Friday #4: Do the Math
Congratulations, you’ve made it to another Friday! *tosses you a Pine-Apple-Rita* You deserveeee. Sip slowly.It’s been a whirlwind of a week and my eyelids are drooping as I type, but there’s an old Donald Trump roast on TV and my wish that it were Kanye West on that stage is keeping me up long enough to get down to business with you guys.
So, let’s get down to business.
As much as I hate numbers and math…and anything to do with numbers…and math…There’s no getting around the fact that it’s the ONLY way your business can thrive. THE. ONLY.
I said this two weeks ago, and I’ll say it again:
When it comes to supporting a business, liking a post and giving shouts out on Instagram doesn’t cut it. You know what does cut it? SPENDING MONEY.
I know, I know—I’ve placed lots of emphasis these past few weeks on the Almighty Dollar, which may seem a little dirty because all our lives we’ve been taught to hate money. We’ve been told that it’s the root of all evil, but the reality is that our business will never survive without it.
If a business makes no money, it can’t purchase necessary supplies, it can’t hire the help it needs, it can’t advertise effectively, and it can’t invest in business development tools (like books, seminars, conferences). Hell, it can’t even treat a prospective client to a nice lunch meeting!
But more importantly, if your business isn’t making money, then you will never be able to do it full-time.
I’ve spent a good amount of time talking about the importance of giving money in order to get money (see: Friday #2a), but if you’ll allow me to switch gears (of course you will), I want to put you in the driver’s seat. Let’s say you’ve already got the customers and the clients who are eager to spend money with you. What’s your goal? How much do you need them to spend in order to consider your business a success?
How much do you need them to spend so that you can submit your two weeks notice and become full-time Funemployed?
This is where the math comes in. *wall slide*
In order to truly build a successful business that you can take full-time, ask yourself three questions:
- How much money do I currently spend on living expenses (rent, car note, groceries, etc.)?
- Based on my current prices/rates, how many clients would I need in order to cover my bills?
- Based on the number of clients I need to cover my bills, would I be overworked and exhausted?
Maybe this example will help me break it down for you.
My friend Beyoncé is a photographer with $1,000 in monthly expenses. Her current rate for a photoshoot is $100 per shoot. At that rate, she’ll have to land 10 clients in order to cover her standard monthly expenses, and maybe 10 more to have money to put away into a savings account, cover miscellaneous expenses, invest in equipment, and enjoy life a little. Beyoncé now needs 20 clients a month in order to support herself the way her 9-5 does. Marketing, pitching, and then executing 20 photoshoots in one month? Including edits, re-edits, invoicing, and correspondence? EXHAUSTING.
After talking to her a little more, I learned that Beyoncé currently averages about 4 photoshoots a month, totaling $400. Unfortunately, at this rate, she can’t afford to leave her day job, even if it were her dying wish.
So what should Beyoncé do?
After our coaching session, Bey agreed that she needed to raise her rates ($100…are you kidding me?!). Now, instead of taking whatever photography work she can get, she’s choosing a niche (hey Friday #1!) and upping the ante.
Before, Bey was just your run-of-the-mill photographer, shooting bloggers against street art and her friends' birthday parties. Now, she’s branded herself as a Corporate Event Photographer, specializing in Conferences, Conventions, and Corporate Holiday Parties. She’s ditched the $100 price tag and now charges larger companies $3,000 per event, which includes her professional photography services, editing, and a 2-day turnaround time on photos.
With just one gig, Bey has her expenses covered for the month and $2,000 to spare. Or even better, she has 3 months worth of expenses taken care of. Imagine if she kicked her pitching into high gear during holiday season, landing a corporate holiday party every weekend for a month? That’s around $12,000 (Right? Me and math aren't good friends).
Now, $3,000 may be too high for you now, but you get my drift. No matter what industry you’re in, I’m willing to bet that 90% of you are lowballing yourself. Shoot, I'm lowballing myself, too. Money is funny, and it’s not always easy to ask for more money than we’ve ever asked before. I remember when my mentor told me to quote a client $5,000 a month for social media consulting. Not management. CONSULTING. I was scared to even type it on the proposal, and called her a million times to ask if she was sure. (She was.)
The goal is to work smarter, not harder. There are a million books out there about business, and almost all of them say that the goal is to make the most amount of money while doing the least amount of work. You shouldn’t have to book a photoshoot all 30 days in order to cover expenses for a month.
I use the photography example, but it applies in every industry. Figure out how much you need to make, and then raise your rates so that you can do it without burning yourself out.
- If you’re a graphic designer, how can you package your graphics so that you’re charging $1,000 for a bundle instead of a million $50 flyers here and there?
- If you’re a life coach, ditch the hourly model and offer a bundle. 10 sessions for $995 instead of 1 session for $100. (ProTip: Lock your clients into longer engagements with you. They always say they’ll come back to pay for more sessions, but they rarely do. When you offer packages, you show them that you’re in that baby for the long haul, and they will be, too.)
And here’s a harsh truth: Sometimes, you have to ditch your familiar client for your ideal client.
Read that line again.
In order to see growth in your business, you’ve got to step into uncharted territory. It may be familiar to slide up in Instagram DMs to offer your services, but if you want the big bucks from your ideal client, you’ve got to get uncomfortable, draft professional proposals, research appropriate points of contact, and pitch yourself via email or phone. Instagram DMs may get you some money, but you’re upping the ante and going after clients with the long wallet, just like my girl Bey did last year.
Remember: There’s nothing wrong with wanting the big bucks. Money is not a curse word.
Do the math. Write it out: How much are your monthly bills? How much are you bringing home from your 9-5? Now, with your current rates and/or best-selling product/service, how many clients will it take to cover your expenses OR match your paycheck? Will you be overworked if you kept your rates the same, or do you need to stop selling yourself short and increase your pricing?
P.S. Spoiler alert: We’ve got another bonus day on the way...More on this money talk next week with Friday #4a.
P.P.S. Don't forget that I'm offering a special 50% off coaching rate during the 5 Fridays to Funemployed series! If at any moment you're feeling empowered to get the ball rolling and start making better sense of your homework, shoot me an email and we'll book a call. It's usually $300 for a 2-hour session, but for you beautiful people, it's $150. And it's for my 5 Fridays family only! So if you want to share the wealth, make sure they're signed up for the Funemployed mailing list.
Until next Friday,
-Janna M. Hall