can have a 10% profit margin on one thing and a 25% margin on another. It depends on what you offer and what it costs you to provide it.

 

My challenge to you is to have a profit figure in mind that you want to keep every single month.  Next step is to create a plan to get there. For example, if you want to make $1,000.00 in PROFIT (not income) what do you have to sell, and how many, to see that figure? Having profit in mind and not just income will give you the money you need to expand and grow and turn your business into your vision.

 

You can find information on each of these steps inside the Facebook group: Stacking the Financial Deck and in the First Steps to Profit Course which is available for a limited time for $27.00.

How Do You Calculate Selling Price?

Posted on by moneycoach

If you have followed me for any length of time, you know that my number one rule for business is “Don’t Lose Money.” Now, this doesn’t mean we never make money mistakes, this means that we are deliberate in our pricing and costing, so we are moving into profit with everything we sell. So, how do we calculate selling price, so we don’t lose money?

 

First, I want to acknowledge that there are  many different ways to price goods and services. There are Value Pricing, Cost-Plus Pricing, and Market Pricing to name a few. There are great free pricing calculators on the web, if you like excel spreadsheets there are some calculators with pricing formulas available as well.

 

I am honestly just a “Keep it Simple” kind of girl, and unless you are manufacturing or have a multi-tiered pricing structure, you can calculate the selling cost of your product and service fairly simply, and come up with pricing that won’t allow you to lose money. Here’s my quick step-by-step method.

 

Step 1: List ALL of your costs.

 

I mean ALL. Do you print labels for your handmade goods or buy tags for pricing? It counts. Gas to get to the flea market? It counts. Pay for an online platform or storage for all of your digital products? It counts.  In your pricing I want you to recover ALL of your costs. I have worked with too many entrepreneurs who were leaking profits 10 cents at a time because they forgot to add in some actual cost and break it down for each product or service sold.

 

Step 2: Add a Profit Margin.

 

Go ahead, add 10%. I’m not saying your costs plus 10% is your price for everything, but I want you right now to start thinking about profit margin. So, add a profit margin.

 

Step 3: Calculate Your Business Operations Cost.

 

I want to know how much it costs you every day and every hour to be in business. Add up your Breakthrough Number, other costs, and get a total monthly amount. Include your paycheck. I also see many creative entrepreneurs lose money on their time and labor when they are creating goods for sale. Take the monthly total and divide by the number of days you are open each month, then number of hours. To see this calculation, visit my blog on this topic.

 

Once you know your costs, your profit margin, and your hourly cost of business operations, we can calculate what you should sell your goods and services for. Let’s say your costs to produce your jewelry is $35.00. You want a 10% profit margin ($3.50) and it costs you $23.00/ hour in operations costs, and it took you an hour to produce. The price for that piece of jewelry should START at $61.50. So, if you are selling for $40.00 (costs plus a little bit) you are probably losing money. And we need to fix that. There are several ways to do it, through pricing, cutting expenses, etc. But you need to address this if it is you. Because you are probably losing money if you don’t.  And rule number one is, “Don’t Lose Money.”

 

Ready to take your First Steps to Profit? It’s not about what you make, it is about what you keep!

 

How Do You Manage Your Personal and Business Finances?

Posted on by moneycoach

My short answer: separately. I get this question a lot. Because your personal and business finances are different. But you should have a management system for each. And the systems do not have to be complicated. They need to be separate, but not complicated. Here are a few simple steps for managing the personal finances when you have a business.

 

Step 1:   How much do you need? Know your numbers.

 

Personal: First tally up your “four walls” because these expenses get paid first, always. Food, utilities, housing, and transportation. This is the minimum number you need to eat, cook, sleep in a real bed, and get to work so you continue to make money.  Know this number. Next, add together your minimum debt payments.  You will have two numbers, the “four walls” number and the “total I need to pay everything” number.

 

Repeat for your business.  

 

Business: Four walls of business, your Breakthrough Number. The Four Walls are rent/utilities and internet/ phone (access to buyers), Critical Operating Expenses, Minimum inventory and product spend, and payroll (and payroll expenses).  These four walls will secure your business and allow you to keep the doors open and making money. Next,  figure in any debt payments and other business areas (marketing, projects, team). You will have your Breakthrough Number (minimum amount) and total “All In” number.

 

Step 2: When do I need it? Know when things are due.

 

Personal: To make things smoother in your personal finances, schedule your paydays. Say NO to co-mingling! Do not pay your car insurance form your business account (unless you are a delivery service). Take the time to pay yourself on regular days and then you can begin to count on that regular income. I advise my clients to pay themselves every other week. This way, they can arrange their personal expenses the way they likely would if they were employed somewhere.

 

Business: On the business front you can do two things; Pay business bills as they come due, not early and know which bills can be halved. In business cash is king and protecting the cashflow is critical. Since you are now only paying yourself on regular paydays, the next thing is to preserve cash by paying expenses when they are due. Some of my clients pay bills weekly. Some twice a month. They key is to get into a rhythm and know when you need and how much you need available for expenses.

 

Step 3: Begin to plan your spending.

 

Personal: Once you have regular paychecks scheduled, you can create a personal spending plan (or budget) for what need to be paid and when. You can plan your personal spending for everything. My only rule for my clients is write it down. Your plan. It may change, but you will have the baseline to refer to.

Business: For your business if you don’t know what you are going to spend in a given month or know how much you need to plan for projects and growth, you will stunt your business. Again, my only rule is that your plan must be written. If you are new to this, it may take a moment to set up. How much did you pay for ads last month? How much are you going to pay this month? That’s really all you need to do to have a general spending plan that you can refer to when you work your business the next month.

 

Following these few steps will get you on a good path to managing both the personal and business finances every month. If you’d like more tips and strategies for taking and keeping control of your money stuff, join my Facebook Group, “Stacking the DECK for financial success.”

So, What Should I Spend On… Evaluating ROI

Posted on by moneycoach

Ah, setting the plans for things and questioning whether you are spending the right amount, in the right order for your business, is a problem we all face. I haven’t yet met an entrepreneur who hasn’t second guessed the decisions to spend money. The cost of the additional team member, marketing plan, or ad spend in her business.  We want to be mindful of our resources, especially when we are starting to make money consistently, because we fear that one misstep will set us back again. Time to evaluate the return on our investment (ROI).

 

The good news, because it is a universal thing, we don’t have to lose sleep over our budget decisions. In fact, when we make a money decision, we need to stick to it until we decide to change. It is easier to say than do, I know, because money is involved. And most of us measure our successes on the amount of income we are making. Why that’s not always the best idea is for another blog post.  Once you’ve made your decision, you can make decisions based on whether your Return on Investment (ROI) is satisfactory.

 

Evaluating Return on Investment

 

I’ve been guilty of evaluating my return on investment in pure dollars and percentages. The fact is, any investment has effects on time and energy as well. I budget for and hire different people on a project basis because they are doing the things that zap my time and energy. Things that may not be in my zone of genius, have a steep learning curve, and honestly wear me out to do. When you have a written plan for your business, you can more easily put expert help where it is needed.

 

The simple fact is that we have to be honest with ourselves first about what is important to us. We can monetize our time and compare how much we are spending versus how much your time is worth. I hired a cleaner once a week in March to help me tackle the house.  Honestly, Andrea has been a Godsend. I made that decision by monetizing how many hours I spent cleaning, vs. how much it really cost to have someone come in and support.

 

Another recent decision of mine was made, NOT through monetizing my time, but rather through evaluating how much time and energy I was spending outside my zone of genius. The hours it took me to perform these tasks, and the energy drain was brutal. I was able to regain some productive time and have much better the results now that I outsourced the project.

 

You Can Always Change If it Isn’t Working

 

My coach has a great expression that, “You aren’t getting a tattoo on your face.”  And, unless you really are, you can change anything once it starts. As your business matures and grows you may find some processes or team members don’t fit your current ROI evaluation. You shouldn’t feel bad about that. I have seen some business owners who hold onto a business decision a little too long.  Typically  because they don’t want to “upset the apple cart” and hurt someone’s feelings. You can change suppliers. And you can change social media managers. You can do all the things you need to as you are staying true to your vision. You should re-evaluate ROI regularly as you are making the next set of decisions to move forward.

 

If you are struggling to make these types of business decisions or are wondering if it is time to make a change in your company, you don’t have to do it alone. Grab a spot on my calendar for a free 30-minute support call, and let me support you in making the changes you must to move your business to the next level! Use this link https://dawnkennedy.as.me/support to book your call.

Is it Time to Give Yourself a Raise?

Posted on by moneycoach

If you have been paying yourself this year regularly, the next question is, “Are you ready to give yourself a raise?”

This week is the last week of June and marks the end of the first half of the year. Be honest, have you really been writing yourself a check every time I send an Entre Pay Day newsletter? If so, congrats! You have written 12 paychecks so far! If you haven’t yet started to make your paydays a thing, put them on the calendar and start this week. Even a $10.00 to $25.00 paycheck feels great and is a tangible reward for all of your entrepreneurial hard work.

 

If you aren’t thinking about a raise yet right now, that’s fine, but let’s define what the conditions are for you to go ahead and boost your own paycheck. You need something a little more concrete than, “someday” or, “next year” or the elusive “when we make more.” The six-month mark is a great time to plan our next salary move.

 

First, what calculation did you use to determine your current check amount?

 

Think back to when you first wrote yourself a check this year. Did you figure your personal four walls (food, utilities, rent or mortgage and transportation) as your first goal? Or did you take a percentage of your “goal” salary, say 40% of your desired $1,000.00 per week? Note how you came up with your current paycheck amount.

 

Next, try a bump up a bit to a percentage that feels good and is sustainable.

 

Go ahead, let’s play with the numbers. What does 5% look like? How about 10%? If you write yourself a  $500.00 net check every other week, what if you bump it up to $550? Remember to have a purpose for the money. So, take a moment and think about what you would be able to do with an additional $100.00 per month in this scenario? Hire a cleaner part time? Get a massage? How about that food order service you wanted to try? Or to pay a bigger chunk of the personal expenses if you still do the side hustle thing?

 

Don’t forget the bump in taxes.

 

Your business should be paying your taxes as well. In our example above of a $500.00 net check, the gross check that you write adds in the 25-30% that you deposit for self- employment taxes. If we add 25% to this example, the gross paycheck every other week is $625.00, with $125.00 for taxes and $500.00 for the next paycheck. Do a quick, back of the envelope calculation, and refigure the taxes and your new gross paycheck amount.

 

If You Don’t Start Now, Calendar your raise.

Maybe you aren’t quite ready to make this bump. But when will you be? Set a date on the calendar. Perhaps it is August 1st. Or maybe 4th Qtr. Whatever you decide, try not to let it go into next year. You want to relook your own compensation a few times a year as you are growing your business. Remember that as soon as you start writing that bigger check it is time to celebrate!

 

If you are struggling to pay yourself, or you are unsure if this is the right time for a raise, you may need to get more clear on your numbers and design a strong money strategy that encompasses the six pillars of business finance. The doors to Profit 101: The Creative’s Guide to Managing the Money are still open for our July 1st start. Visit https://entremoneycoach.com/profit-101 to get into the simple money management program creatives love.

Why You Should Plan Your Spending Every Month

Posted on by moneycoach

I don’t like the word, “budget.” I think it seems restrictive, and many people agree. Prefer to use, “the spending plan,” because you are truly free to decide how to spend. I find, however, the monthly spending plan causes some real stress for people. Sometimes it is the idea of planning out the money (particularly before it’s made) and sometimes it’s the feeling that your plan must be perfectly executed to be any good. BUNK. Having an idea of what you will spend, and when, makes it easier to make decisions. Because you have set a limit. A written limit. Your spending plans. And the plan is designed to be dynamic. As dynamic as your business.

 

Having an idea of what you want to spend every month in different areas of your business is smart. It’s way too easy to just hand over the debit or credit card without counting how the amount you spend reflects on your overall business income and expenses. You are in business to make money and earn a profit. You have to have a plan for your spending.

 

Know what You Will Spend and Write it Down.

 

Think of you spending plan as a helpful guide. Beyond the expenses in your breakthrough number (the four walls), you should consider your spending in other areas, such as your marketing, projects, supporting persons (not employees), and business processes. Creating a marketing budget, creating a budget for contractors, and a budget for things like accountants and payroll allows you to make decisions throughout the month on where to maybe spend more, or where to cut back.

 

How much you can afford to spend will be something you need to work out based on your business’s goals and income but have numbers down. I’ve seen one too many businesses hire people or launch a campaign and then run out of money before things could be completed. Because they bought into what sounded awesome, not what was really affordable at that moment in their business.

 

Plan to Make Changes Throughout the Month

 

Guess what? My spending plans RARELY go unchanged throughout the month. Typically, at least one thing changes. Maybe I made a small investment into a resource or course that became available. Or I decided to move a project forward sooner than planned because of an opportunity that I wasn’t expecting. The thing is, having a written plan allows me to make those decisions.

 

Unexpected changes are, well, to be expected. When you have your plan in front of you have a baseline. Then consider what comes up. You can ask yourself, “Can I afford this? Is it moving us towards the vision? Does this work better now or later?” Your answers will then guide whether you want to spend now or not. But with a good written plan you will already know what money has been allocated, what’s left, and how much extra has come in the door to guide you.

If you need some guidance in creating your spending plan, and getting your business money stuff straight and stress-free, join me in the live Profit 101 course starting July 1st 2020. For more information on what we cover in the course, including the six pillars of your business money, visit https://entremoneycoach.com/profit-101 . Doors close on June 30th.

Money Truth: We Aren’t Supposed to be Starving Entrepreneurs

Posted on by moneycoach

Talking to my third creative this week about profit. And again, it’s someone who is netting under $7.00 an hour. Not because they aren’t talented. Not because they aren’t absolutely excelling in their zone of genius, but because they don’t know their numbers, they don’t know where the profit is all leaking out, or they feel too guilty to charge more.

 

The truth is, we wouldn’t work for someone else for the rates that we pay ourselves. The days of “breaking even” need to be behind us, because you are worthy of earning an amazing paycheck and keeping profit in the business AFTER you get paid. Here’s a little primer on profit.

 

There are several ways to figure your profit margin, but without getting too “mathy” I want you to do two things really. Make sure you are not losing money. Add a little profit margin to your products and services if you don’t already.

 

Rule #1: Don’t Lose Money

 

The first rule of business. But it is easy to do. You can forget to figure in all of your costs. Perhaps we don’t account for all of our hours. Or, we offer “add ons” without considering what those bonuses cost our business. And we all do it. If you want to offer something for free and not recoup the cost, that’s fine. Or, if you want to offer something at less than cost, that’s fine. But, if you do it for everything in your business, it’s not a business. It’s an expensive hobby. And you will only get more and more frustrated as time goes on. Because you work so hard and make no money.

 

Here’s a simple way to figure your base costs. You can figure them by day, or by week, or by hour. To figure by week, take your total and divide by 4. To figure per day, divide by the number of days you are open (M-F is an average of 20 days/mo.) and by hour, first divide by day, then by the number of hours you are open.

 

  1. Add up all of your costs. Start with your Breakthrough Number, all four walls of your business (if you need to calculate your number, visit here). Don’t forget to add your other costs, such as, your marketing, debt payments, everything.

 

  1. Take that number and choose your frequency (week, day, hour) and divide. This is the base cost you have to stay open for the period of time you chose. For example:

 

My true costs are $3500.00/ month.

For weekly costs: Divide by 4- $875/ week

Daily costs to stay in business, divide by 20 (I am open 5 days a week): $175/day

Divide the daily number by the hours I am open (8): $22.00/ hour.

 

So, for this example, I need to make $22.00/ hour or $175/day or $875 week to not lose any money in my business.

 

Rule #2: You Are in the Business to Make Profit.

 

You need to make more than the hypothetical $22.00/ hour example above to have any profit left over after all of your costs. How do we do this? First off, it is an average. You may have a day that makes more, and a day that makes less. You know your Breakthrough number (that’s the start) and all of your costs (that’s how we figured the base) now we look at your products and offers and add profit.

 

  1. If you are a service provider: add a profit line. You can add whatever feels right for you. Add 20%, 50%, 100%.

– Start from your offer. How many do you need to sell a day, week, month, at the current price point to get to profit?

– mix up your offers, how many of each do you need to sell?

– you can decide what offers get which profit margins, because they don’t all have to be equal. There’s no issue if you charge a 30% profit on one thing, and 10% on another. As long as you have a net profit margin when you look at them all together.

 

  1. If you have a product: add a profit line. You can add to every product evenly, or add to them individually, do what feels right.

– I see products from creatives often lose money, because you don’t charge to recoup the time it takes to manufacture things, like shirts, prints, jewelry, etc.

– Add a small percentage to your true wholesale costs, like 2-3% if you are worried about charging more.

– Add a flat fee for your time if you don’t already. $8.00/ item to manufacture or perhaps $100/ hour (divided by the number of things you make an hour.) to recoup the cost of your time.

– If you are a wholesaler or reseller, use a flat percentage if you want- and siphon it off as pure profit, not to be co-mingles with the other income for expenses.

– Again, your profit margins do not have to be equal across products, line of business, or offers. You can have a smaller number on bulk sales, higher on individual for example. As long as at the end of the day you have a positive profit margin.

 

You Don’t Have to Do the Math Alone. Grab a spot on my calendar for a free 30-minute support call, and let’s take a look at your numbers, and where your profit leaks are. Just visit https://dawnkennedy.as.me/support  to grab a spot on my calendar. I am passionate about seeing small businesses succeed and maintain profitability for the long term.