"I need your help", a very close friend comes waltzing into the house and takes a seat at the dining table, "How much should I charge clients?". "Easy. What's your cost of doing business?" I replied without hesitation.
You see, numbers come easily to me. Budgets are my constant, because, even as they rise and fall, they're predictable. We know to expect a huge electricity bill at the end of Summer with the endless use of air conditioning, a bit of a spike in the middle of Winter with the use of our clothes dryer, our grocery bill jumps every December through to February with Christmas dinners and birthday celebrations, and the flu season brings with it a large bill for doctors appointments and flu medication. Just as household budgets are important to the flow of income and expenses, as is a budget for your business to record and estimate your expenses for running a business and whether or not that flows nicely with the income your business is bringing in.
"IF YOU AIN'T GOT NO MONEY, TAKE YOUR BROKE A** HOME"
As Fergie-Ferg's Dad explained to her, my Dad explained to me; If you don't have the finances to do what you want to do, you can't do it.
It took me years to fully understand what Dad was trying to teach me. By "years", I mean, "my entire life, to date".
Too often are business owners getting in over their head because they don't price what they do or sell accordingly.
"Accordingly" - "Taking into consideration every single expense that their business has, and ensuring that the income their business brings in is covering all those expenses as well as their personal wage". That's right, you need to be covering your wage!!
Businesses are failing and going under quicker than they're rising. A huge reason for this is because business owners are spending more than their business is earning. The common excuse is, "I need this to get my business going".
NEEDS vs. WANTS
When we make that leap into starting our own business, we have these dreams of what we want our business to be.
We imagine beautiful business cards, handing over fancy credit cards with our business name on it, sitting in luxurious offices or studios with beautiful decor. We imagine what we want to build our businesses up to and not where we NEED to start. You're starting out! You're brand new! No one expects you to have a fancy website & beautiful matching stationery.
Start out small and work with what you HAVE. Dream big, but remember that everyone has to start somewhere, we all had the cheapest business cards with horrible stock standard designs and an amateur website, now it's your turn.. accept it.. breathe it in.. make the most of it. It's onwards and upwards from here.
FIGURE OUT YOUR COSTS!!
Your "Cost of Doing Business" or CODB is the number one thing you should do when you start your business. You need to know how much it is costing you to run your business, so that you know how much you need to earn to not only keep your business going, but to help it grow, as well as cover your personal wage. Your CODB covers, but is not limited to;
Business Cards
Website
Domain Name
Email
Business Software (Lightroom, Photoshop, InDesign, Accounting Software, etc.)
Equipment (Cameras, Lenses, Computers, Memory Cards, etc.)
Camera Wear & Tear
Travel Time (Location shoots, Meetings, Consultations)
Fuel for your vehicle
Wear & Tear on your vehicle
Laundry
Phone Usage
Meals for when you are on location
This list will vary depending on your business setup and what you provide to clients, but I guarantee that most people just starting out won't realise that they've forgotten to include a good chunk of their costs, for example;
Bank fees on Business Accounts
Delivery Fees for products
Sick Pay
Holiday Pay
Internet Usage
Social Media Marketing
Your personal design time
Again, this list will vary, but these are a few of the things that people forget to include, or don't realise they should!
Make a list. Then leave it for a day or two and add to that list because you've realised there was something you forgot.
YOU'RE YOUR OWN BOSS NOW!
Think of all the expenses you would expect your employer to cover, all the expenses you keep receipts for so you can claim them back at tax time.. you need to pay for these things now, so you need to charge your clients enough to cover all your expenses!
You are now responsible, more than ever, for your own income. Whether you have quit a 9 - 5 job to work for yourself full time, running your business in addition to working a 9 - 5 job, working for yourself full time in addition to being a stay at home parent, or "other", you are in charge of how successful you and your business become, this is why charging your clients the correct amount for both your time and your services is so incredibly important!
"How do I know how much to charge?" - Easy! If you went for a position with another business for the role you work within your own business, how much would you expect to be paid? How much would your time be worth?
Add that to the amount you need to run your business as well as have your business profit.. divide it by the amount of clients you would expect to have hire you = the minimum amount you need to be charging.. MINIMUM.
Anything less than this amount your business is losing money and you will more than likely be taking money out of your own pocket to keep it afloat.
Fancy business cards and thousands of dollars in web design isn't going to grow your business. Making good decisions and knowing your numbers is what will grow your business. Get this part right the first time and you'll hit the ground running.
*DISCLAIMER*: EVERYONE'S SITUATION AND BUSINESS PLAN IS DIFFERENT TO THE NEXT. WHAT YOU REQUIRE TO RUN YOUR BUSINESS WILL BE DIFFERENT TO OTHERS. GOING INTO BUSINESS FOR YOURSELF IS A SERIOUS DECISION. BE SURE TO THINK YOUR FINANCIAL SITUATION THROUGH THOROUGHLY.
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Erin Michele .x
