How confident are you in your pricing structure?

How confident are you in your pricing structure?

I’m asking this question, purely from the fact that if you’re not fully confident in your pricing structure and what you’re charging, this will come through when you are talking to potential clients.

And this is whether you feel that your prices are too high, or whether you actually feel they’re too low.

Two examples of this.

Example one – no confidence in pricing structure

Just this week. I found a potential business coach for me, booked a call and the conversation was going quite well.  But then it ultimately came down to pricing.

I suspect that she had looked at my website and my online profile and put me in a category of earning six or seven figures, which, quite frankly I don’t.  And so she quoted me $25,000, per month.

Yeah, you read that right, $25,000.

After nearly falling off my chair and reaching for gin and tonic to take a good hard slug I informed her that this was completely and utterly out of my price bracket. She instantly discounted. And so, I thought I’ll see how far I can push her.

Within, literally one minute, two minutes maximum, she had bought that price down to $500 per month.

Now, what did I think? “Wow, this is fantastic. I can now afford her I’m going to sign up with her.”

No!  In fact, the complete opposite.

I instantly thought if she is discounting by $24,500 in less than two minutes, she’s a fraud. She’s making this up. She’s not confident in her pricing. She has no idea what she’s doing. And she’s certainly not someone that I want to work with.

Example 2 – 100% confidence

On the other hand, many moons ago when I was moving from employment to self-employment, I called a business coach who I really wanted to work with. And yet, yet again, she was out of my price range. I asked her what she could do for a lower finger, and she would not budge.

She knew her worth, she completely stuck by her pricing, she said to me, this is what it is. if you want to work with me. That’s what you’ve got to pay. She wasn’t quite that blunt, but that was the message that crystal clearly came across. What did I do? I found the money, and I went with her.

Do you see the difference? If people really believe in you, they will find the money and they will work with you if you’ve got something they really want. But you must believe in yourself. Instantly going into discount mode screams desperation, it screams you don’t believe in yourself; it screams you don’t really know what you’re doing.

Set your prices, believe in them. And as I mentioned, if your pricing is too low it’s going to come across because you’ll falter when talking, you’ll feel a bit icky inside.  You’ll think, bloody hell, I’m going to be doing all this work and I’m not really going to be charging my worth. It’s not a good feeling and it will come across in your voice.

Go sort your pricing structure out. Be 100% confident that you’re earning what you’re worth, but you’re also not pulling the wool over people’s eyes and just simply trying to rip them off.

Any thoughts? Let me know below.

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What to do when the money runs out?

What to do when the money runs out?

Everyone tells you to visualise and focus on what you want to achieve and it will come but try as you may, when the chips are down and you don’t know how you are going to pay the mortgage this month, staying positive and seeing a wealthy future is nigh on impossible.

You try to focus but every thought is consumed by the blinding panic of knowing the money has run out. Your chest feels like it is being crushed and you struggle to control the rising panic.

But it will be ok. Just read another self-help book and manifest the money.

Here’s the flaw in the plan.

Manifestation gurus tell you what to do but then also include their disclaimer that things don’t happen overnight. But you need the money now!! You don’t have time to let the manifestation work its magic. Time has run out.

What can you do to stem the rising panic that is threatening to engulf you and suck you in into its dark depths forever, never to return?

Get some perspective.

This will not kill you. There are others who have gone before you and will follow. They have survived and will continue to do so.

Take control.

Sit down and look at your exact financial situation. Do a cash flow spreadsheet. You now know exactly where you are and can now plan to bridge the gap of where you need to be.

Cut costs.

Look at your cash flow and cut out the luxuries. Don’t despair. This is a short term solution until you are back on track. Cancel sky tv. Change your mobile contract to the cheapest available. Cancel subscriptions. You can survive without all these things. Just take a look at those in third world countries. Life doesn’t end when you don’t have 100 tv channels to choose from. And you may just find your life feels freer without them.

Increase income.

Can you take a part time job. Sod losing face. This is about survival! What can you sell? All those clothes you have sat at the back of the wardrobe .. sell them on eBay. Do you have a spare room? List it on Air B&B. 

Talk to someone.

One of the worst things is trying to remain looking super successful to the outside world and bottling everything up inside. This is like a pressure cooker. You will explode. Find someone to confide in. Someone you can be honest with and have a breakdown in front of. Sometimes jut having a bloody good cry and letting it all out can work wonders. It lets off all that steam and allows you to see clearly again

 

Whatever you do, don’t just bury your head in the sand.  Take control and get the help you need.

 

 

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How To Make Sure You Get Paid On Time

How To Make Sure You Get Paid On Time

Do you want to get paid on time

Sorting out collecting in payments due to your business really is critical as you will spend far too much time chasing outstanding payments (as you may already be finding) and your cash flow may be so adversely affected your business is put in jeopardy.

To make sure you get paid on time, follow these tips below:

Decide Your Payment Terms

Decide when you want to be paid and make this clear to your client.  Don’t let the client dictate to you.

Depending on your business you may decide upon 30 days payment, 14 days, immediate payment or payment up front before any work is undertaken.

And you don’t have to stick to just one payment term for all your clients.  You can amend them dependent upon who you are working with.

I have used a variety of payment terms in the past (and still do).

For my freelance work with large corporations that I have a good working relationship with, I work on 14 days payment due after the work is delivered.  With business advice and consultations with individuals, I work on payment up front before any meetings take place.  When I run my local workshop, I allow payment on the day.

For larger projects, you may consider splitting the payments and I do this when I release one of my more expensive courses.  I ask for a percentage up front followed by 3, 6 or 12 monthly payments, depending on the type of course I am delivering and its length.

It’s your business, you know your cashflow (or you should!) and you decided what works for you.

Have a Contract

Once you’ve decided what you will be providing and when and how you want payment, you need to get this all written up in a formal contract that will be agreed and signed by your client.

Clearly state the payment details, what you will deliver in return for payment and what happens if a payment is missed or late.

Personally, I add a late payment charge into my terms and conditions and make it clear this will be automatically added to the client account if payment is not received within 48 hours of the due date. I also add that all work will cease until full payments have been received. I put in an explanation that this charge is to cover administrative costs in chasing payments and for not adhering to contracted terms and conditions.

Once you have your contract written up, make sure all details are included such as your name, business name, contact details and client details.  Sign it, date it, send two copies to your client and ask them to do the same before returning one to you and keeping one for their own records.

When I first did this many moons ago, I was afraid this may put off potential clients.  I know realise this is one of the most sensible things I have done as if anyone does not agree with these terms, I don’t want to do business with them.  Paying clients are what I want, not freeloaders.

A contract also helps should there ever be any query about a payment in the future as you can both refer back to the agreements that has been signed by both parties (yes, you must get them to sign before you start any work!)

Collecting payment

One of the easiest ways to administer collecting payments is to use accountancy software. I personally use FreeAgent where I have all my payment terms laid out and once a contract is agreed, I create recurring invoices to be sent on due dates. It is also possible to send reminders prior to the invoice due date to remind clients to pay and to automate unpaid invoice reminders.

On each of these reminders, I highlight the fact that a late payment will be automatically added should the payment not be received. This relieves me of having to send individual emails to clients and the yucky feeling that can sometimes be felt when chasing payments. It really is a huge time saver.

After having a few late payments and introducing this system, I have only ever had one defaulter.

Below are a number of different financial software solutions for you to have a look at. There will many more out there but this is a small selection to consider. Yes, there is a cost to these but if it saves you stress and gets your payments in, it will be well worth it.

FreeAgent

Package prices start at £19.99 + vat PCM. I heard so many good things about this that I just had to to switch to it myself and now don’t know how I ran my business without it. I just love it. If you want to use it you can get a 10% discount by using this link

Freshbooks

A free option for just one client. Package prices start at $19.99 PCM

Kashflow

Pricing starts from £5 + vat PCM for sole traders. Has add-on features such as CRM.

Quickbooks

Pricing starts from £9 PCM. A simple calculator to see which package is best for your business.

Xero

Pricing starts at £9 PCM for up to 5 invoices. Lots of add-on features

 


Use the tips above and save yourself time and stress of getting those much-needed payments in and make sure you get paid on time

Do you have any tips of your own on how to get paid on time?  Share them in the comments box below

 

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Turnover is vanity, profit is sanity

Turnover is vanity, profit is sanity

I have been catching up with the latest episodes of Dragon’s Den.  Whilst I appreciate the show is heavily edited, I am still amazed at the number of people who enter the Den without a clear understanding of their figures.

So many have no idea of the difference between turnover and profit.  The episode I have just finished showed a woman who was so proud of her £20,000 turnover but could not understand why the dragons were aghast when she said she had a negative figure for her gross profit.  She was questioned about her understanding of what gross profit was and she obviously did not have a clue.

Therefore, let’s clear up the key meaning of turnover, gross profit and net profit in case you are unsure.  And if after reading this you still don’t understand, please don’t bury your head and feel scared to ask for fear of looking stupid.  These figures are imperative to your business success so seek advice and explanation from your accountant.

Turnover:  This is simply the total amount of your sales income over a specified amount of time.  VAT is excluded from this figure if your business is VAT registered.

Turnover = income received from sales

Gross profit:  This is the money that is left from your turnover once you have deducted the direct cost of making your product or providing your service (such as raw materials) but not the general indirect running costs of the business (such as insurance, salaries etc).

Gross profit = turnover – direct costs

Net profit:  This is the money that is left once you deduct the indirect running costs of your business such as marketing, insurance, salaries etc from your gross profit.

Net profit = gross profit – indirect running costs

 

A simplified example:

Mary makes luxury cushions.  She sells her cushions at £50 each.  To make each cushion she needs to buy £7 worth of material, cotton, stuffing etc.  The running costs of her business for insurance, telephone, personal drawing, marketing etc are £1500 per month.

Over the last 12 months Mary sold 500 cushions.

Her turnover was £25,000 (500 x £50)

The direct cost of marking the cushions was £3,500 (500 x £7)

Her gross profit was £21,500 (£25,000 minus £3,500)

Her indirect costs were £18,000 (12 months x £1500)

Her net profit was £3,500 (£19,000 minus £18,000)

That’s it in a nutshell.  If you need any more help, pop on over to The Small Business Kit and drop me a line.

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Small business accounting software

Small business accounting software

The end of the financial year is here again and it is time to consolidate the accounts.  Do you have an easy system in place for this or use small business accounting software or do you sit tearing your hair out and losing sleep over not being able to balance the books?

If the latter, what are your options?  Personally I believe having an accountant is crucial to any business.  Or should I say a good accountant.  My accounts aren’t that difficult and I could quite easily do them myself but I have found that my accountant will always, without fail, find something that will save me money on my tax bill that I hadn’t thought of which pays for her fee instantly.

You can then look at getting a bookkeeper in to reconcile the accounts at the end of each month but this is where I think money can be better spent (sorry to any bookkeepers out there and do correct me if I am wrong!).

I believe in the power of automation to save time, money and stress.  And this is where small business accounting software comes into its own.  Yes, you can use software to replace your accountant but my personal preference is to use it in conjunction with my accountant to make their life easier (and their bill lower!).

There are some fantastic software options on the market today which will make balancing the books so simple and take literally minutes once you get to grips how to use them.

What can small business accounting software do for you?

These packages can take care of all the admin for you including expenses, payroll, and time tracking, to estimates and invoices.

They can help you keep track of your cash flow, see how much profit you are making, allow people to pay you online and send out automatic reminders to people who owe you money.

They will allow you to keep an eye on how much tax you owe and when it’s due.  And some even file your returns including VAT, RTI and Self-Assessment directly to HMRC on your behalf if you are not using an accountant.

Many software options have a free service but these are usually only up to a very small number of clients and also do not include many of the more advanced features so the paid for versions are always better.

Try before you buy

Before you go down the route of using a paid for service, take up a free trial so you can have some time to play with the system and make sure it does everything you want it to and that you can navigate your way around easily and understand the system.

Don’t just go with the first option you come across but review a number of options by talking to other people, particularly those in your industry that may have some quirks that need addressing.  Use online resources to read reviews and make sure you compare prices.

Resources

Below are a number of different financial software solutions for you to have a look at.  There will many more out there but this is a small selection to consider.

FreeAgent          Package prices start at £19.99 + vat PCM.  Hearing lots of good things about this package and just about to switch to it myself.

Freshbooks        A free option for just one client.  Package prices start at $19.99 PCM

Kashflow             Pricing starts from £5 + vat PCM for sole traders.  Has add-on features such as CRM.

Quickbooks        Pricing starts from £9 PCM.  A simple calculator to see which package is best for your business.

Xero                      Pricing starts at £10 PCM for up to 5 invoices.   Lots of add-on features

So have a look at some of these small business accounting software options and please give your own review on which you prefer and why in the comments box below or on The Small Business Kit Facebook page.

 

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Take financial responsibility for your small business

Take financial responsibility for your small business

Do you take financial responsibility for your business or do you keep getting tempted by bright shiny objects?

One of the things you need to do when running a small business is to keep a close track on your spending and take financial responsibility for every penny spent.

Too often we get sucked into impulse buys and then have a ton of things we don’t really need or use.  How many highlighters, shiny notepads, diaries, planners and magazines does one girl need?  This all then adds to the clutter on desks and bookcases that in turn takes time to sort through and get rid of.  And of top of this, how many courses have you signed up to that you have never completed?  I have four outstanding at the time of writing.  Shameful I know!

If this resonates with you, go out and purchase yourself a small notebook (or use one of the many shiny, colourful ones you have stashed away.  At the top of each page, list how much money you have in your monthly budget to spend on non-essential items for the month and then every time you make a purchase, deduct it from the amount available to try and help you keep on track.

If you aren’t still a feather quill and ledger type of person, there are numerous mobile apps out there that can help you keep a track of your daily spend and the majority of them are for free.  You can also use just a simple spreadsheet on your phone.  A couple of apps that I use are MyMoney and I have also just downloaded ShopSavvy Barcode Scanner  which lets you scan a barcode of a product and then lists where you can buy it at the best price.

Since I have put this into practice, I have already stopped and thought twice about making a couple of purchases and not gone ahead with them.  By setting myself a limit, I know that by making those ‘small’ purchases now it will reduce my overall spend and I may see something else that I prefer later in the month.

This is all such simple and basic stuff but what so many of us forget to do by letting our financial responsibility slip.  We then find we have overspent and end up feeling stressed when we check the bank balance at the end of the month.

And finally, the best of thing of all that I have done is gone and bought myself (yes, I have entered it in my notebook!) a good old fashioned piggy bank.  I love him and have promised to feed him daily with at least one gold coin out of my personal money so that at the end of the year I will have a minimum of £365 to reward myself for taking financial responsibility for my business.  Happy times!

 

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