The 2 Most Important Financial Steps to Take When Starting a Biz (and 2 mistakes I made when I launched my biz)
You’ve found your passion and figured out how to monetize it! BRAVO! This is something to be very excited about! Now it is time to set you and your biz up for financial success.
There are so many things to do when starting a business, but I want you to set some time aside so that as you grow, you don’t have a big mess to clean up. There are obviously more than 2 things you need to do down the road, but for now I want to highlight where you should start!
#1 – Open a separate account that is just for your business. Depending on the needs of your business, you may not necessarily need an official business account, but you for sure need to make sure you have separation. As you’re just starting out, cost is obviously a factor, so keep that in mind when you are looking for where you will open this account. Another factor is access to bank machines or a teller if that is something you will need.
But Sherry, I haven’t made any money yet, why do I need a different bank account, it won’t have any money in it? I get what you’re saying, and I did this backwards when I started, so I know that it can be a pain. In start-up phase, you’re likely investing in your business with personal money. If this is the case, transfer the personal money to your new account and make business purchases from there. This will make tracking of all start-up and future business expenses way easier to track. It will also make it easier as your business scales. It also makes it easy for you to pay yourself back for the initial investment when your biz starts to earn money. If you used $1000 of your personal money to start your business, your business owes you $1000.
#2 – Invest some serious time in pricing your products or services. I’ll be honest with you here, I made A LOT of mistakes with pricing when I started out, and you most definitely will too.
For my service-based businesses out there, you have a very hard job ahead of you. You are putting a price on yourself, on your skills and your knowledge. This is beyond hard. I want to encourage you to price based on the value you are providing to your clients, not your time. When I started out, I had a spreadsheet (shocker, I know), and all of my program prices changed when I changed the box for my hourly rate. To price based on your value, think about the results that someone will get from working with you. The big picture of what a client gets by working with me is freedom, freedom from a job they hate, from a schedule that is not their own, freedom to do what they love. To me, that is priceless! Think about the big picture of how you are changing your client’s lives, and pick prices that make you feel a little uncomfortable. Prices that push you outside of your comfort zone. That’s how you know you are on the right track. I also highly recommend mapping out your price increases for the next 12-24 months. Initially a price increase every 6-months is reasonable as you hone your services. Mapping out your prices ahead of time is important because it allows you to remove all the feels from selecting your prices when you hit a price increase date. Adding a price increase reminder to your phone is a wonderful way to make sure you don’t forget.
For my product-based businesses, be sure to consider ALL of your product costs and then add in your time AND your value (not everyone can do what you do, don’t forget that). For the product and ingredient side of it, a spreadsheet is an excellent idea to track your cost to make your item(s).
For both service and product-based businesses, try not to go down a rabbit hole and compare yourself to others. For service based, I actually don’t think you should do much comparing as this will make you second guess yourself. Remember you are the only you out there and even if someone else is doing what you do, they are putting their own spin on it. For product-based businesses, I do think you should do a little window shopping of businesses offering similar products in the same area you will be serving, so you understand what is out there. Don’t allow what you find to be the sole reason you select your price(s), use it as a piece of the puzzle.
Mistakes I made with pricing when I launched my business.
#1 – I had 3, 6 and 12-month financial coaching packages. You may be wondering is wrong with that and it is two things. It was possible for someone to commit to work with me for 12 months, that was not a good fit. This was not good for either of us. Reason #2 this was a bad idea, my prices for my 12-month program did not translate into a high commitment level from my clients, making my coaching not very effective, making me feel like I was not a very good financial coach.
Resolution: I now have an initial 2-hour Money Miracle Session. It has two pluses; it allows us both to get to know one-another better AND it can be a one-off session for a client that is an action taker and can implement the plan without additional support.
#2 – #1 is the perfect lead into the second big pricing mistake I made. I priced too low, even for a new coach. Low cost = low commitment from client = me feeling like I was a shitty coach!
Resolution: Price increase(s), I had a pretty substantial price increase early summer my second year in business, at the same time I added my Money Miracle Session. This transformed my business. My clients started showing up hard and doing the work they needed to make changes. It blows my mind, that these small tweaks made my job easier, allowed me to make a bigger impact AND increased my income! MIND-BLOWN!!
If you need an objective opinion on product or service pricing, I’d love to connect with you. We could hop on a free 20-min call to talk about pricing session or hop right in and book your pricing session. Prior to your session, I will collect some information from you to help us hone in on what you should price your product(s) or services.
-Sherry
