We're taking a look at the little things that make a big difference for work-at-home success. Yesterday I introduced you to Revka, the owner of http://berriesandcreamblogdesign.com/. (That's her in the picture!)
Not only did she start being honest about the fact that she works from home, she also asked her husband if they could discuss her business and their individual views and goals for it. She shared, "It was quite an eye-opening discussion--sometimes painful but quite helpful. At last, we are on the same page and have agreed to a particular set of goals and boundaries for my business."
According to Revka, the discussion has positively impacted her marriage. She notes, "With guidelines in place, I know where the boundaries are and what is acceptable to him in terms of fulfilling home responsibilities and business obligations. When I cross those boundaries, he is now able to remind me where the boundary is. This has reduced feelings of resentment, frustration, and anger on both our parts."
I found the same to be true in my own marriage. Resentment had been building for a long time. When I finally approached my husband for an open discussion about my desire to work and the balance it takes to make it happen, we were able to agree on a system that works for us. But I waited too long to have the discussion and wish I had done it sooner.
Honest communication is essential to work-at-home success. Do you need to schedule a conversation with your significant other? If so, don't delay!
We'll cover the last of Revka's changes tomorrow. Stay tuned!
No More Work-at-Home Insanity,
Little Things Make a Big Difference, Part 2
Little Things Make a Big Difference
A reader recently Facebooked me to thank me for writing Make At Home Work: Successfully Growing a Business and a Family Under One Roof. Revka said the book changed her business for the better. Ever curious, I asked her how. She shared three adjustments that have made a big difference for her. Amazingly, they were the same three adjustments I made to my business so that I quit drowning and started living again!
Before I share these changes, however, I'd like for you to meet Revka. She's the talent behind Berries and Cream Blog Design, which offers custom blog designs (particularly custom WordPress designs) and small business web solution packages. The company gives WAHMs and other entrepreneurs the opportunity to have a professional-quality website even on a small budget. You can find her online at http://berriesandcreamblogdesign.com/.
The first change Revka made is that she quit trying to "hide" the fact that she works from home. She wrote, "Instead of trying to do it all, I now acknowledge that my business places demands on my time that prevent me from volunteering for everything. I also acknowledge that I have deadlines and that at times my business takes precedence over housework and even family."
And how has this helped her? "Since I no longer minimize my business obligations, I find it much easier to refuse to take on more responsibilities. This has greatly reduced my stress level, and I do not feel completely overwhelmed like I did when I was trying to do it all and run my business, too."
I found the same thing to be true. Sometimes when you try to be all things to all people, you end up being nothing to no one, including your self and your family. Be honest about the fact that you work from home. This is the first step to sanity in an at-home business.
Later this week will look at the other two changes Revka made.
No More Work-at-Home Insanity,
Little Things Make a Big Difference, Part 3
Blog designer Revka (you can see her at the right) made three changes as a result of reading Making Work at Home Work: Successfully Growing a Business and a Family Under One Roof. We addressed two over the past couple of days. Today we'll address the third change, which has to do with setting financial goals for your business.
Instead of trying to make as much as possible each month, Revka now has a specific dollar goal. Once that goal is reached, she views any other income as an added blessing, not an obligation. She shares, "I cannot express how freeing it is to set a specific dollar goal for monthly sales. As you state in your book, when you are trying to make as much as you can, there is always a sense of having to take every job that comes along, and that is an enormous load of stress at times. Since I set monthly sales goals, I have been able to pass along work when I feel like it instead of adding unnecessary stress to my life like I did before. What I find curious is that instead of making less money per month, I have actually made more money each month than I did before, even while turning down or passing on jobs. In fact, I have made double my monthly sales goal nearly all of the months since I set the goal (emphasis mine)."
I found the same to be true: when I set a financial goal and was deliberate about not overwhelming myself with work, my income actually went up! And Revka and I aren't the first to notice this. I've spoken with many entrepreneurs who have had this happen. It speaks to the power of clarity, goals, and approaching your work from a position of strength rather than feeling you have to accept every project that comes along. The more clearly I was able to define the type of work I wanted, the more able I was to find it. And the more clearly I was able to define the work, the more able I was to find the kind of clients I wanted to work with and those who would be able to afford my services. It sounds crazy, but it's true.
If you haven't set a monthly financial goal for your business, now is the time to do it. And it also make sense (and a lot of dollars) to take the time to define the type of work you most like to do and the type of client you most like to do it for. Why? Because when you know what you're looking for, it's much easier to find it.
Blessings,
http://www.makingworkathomework.com/
Setting Fees
In my last post I wrote about setting a financial goal. In this post, I'll show how this influences your work.
As we discussed previously, it takes gross income of $60,000 to result in a net profit of around $24,000 (assuming overhead of 30% and taxes of 30%). If this is our goal, this information tells us that we need to produce $5,000 income every month ($60,000 divided by 12=$5,000).
Where's this $5,000 going to come from? Excellent question. And it's one every entrepreneur needs to answer (based on their individual goal).
If you're a piano teacher who charges $15 per half-hour lesson, you know your income is $30 per hour. How many hours would you have to teach to make $5,000? Simple math tells us 167 hours per month. When we divide further, we can see that you'd have to work full-time teaching lessons each week to reach this goal (167 hours divided by 4 weeks= 41.75 hours per week). Since most teachers only teach in the evenings and on weekends due to children's school schedules, we can see that an income of $60,000 per year teaching piano isn't likely, unless you raise your rates. Before doing so, however, you should call around to find out what the going rate is. A rate increase might make it difficult for you to add students to your roster or cause some current students to leave.
Let's take the same goal but look at another scenario. If you're a cake decorator who specializes in wedding cakes averaging $750 each, how many cakes would you have to create to make an income of $60,000? Again, simple math shows us the answer. $60,000 divided by $750 (average per cake)=80 cakes. Is this manageable for you based on current demand, your family's needs, etc.? Only you can answer this question.
One last scenario. Let's say you have a contract to help a web design company write copy for new websites. The company pays you a flat fee of $750 for each website. Currently, you're completing two of these a week, for a total income of $1,500 per week. This means you're making $6,000 per month and will likely meet your income goal in 10 months. Maybe, just maybe, this means you can take a couple of months off in the summer to spend with your children, or at least cut back on your work since you know you'll be able to hit your financial goal (assuming the company continues to send you two websites per week to work on).
There are a couple of things to keep in mind as you ponder these scenarios:
1. There is nothing magic about the numbers I used above. Frankly, I just pulled a number out of the air as an example. Don't feel bad if your number is much lower--or much higher--than the one I used above. Remember, only you know what's best for your family. My income my first year of working at home was less than $3,000. As my children have become more self-sufficient, it's grown accordingly.
2. Your line of work will determine, in part, what's realistic for you in terms of income. Your family situation will also help deteremine what's realistic. Finally, the amount of time you want to spend working will also influence your goals.
3. Goals are not cast in stone. If you see that you've set yours too high and are sacrificing too much to try to meet it, give yourself permission to adjust it. I deeply regret the number of nights I stayed up late working and the number of days I was grumpy because of it--all because I was determined to meet my financial goal. The crazy thing is that it was one I set myself and there was no punishment for not meeting it, nor any real benefit to reaching it other than self-satisfaction. I paid a high price in terms of my marital relationship, however, and I'm glad I was able to see the light in time to make a change.
4. Goals are not meant to just drive you to work hard. They are also meant to help you know when you can ease up. It's been easier for me to give myself persmission to take a few days off or schedule lunch with a friend now that I track my income each month and can see when I'm ahead of my goals.
You've got plenty of time between now and the end of the year to decide what your 2010 financial goal will be if you decide to set one. Think about it. Write down a figure, and live with it a couple of weeks before you finalize it. Then, remember that the goal should be subject to change depending on what happens in your life next year.
Financially Yours,
Setting Your Financial Goals
How much do you want to make next year?
Many work at home moms answer this question with a simple, "As much as possible." But often, as much as possible means you have to work "as much as possible." And, if you let it, "as much as possible" can begin to run your life. You'll always feel like you need to make one more call. Add one more person to your network. Make one more sale.
A better approach, from my standpoint, is to set your financial goal for the year. As you do, keep in mind that on average, most entrepreneurs keep around 40 percent of what they make. About 30% goes to pay taxes and 30% is consumed by overhead expenses. If you earn $100, your profit will be somewhere around $40. To earn a profit of $24,000, you'll have to have income of about $60,000. Kind of depressing, isn't it? But it's better to know this up front so that you can be realistic when setting your goals.
Once you have a number in mind, you can divide it by 12 in order to determine your targeted monthly income. Using the figure of $60,000, we can see we'll need to make about $5,000 a month in order to have a net profit of $24,000 at the end of the year. Dividing this further, we note we'll need to make $1,250 per week.
Why bother with all this math? First, you'll be able to see how realistic your finanical goals are. And second, when you have a measuring stick, it's easier to determine how you're doing. If you're ahead of your financial goal for the month, perhaps you can close the office door early a couple of nights or give yourself a day or two off. And if you're behind, you can decide if you want to work a little harder to get caught up, or to adjust your goal based on your family's needs.
Having a goal has made it easier for me to budget my time--and to set my fees based on what I hope to make. I'll address this in my next post.
Boosting Your Revenue
If you’ve priced your goods and services appropriately, revenue leads to profit and if you are interested in increasing your profit, there are only four ways to do it:
1. Increase your revenue by selling more products or booking more business (this may require you to work more than you currently are)
2. Increase your fees or prices (which may not be possible if you’re an independent direct sales consultant)
3. Reduce your expenses (but not to the point that you compromise your effectiveness)
4. Develop new revenue streams
For the past two years, my goal has been to work less and make more. It’s not that I’ve gotten greedy. I just want to make sure I’m getting a fair return for my labor. And, if I’m going to take time from my family, I want to make sure that I’m adequately compensated.
Sometimes we underestimate our value as work-at-home moms because of lack of confidence or gratitude that we get to work flexibly when others don’t. A friend challenged my thinking in this regard when she flippantly said, “Just because you work in your pajamas sometimes doesn’t mean you work is worth less than someone who gets dressed every day.”
She’s right. That’s why we need to periodically take a look at our income and expense statement in order to insure we’re earning what we’re worth and maximizing our profit. Here’s how to measure your success in this regard:
Determine the minimum you have to work to cover your overhead. My profit was lean the first years of my home-based business because I was caring for a toddler and an infant and I wasn’t able to do much else! Yet I still had overhead expenses such as a second phone line, internet connection fee, and office supplies. When you know how much you have to work each month just to cover your expenses, it is easier to determine how much you’ll have to work in addition to make the profit you desire.
Identify the market value for your line of work. If you were employed by another company doing what you’re doing, what would your salary be? Another way to think of this is to determine the “going rate” for your type of work—and then compare what you currently charge. Though you may be making somewhat less due to the fact that you are not based in an office outside the home, may not be working full time, and have flexibility that many employees don’t have, your income should still be comparable. If it’s not, it’s time for an adjustment. A graphic designer I know increased her fees by 30% when she realized she was under-charging for her services. No one balked. If you’re not a sales consultant whose prices are set by someone else, make sure you’re getting what you’re worth.
Be realistic. Though you may wish to see more products or book more business, doing so will require you to work more than you are, unless you can find a way to handle the increase without additional effort. If you're a network marketer, you might choose to focus on building a bigger team underneath you. If you're an independent service professional, you might decide to market more aggressively but pass the increased workload along to subcontractors instead of handling it yourself.
As you set your goals each year, be sure to recognize your limits in terms of time, energy, and capacity. If you choose to increase your income, be aware that doing so requires other increases as well, including the possibility of increased stress. If you don't want the anxiety that may accompany increasing your current sales levels, reduce your income expectations or increase your fees instead. Keep in mind there may be a point at which the market will no longer bear fee increases. If this is happening to you, consider developing new income streams for your business.
Financially Yours,
Mary Byers
Reduce Expenses
Joy Duling, the genius behind The Productive Entrepreneur (http://www.theproductiveentrepreneur.com/), agreed to be my guest blogger today. I had planned to write about controlling expenses this week--the very topic Joy posted on her blog this week. So, with her permission, I'm posting her ideas here today. Joy writes:
How to Control Overheads
Overheads are business expenses that are not specifically part of a business project. They're the costs or your business that you're going to have whether you have a customer or not. For example, you're going to have to pay for electricity, office supplies, and facility rentals whether or not you make a sale. Costs that are specifically for a project, like shipping costs for final product, are not included in this cost.
In order to keep your costs down, make it a regular part of your routine to monitor, track, and review your overhead costs. Start by collecting your receipts and recording all your expenses in a ledger or spreadsheet. Divide them up by category, including project related expenses and overhead costs.
Once you have started tracking and categorizing what you spend, you'll probably start to see some trends. Maybe you're spending way more than you thought on shipping. It could be you see that your advertising budget is or isn't being well spent. By knowing where you're spending you money, you can figure out what expenses are worth keeping and which ones might be reduced by looking elsewhere. The key is to continue to monitor what you're spending, and make and monitor your budget regularly.
Outsourcing is a great way to keep your overhead costs down. If you have regular employees, you have to pay to train them and keep them working even if business is slow. Contractors can be hired when you have something to work on, but you don't have to worry about paying them when your business starts to drop.
Another great way to keep overheads down is to shop around. Most people do this at start up and then stick with the same provider for many years. Have you ever noticed that each car insurance company says that they can save you money over other companies? That's because companies will often offer potential new customers better rates than they do their current customers - it's easier to keep an old customer than to convince another company's customer to switch. If you look around to different companies every so often, you'll probably find a better deal.
You don't necessarily have to switch to a different provider to get a better price on supplies. If a company think they might lose your business, they're often willing to cut you a deal. As you're shopping around to other companies, be sure to try to renegotiate prices with your current supplier. This way you may be able to get a better deal with a company you already know you can trust.
You hear a lot of talk about going green and saving energy, but cutting energy use is not only trendy and good for the earth, it's also great for cutting costs. Whether it's investing in low flow toilets or buying energy-efficient light bulbs, making small earth-friendly cuts can make a big difference in your monthly bills.While overheads can be a big chunk of your business expenses, they're usually something you simply have to live with to run a business. But just because you have to have them, doesn't mean you can't reduce them with a few simple steps.
Thanks to Joy's suggestion, I've added reviewing my expenses to my "To Do" list for this week. How about you?Let the Numbers Talk
It's essential that you have a separate checking account for your business AND that you have a method to keep track of both your income and expenses on a monthly basis. I use Quick Books. And believe me, it is quick! I paid a friend to teach me how to use it and after only an hour and a half, I was able to enter my income and expenses, run my own financial statements, and use the convenient invoicing system. I haven't had any additional traning since then. Though I know the software is more powerful than what I'm using, it meets my needs.
At the end of each month, I run an income and expense statement so that I can look at one simple piece of data: did I spend more than I earned this month? Often, I have. In that case, I look at the year-to-date numbers. Have I earned more than I spent for the year? If so, I'm in good shape. If not, I know I have to watch my expenses more carefully.
I'm surprised at the number of at-home entrepreneurs who don't take the time to look at their numbers--or to interpret what they have to say. As I've said before, it isn't what you make that matters. It's what you keep. Who cares if you're making hundreds of dollars per month if you're spending thousands?
What do your numbers say about your performance so far this year? You do have your numbers, don't you? Set aside 10 minutes this week and let them speak to you. You may be surprised at what you see. And if you are, don't ignore the warning signals. Do something about it NOW, before it's too late. If you manage your business right, you'll have money left over to put in a SEP-IRA, which I'll discuss in the next post.
Financially Yours,
