All posts by SeattleMoneyCoach

Small Business Recession Woes: avoid the temptation to discount your services

Practical Money Path, Underearning 101

The word “recession” is in the air and lots of people are nervous. Businesses are reporting that new business is down and current clients are taking longer to pay. What is a small business gal to do? First of all, don’t panic!! This is normal. Yes, it is normal. The economy goes up and down, and business slow downs are a normal part of life. And I know you may be tempted to discount your services, but resist. Remember, you are charging people for the value you bring, not the exact amount of time you put in.

One key to surviving a recession is to focus on your current clients. It is far easier to sell to current clients than it is to bring in new clients. Bringing in new clients takes time and money. Marketing is expensive, even if you shoe-string it. And remember, your time IS money. (I am not saying to stop all marketing. No, no, no. You want to keep your pipe-line full. )

A former client emailed me to say that she is picking her 10 most high-value clients and taking them out to coffee or lunch, one per week, to thank them for their continuing business and referrals. Since she has more time on her hands due to business slowing down, this is a great way to spend it. But she is not discounting her services for these people. They know her and like her.

Instead of discounting, can you find a way to add more value to your current clients? (The woman above took them to coffee or lunch!) Perhaps you can offer an additional service to your current clients, with their pocket book in mind. In my case, I run groups. It is less expensive to attend my groups than to work with me one-on-one. I’ve had some clients cut back their one-on-one time with me and attend these groups. This way, they get lots of value and pay less.

 

Stay focused on your current clients and take good care of them. But always go the added-value route. Not the discount route.

Escape the Money Fog and Earn More (article from Mikelann’s newsletter)

Practical Money Path, Underearning 101

A dense fog surrounds some of us—a money fog. This fog wraps us in a fuzzy embrace, whispering that perhaps everything is ok. Maybe you have enough money. Maybe everything will be just fine. Maybe. But an ever-present anxiety seems to go hand in hand with this fog.

When you don’t know exactly how much money you have, how much money you owe, or where all your money is going, you are in a money fog. It’s that last one that is a particular problem when it comes to earning enough money to live the life you want.

Think of it this way—if you don’t know where all your money is truly going, (not what you THINK you spend) do you really know how much money you need to earn?

Of course this gets complicated fast because many of us are uncomfortable with where some of our money goes. And some of us feel that there is not enough money to begin with, so looking at our financial lives feels depressing. (We just know we need to earn more….) But this leads to vagueness and stress. If you walk around saying “I need to earn more money!” this will likely lead to free-floating anxiety. It is simply not very helpful. How much more do you need to earn, really?

I had one client track where all her personal money was going. (Gulp!) After a few months, the money fog started to recede. She got clear about what she actually needed. (And yes, she did make some spending changes when she saw what was actually happening.) Then, when we looked at her small business, we were able to see exactly what she needed to earn. We broke this down into how many more clients she needed to see. I had her raise her rates. We started planning her business spending. And one day, she realized that that ever-present anxiety was gone.

Here are the common signs of being in a money fog:

  • You don’t balance your bank account
  • You don’t know where all your money goes (both in your personal life and in your business)
  • You don’t know what you owe in debt
  • You are not clear on your investments
  • You have no plan for how you want to spend your money in your personal life and your business life.

If you identify with any aspect of the money fog, start by picking ONE action you can take. Don’t overwhelm yourself. Do you know a friend who regularly balances her bank account? I suspect she would be happy to share with you how she does it. Can you pull out your credit card statements and write down all the balances on a sheet of paper?

If you are feeling foggy and overwhelmed, try this: print out your on-line bank statements from the beginning of the year and write down all your income deposits on a sheet of paper, by month. You will see what you are earning each month. Do this for June also, and you will have six months of data to look at. (If you divide the total by the number of months worked, you will have your average monthly income.) Then double this six month total. If you continue to earn at the same rate, this is how much you will bring in for the year. How do you feel about this? (Is it time to charge more money?)

Coming out of the money fog is a process. It takes time. But when the fog clears, you can see your life ahead of you. Possibilities take shape. You are in control and life is good.

Who do you read? And how do you keep up?

Practical Money Path

I’m going to put a list of useful blogs here (a blog roll) so I’m asking: who do you read? What blogs do you find useful as a self-employed woman? Comment here and let me know.

I know many of us feel too busy to cruise the internet for information. For me, I’ve actually had to schedule reading time. I need to stay connected and current, but if I don’t schedule it, it doesn’t happen. Often I’ll print out articles and put in a “to read” file that goes in my bag. Yesterday at my son’s swimming lessons, I pulled out this file. But I like to comment on blogs too, so I schedule computer reading time where I take my computer to a coffee shop.  (I call it the Blog Shop.) I’d rather be reading books, but then I feel I’m falling behind in the world of the internet. Arg! And when I hear about all the social networking on the internet, my head spins. I’m alreay behind and I haven’t really started. And I keep wondering—with everyone writing, who is doing all the reading? What is your method? How do you keep up on your reading?

Discounting fees on your clients behalf?

Emotional Money Path, Practical Money Path

Check out this great blog: Women and Money: Where chicks make “cents”, by Kathleen Burns Kingsbury. In her post, Who’s money is it anyways, she talked about fee setting and the fact that many business owners will reduce their fee if they think the other business owner can’t afford it. She wrote,

To me the idea that a client needs a reduced fee based on no hard data says more about the business owner’s relationship with money than the clients. Therefore, I challenged each group member to think about where the responsibility lies for making spending decisions. Is it with the business owner or the customer?

I think part of the problem is that we get our own money issues mixed up with our perceptions of our client’s money issues. No good can come of this. Spending decisions should be made by the client, not us acting on their behalf! Women take on way too much. When you decide what is in a client’s best interests, well…. That sounds like a parent-child relationship, not a professional one.

The key to being happily self-employed: spend your time in the inner circle

Metaphysical Money Path, Practical Money Path

I am so jazzed about the Virtual Earn Your Worth program that I can barely stand it. I simply love teaching women how to earn their worth. And for me, this is about spending time in the inner circle—you’ve all heard the circle analogy from coaches. The inner circle is full of things you love, you are good at AND make you money. Then the next circle may have things you are good at but don’t love. Then the outer circles are full of those things that you aren’t good at, don’t love, and don’t make you money. Emptying your own trash probably fits there. (If you are a coach out there, chime in and help me explain the circles.)

For me, the key to being successfully self-employed has been to slowly delegate the outer circles. For example: web development. I simply hate it. And besides, I can’t really do it. So as soon as I was able, I hired a web developer. And I hired an assistant (gotta love having a virtual assistant—oh yes!) to help me keep moving towards spending more time in my inner circle. The trick has been delegating to her some of the things that I COULD do, but simply don’t love doing. Could I submit articles to article data-bases around the internet? Yes, I could do that. But is it a good use of my time? Besides, I don’t want to do that!

Teaching the Virtual Earn Your Worth Program is definitely in the inner circle. But even then, my assistant has helped with many tasks. She helps me place the members into their accountability mastermind groups, as well as deal with the shopping cart and registration. And my web developer developed the forum that the members use to communicate between our 90 minute phone training calls. So even though this program sits in my inner circle, there are piece of it in the outer circles. Those I delegate.

The key is to spend your time at the intersection of what makes you good money and what you love doing. If you get clear on this, then over time you can delegate those tasks that are in the outer circles. It is true that this takes money. Delegation costs. But could you make more money if you freed up some of your time?

I raised my fees after my self-employment mentor kicked my butt

Practical Money Path, Underearning 101

I recently flew down to San Francisco and stayed with my mentor and colleague Karen McCall for two blessed days. Karen is the pioneer of Financial Recovery Counseling and introduced me to this awesome field. It is she who introduced me to the concept of “underearning” and the importance of getting out of the money fog. (And staying out!)  In fact, I dedicated my book to her.

 It felt sooo good to share my business and my business numbers with her. I spend a lot of time in other people’s small businesses (and personal finances), coaching them on underearning and spending issues etc. But sometimes I confess that the phrase “physician heal thyself!” or “the cobbler’s children have no shoes” drifts through my head. What about me! Sometimes I think we are too proud to ask for help in what is supposedly our own area of specialty.

To make a long story short, she asked me what I was charging private clients. This was after she listened to me be-moaning my tight schedule and my desire to free up time for the other aspects of my business. I don’t want to give up private clients. But I am also running several business support groups for self-employed women. And I want to write more. (Oh, and did I mention I have a family??)

In her oh-so-tactful way, Karen says to me, “You know, I just read this great book on how to set and raise your fees”. I rolled my eyes. (It is the workbook I wrote, in case you don’t know.) Then she told me to charge more. According to my very own guidelines, I am niched, experienced and have too much pressure on my schedule. Oh, and I’m not experiencing enough price resistance. Damn. So I took her advice. I guess that means I took my own advice!

Quick wording tip on stating fees for small business owners

Practical Money Path

When people ask you what you charge, instead of saying, “I charge x…” try “The fee for this type of work is…” Or “The cost for this type of service ranges from x to y, depending on what level of service you choose”. It may sound like a minor difference, but it is one way of saying that your business is charging the money, not you personally!

When people call me about private work, I don’t say, “I charge this much per hour”. Instead, I say, “Generally speaking, financial counseling runs about this much per month. You can pay for it in these ways…” Keep in mind that we don’t get to keep everything that people pay us anyways. They are paying our company, and we have to pay out costs and taxes. But this is more about a mental shift and goes back to the fact that we over-identify with our business. This makes it hard on everyone. Stop taking everything so personally! Your clients are paying your company, even if it is just you. So watch what you say. How do YOU state your fees?

Self-employed women must stop over-identifying with their businesses!

Emotional Money Path

Let’s peek inside a typical self-employed woman’s head. “Am I really worth charging that much money? Will people believe my services are worth paying that much for? Will I really be able to deliver at a level equal to what I charge? Will people expect more than I can deliver if I charge at the top of the market? Just who do I think I am, anyways?!!!…..”

Part of the problem stems from over-identifying with our businesses. When I over-identify with my business, I AM my business. So when I feel confident, it is easier to charge good money. When I don’t feel that great, well… it’s harder to hold the line. And conversely, when things go well for my business, I feel great. And when things don’t go well for my business, I don’t do well.

So here it is: you must separate from your business. You are not your business. And your business is not you. Even if you run a very small business, you are still NOT your business. I’ve had to train myself in this over and over. When I over-identify with my business, I become very stressed. I tend to work too much and take everything personally—which is great, unless something is not going well.

Now I say to myself, “I am me, and that is the Women’s Earning Institute. It is not me.” When people ask me how things are going, I tell them how I am doing personally, or I tell them how the business is doing. Maybe I tell them about both. BUT THOSE ARE TWO SEPEREATE ANWERS! In the business world, as much as I may want people to know me and like me, they often don’t know me at all. They see my professional side, and that has to be okay.

Keeping my business separate from me helps me charge appropriate money. It helps keep me more objective. They are paying the Women’s Earning Institute, not me personally, and it has many costs. What I charge is a business decision, not a personal decision. It helps to keep this in mind.

Women and Negotiation: Tune into Mikelann on blog talk radio

Practical Money Path

Join me Monday, May 12th at 10:30am EST, on blogtalkradio when Barb Giamanco, of www.womensmentornetwork, interviews me on how ask for, and get, what you really want. This will be thirty minutes on how to negotiate, especially for self-employed women! Barb runs the WOW Women Series that airs live on the 2nd Monday of each month at 10am EST. (I’m on the second half of the show.) If you miss it live, go to www.blogtalkradio.com/wmnradio to download and listen after May 12th. Yes, you can negotiate and get what you want and deserve!

Raising Rates without Losing Clients

Practical Money Path

Here is an interesting article by Brent Bowers on how to raise your rates without losing clients from the New York Times. I’m not certain I agree with all the advice, though I’m glad to see this sensitive issue raised.

Here is the passage I want to discuss:

As for the consultant who wanted to know how to augment his rates without alienating existing customers, Mr. Jacobs’s counsel was to be gentle. First, he said, increase them for new clients only, and use the exercise to explore how high you can push the rates.
Then, he said, the consultant should inform existing customers in person — not in writing — that he plans to raise rates by 5 to 10 percent. “Have a conversation as part of a regular visit,” he said. “Make it casual. Tell them why you’re doing it. Say something like ‘I hope we can work out an agreement.’ ”

It’s that last sentence that will get you in trouble. I agree with the writer about talking to current clients in person. However, I disagree with leaving them room to negotiate with you. When you say, “I hope we can work out an agreement” you are in effect saying, “This new price is not really firm and you can talk me down. Go ahead. Try.” If you feel compelled to tell clients why you are raising your fees, simply say, “due to rising costs.”

Yes, this is stressful. But the truth is that not everyone should be able to afford you. Even if you lose some clients who will not pay the new higher fee, you will create room at the top for higher paying clients. If you never lose any clients when you raise your fees, I suspect you are not charging enough. You will make more money with fewer clients if you charge at the top of the range. (I’ll save my thoughts on the emotional aspects of this for a different post. I’m just finishing the ebook on the emotional dynamics of charging people money.)

When you decide to raise your fees, make the new fees effective for all NEW clients. Then, let your current clients know that you will be raising your fees. Tell them you appreciate their business, and because they are current clients, you are going to give them two months notice. Let them know that you’ve already raised your fee for new clients. “Therefore, the new fees will not go into effect for you until…” I know this is hard, but you simply must make enough money to maintain a healthy business and avoid financial deprivation!