Self Employed Success

Many people quake in fear at the idea of writing a business plan. They imagine in their mind a 100-page document full of charts and financial figures. While it’s possible to create a business plan of that magnitude when trying to get capital for your business, a typical business plan for self-employed people should be less than 10 pages.

The purpose of a business plan, for a self-employed person who is financing his own business, is to have a central repository for all strategic thinking about the business for the coming year or two. Here’s what should be included:

• Your business idea in three sentences.
• Your target audience.
• The challenges that your target audience faces.
• The benefits of using your products and services to meet those challenges.
• Your company brand and image.
• Your projected revenue and expenses for a year.
• If you project more expenses than revenue for the first year, a statement about where the money will come from to pay for those expenses.
• A list of your major competitors, and how you are different from them.
• At least six marketing techniques you’re planning to use over the coming year, when you plan to implement them, and what results do you expect from them.
• A list of people who you will need to hire to implement your business plan or marketing plan (unless you have the business skills and time, yourself, to do all the work).

You should review your business plan, and update it, annually. I recommend reviewing the marketing section of your business plan quarterly, so that you can gauge the success of your marketing campaigns.

I went to a professional video techniques workshop this weekend with Rick Toone and Ken McArthur. They focused on the importance of planning in creating video as a marketing tool for your business, being strategic in your intention for  the purpose of each scene, the overall message of your video, and what will you do with it.

I know I harp on strategy and planning a lot, but bear with me as I harp on it some more. What Ken and Rick were talking about regarding creating videos for your business applies to every thing you do to market your business. Some people enjoy writing blog posts or creating videos to market their businesses. Some people enjoy public speaking and networking to market their businesses. But before you get your hands and head into your next marketing project, ask why you’re doing it: who are you trying to attract, what are you trying to say to them, what you want them to think and feel as they interact with your marketing technique, and what you want them to do afterwards.

But don’t forget the biggest why of all: Why are YOU doing this particular marketing technique?

I’m speaking on Wednesday to a group of women entrepreneurs at the Women’s Business Forum. Before I write that speech, before I haul myself out of bed before the sun rises, before I stand in front of an expectant group of business owners and talk about the psychology of marketing to women, I have to think long and hard about my personal intentions for this program.

Sure I want to educate them and introduce myself to them…that’s a given, a basic necessity, the bottom-floor reason why I’m doing it. I have always deeply admired what the Women’s Business Forum is doing: as a non-profit organization, they empower female small business owners to succeed by offering free educational programs and mastermind groups. Giving 1-hour and 4-hour workshops to this group, free of charge, is my way of contributing to the magic that is the WBF. I’ll do it as often as they invite me to do it.

It’s not my intention that someone walks away from my presentation on Wednesday and says, “Gosh, I can’t wait to hire Karyn for thousands of dollars!” (I won’t say no if they do…I also have an intention for earning a large income from my coaching and consulting business. ) But if one person walks away with a little more knowledge, a great marketing technique, a brilliant way of looking at their business through a different lens, I’ve done my job.

Of course I’ve planned out my speech. Of course I’ve planned out my wardrobe. Of course I’ve loaded up with business cards. The most important implementation I’ve done is to stop and ask myself: Why are you giving this particular speech, on this particular day, to this particular group?

Strategic thinking starts with self-knowledge.

(P.S. Thanks to Rick and Ken, I’m re-energized around creating videos for my biz. Keep your eyes and ears open for more great Ask Karyn Anything educational videos coming soon! Submit your questions here.)

There is a delicate balance between the fee you need to charge for your products and services, and the fee that people are willing to pay for them. But with gasoline, heating, shipping, health care, and other costs rising, there comes a time when you must raise your rates in order to remain profitable.

Most people see their own costs going up and won’t be surprised that you’re raising your fees, too. With proper communication about it, you should be able to raise your fees effortlessly.

Here are some tips on how to go about it:

• Don’t let fear and limiting beliefs stop you from raising your fees. If you hear yourself making excuses that you know are not true, it’s probably your fears and limiting beliefs raising their ugly head. Some of these include, “All my customers will leave if I raise my rates,” or “I’m not worth the new rate.”
• Have a clear idea of where your break-even point is, profit-wise. It’s not just about what you “need” to make, it should be about what you “want” to make, too. Decide how much money you want to bring into your personal life from your business and how much cash flow you want in your business to float new ventures. Think big; don’t keep cutting your goals just because you feel uncomfortable with big numbers.
• Base your fees on what the benefits and results of using your product or service are worth to your customer. For example, as a small business consultant and coach, I help people increase revenue and profit in their business. This has a value to self employed small business owner, and my fees are based on that value. If you can solve their problems, and if the problem is important enough to solve, then they’ll pay you an appropriate fee for that solution.
• Base your fees for services on your level of expertise. If your expertise level is high, if you’ve put in many years of study and have lots of experience, you’ll be able to charge higher fees than someone just starting out. Because of this, you might consider raising your fees annually as your skill level and experience grows.
• Check your competitors. Are there people out there, with your same skill level, charging more than you do? Why do you think you’re still undercharging?
• See if your product or service is a “commodity.” A commodity is a product or service that is the same, regardless of who is offering it. If you’re selling a gallon of milk, it’s the same gallon of milk that your competitors are selling. In commodity pricing, there’s no room for differentiation in the customers’ minds, and customers will be looking for the lowest price. So if you have a class called, “Copywriting 101″ and your competitor has a class called, “Introduction to Copywriting,” your customers will see these two classes as the same thing: a commodity that can be purchased in a number of different places, therefore price becomes the only differentiating factor. However, if your product or service is unique, or your skill set and experience are different and better than your competitors, then you can charge more. You’d pay more for Oprah to teach you how to create your own TV show empire than someone you’ve never heard of. Bargain basement prices often scare off potential customers because they think your product or service is a commodity they can find anywhere. Use good marketing, branding and copywriting to differentiate yourself from your competitors.
• Decide in advance whether you’ll raise fees across the board, or only for new customers. Even if you raise fees only for new customers, there may come a time when existing customers will need to have their rates increased, too. Make a strategic decision about when you’ll raise your fees and for whom.
• Do the 80/20 evaluation. Find the 20% of your customers who bring you the least profit and either raise their rates or get rid of them. This may sound harsh, but you’re in business to make a profit and you can’t carry an unprofitable customer just because you like them. Refer them out to someone who can serve them at the fee the customer is willing to pay.
• If you will be raising your fees with existing customers, it’s a good idea to call them or write a letter, explaining that the fees will be going up to the new rate, and giving them a date when this will happen. I recommend giving them at least a two month notice. Will you lose some customers who aren’t willing to pay the higher rate? Yes. But if you do, then you need to ask yourself, “Why hasn’t this customer found value in what I’m offering so that the new rate was still acceptable to them?”

This is the perfect time of year to look at your pricing model and make changes. Take a few hours and decide on your new fee structure, dates for change-over, and communication avenues.

Don’t just charge what your competitors charge.

Don’t just charge the lowest price.

Instead, do the math.

Here’s how…

1. Determine What You Need To Make

Part of the calculation in setting service fees is how much you need (and want) to make. If you first decide how much profit you need to make, you can then determine what to charge in order to make that profit. It’s necessary to do a personal and family budget first, to determine the minimum you need to bring into your home each month.

In addition to that minimum, add the amount you’d like to make, that would give you the lifestyle you want. You need to have a goal of the full amount you want to bring home each month when you have a successful business. While income isn’t the only measure of success, NOT making enough money in your business will bring frustration and dissatisfaction.

So take time to dream a little. If you could earn as much money as you ever wanted, what would you spend it on? Maybe you’d send the kids to college. Or go to Paris. Or tuck it away for retirement savings. Or give to your favorite charity.

2. Research Your Fee Options

First, examine carefully your skill level. It is common practice in business to charge based on skill. The more skill and experience you have, the more you charge.

You have several choices on how your services will be billed:

• per hour
• per session (regardless of how long a session lasts)
• per month
• per project
• per “program” (you define what the program includes and how long it lasts)

Next, find out what others are charging for similar services in your industry and location. You may have a difficult time getting clients if you set your fee at $100 per hour when other providers in your area are only charging $60 per hour, unless you have more experience, are more well-known, or have a unique offering that is different (and better!) than your competitors.

One interesting note is that you often can charge much more in big cities than anywhere else: in the suburbs you might be able to charge -$75 an hour and in New York City charge $150 a hour. And even within a city, you might be able to charge more in exclusive neighborhoods than middle-class neighborhoods. Keep your eyes open to the subtle differences in pricing structures all around you.

Look at your target audience. Are you trying to reach high-income people or is your target somewhere else on the spectrum? Are you intending to sell to corporations? Knowing your ideal target client can also impact your pricing model.

Ask others in your industry what they charge. It is not collaboration or price-fixing to simply inquire as to industry norms. Ask your attorney if you have concerns about enquiring within your industry about pricing.

Another consideration is how much your education cost you. As an example, some massage therapists can spend $4,000 to $6,000 to get their certification. These education expenses, as well as other business expenses, need to be figured into the mix when setting fees. You’ve got to recoup those expenses and make a profit, too!

Finally, decide if you will offer discounted fees and how you will apply them. Some people create their fees on a sliding scale, based on what the client can afford. Others offer either full fee or free sessions, with no discounting in-between the two extremes. Some take one or two free clients per month as a way to give back to the community, or offer discounts with a deadline attached. The choice is yours.

3. Determine Your Payment Policies

Decide if the client must pay in advance, over time, or after the work  is complete. If they pay for your entire month/program/project in advance, will there be a discount?

Also decide if you will offer a discount for early payment of invoices, say a 5 percent discount if paid by a certain date. This encourages those clients you invoice to pay their bills early, thereby giving you earlier access to your cash.

Finally, if you will be invoicing clients, determine how much time they have to send you the payment. Typical time periods are 15 days or 30 days after the invoice date. You must be willing to be assertive in collecting past-due accounts and be firm with people who don’t pay on time. For example, if your policy is that payment must be received in your office by the first day of the month, consider warning, then firing, clients who habitually are late in sending in their payment.

EXERCISE – How Many Sessions Do I Need To Do?

For this exercise, you’ll need a piece of paper and a calculator.

1. Calculate the income you need to bring into your home (after taxes and expenses) so that you’ll have a comfortable life. Don’t short-change yourself here; be honest with what you really need and want.

2. Add 30-35% to that number to figure out the gross income you’ll need. This covers taxes and expenses. (Adjust the percentage if you will have an unusual number of expenses.)

3. Determine the fee you’ll charge for one session (hour/program).

4. Divide your total income by the per-session fee to calculate the number of sessions you need to do in a year.

5. Now divide the yearly sessions by 12 to determine how many you need to do per month.

6. Assuming you’ll work an average of 20 days per month, divide the total monthly sessions by 20 to figure out how many you’ll need to do per day.

For example:

1. Desired Net Income: $35,000

2. Plus 30%: 35,000 x 1.30 = $45,500

3. Per Session Fee: $60

4. Number of Sessions per Year: 45,500 / 60 = 758.33

5. Monthly Sessions: 758 / 12 = 63

6. Average Daily Sessions: 63 / 20 = 3.15

In this example, you would have to do between 3-4 sessions per day in order to reach your annual profit goals.

Your Calculations: Do The Math

Net Income:

Plus 30%:

Per Session Fee:

Number of Sessions per Year:

Monthly Sessions:

Average Daily Sessions:

Now, look closely at that final number. Can you physically and emotionally do that many sessions in a day? What about the time you need for administrative and marketing work?

For instance, if each session is one hour in length (with 15 minutes of rest time in-between sessions), do you have enough time and energy to do that many sessions?

Final Thoughts…

There more involved with setting your pricing and payment policy, but these tips should give you a solid foundation. In the next issue of Self Employed Success, I’ll give you some tips on raising your existing fees.

Until then…be happy, be prosperous, be ambitious for the sweet life.

Comments?

So, what did you think of this post? Did you find it helpful? Do you like these longer, meaty articles or do you prefer shorter ones? Let me know what you think!

About 21 years ago, I set out to make a Vision Board for myself about my perfect business and my perfect life. At the time I was working a corporate 9-5 job, plus running a photography studio in the evenings, and photographing weddings every weekend. My corporate job was safe but a little boring, and working most evenings and weekends left me no time for dating. I had been living in a two-bedroom apartment since college, but longed to have my own home and garden.

I pulled out a stack of magazines and began cutting out images and words that inspired me. Soon I made a Vision Board of my perfect small business, my perfect new home, and wrote a list of What I Want In A Husband, which I added to the Vision Board.

Fast forward six years later: I had bought my own home and created eleven garden beds, which brought me tranquility and a deeper connection to nature and beauty. I had met and married Aly (he laughed when I showed him my Perfect Husband list!). I had started my life coaching business that would eventually morph into a small business coaching enterprise.

Last year I created a new Vision Board for myself (see photos below). Already some of the things on it have come to pass.

What’s a Vision Board?

A Vision Board is a collage of things you want in life, experiences you desire, and people, situations, and feelings you want to manifest. Sometimes it’s called a treasure map.

Making a Vision Board has several purposes:

• Helps keep your goals constantly in sight and in your mind
• Surrounds you with the energy of what you desire most
• Helps you gain clarity about what are your most important goals and dreams
• Keeps your emotional energy high and your focus strong

The way to achieve your goals in life is to have a clear picture of what you actually want. Brian Tracey says, ” An average person with average talent, ambition and education, can outstrip the most brilliant genius in our society, if that person has clear, focused goals.”

The Law of Attraction says that the more you focus on the things you want, the more time you spend paying attention to your purpose, the more you draw your desired items and experiences into your life. So surrounding yourself with visual representations of what you desire helps to elevate your energy in the direction of those things.

What You’ll Need

1. Poster Board – I use 20″ x 30″ poster board, because you can find inexpensive frames of that size in any discount department store. A frame will keep the board flat and dust-free, and will allow you to hang it on your wall.
2. Old magazines – You’ve been wanting to clean up your old magazine pile, so here’s a good excuse! Also, check with friends to see if they have any old magazines, or ask your local library if they ever trash magazines. Choose magazines that have always appealed to you in the past, as they’re a treasure trove of images and words for your Vision Board.
3. Glue – Don’t use glue sticks as the glue isn’t stable (unless you’re going to frame the Vision Board between a plastic cover and a cardboard backer, which should keep all the items secure). Personally, I use paper cement. There are also double-sided sticky tabs you can buy at most photography stores. These tabs are commonly used for putting together wedding albums, but work great for a Vision Board, too.

Getting Started

While it helps to review your goals and dreams in advance, I find that just diving into the magazines and cutting out any words or images that appeals to me to be the best way to collect ideas.

Don’t judge or critique what you’re cutting out yet. Just cut out any image or word that attracts you, as these are subconscious messages from your brain, heart and soul.

Sort them into piles of themes:

• Feelings you’d like to experience
• People you’d like to attract into your life
• Travel and places to see
• Money goals
• Lifestyle goals, like health, relationships, etc.
• Professional goals, like enhancing your business, becoming famous, or writing a book

Prioritize what must go on your Vision Board. Soften your focus and allow your thoughts, feelings and intuition to guide you to the most important images and words.

Layout without gluing. This helps you to group the items in a pleasing manner and eliminate those items that don’t work for you. Don’t forget that you can write your own words and draw your own sketches for the Vision Board, too.

Glue and frame.

Put it where you’ll see it. Take a moment each day to focus on a portion of the Vision Board that calls to you.

Do you remember in The Secret, John Assaraf talks about creating a vision board that included his perfect home?  Six years, and several moves later, he was unpacking an old box and came across his old vision boards – and discovered an amazing thing: the photo of his dream house on one old vision board is the EXACT house he lives in today! (Not a house “like” the house he wanted…the exact same house he was currently living in.) John tells the story in this moving video.

When you create your Vision Board, take photos of it, and post it on your blog or Facebook, so we can all share in the manifesting of your dreams! (Post the link on my Facebook Fan Page: http://www.facebook.com/KarynGreenstreetFan or use the Comments link below to post your link to this blog.) I can’t wait to see what you create!