you’re grounded: breaking the cycle of pricing based on traditional employment
How did you set your very first self-employed, entrepreneurial hourly rate?
Pat yourself on the back if you did some research on competitors, crunched the numbers on the amount of hours you could bill & the amount you needed to earn, and set a rate that reflected both.
I didn’t do that when I started my business. And I hear that many of you didn’t either.
Most of us didn’t set out to become consultants, freelance designers, and New Economy entrepreneurs. Nope, we got our liberal arts degrees – or misguided business management degrees – and tried to enter a job market that didn’t want to have us.
We talked about experience (or lack thereof) instead of value, of skills instead of significance. We polished our resumes and customized cover letters.
And we got jobs ranging from $10-15 per hour.
And we cursed our parents for telling us we could be whatever we wanted to be when we grew up. We cursed society for wanting automatons instead of freethinkers.
Frustrated & desperate, many of us have stepped off on our own. We gather in coworking spaces, corners of the internet, and networking events. We talk about doing business differently and making money with meaning.
But many of us are still holding on to the one thing that threatens our ability to make this happen: the way we price our work.
We’re grounded. We’re grounded by the traditional employment model we’re trying to escape. We’ve been sitting on the tarmac with no hope of taking off into the wild blue yonder or our vast earning potential.
So what gives?
An opposite phenomenon is at work in pricing. “Anchoring” is the practice of using a cost-prohibitive product to make another product seem reasonably priced.
It’s not always a scam – it’s often just smart. For example, I offer individual coaching at one rate and more affordable group coaching at a second rate. You know you’re receiving a comparable service with stellar results but the lower price on group coaching looks much more accessible. Without the individual coaching price (more than double!), you might still balk at the group coaching price.
With wage “grounding,” we are setting rates based on old employment models.
When I first set my consulting rates, I set them at $25 per hour. That was double what I had earned before so I figured that was a great place to start.
But the reality of self-employment is nothing like the reality of traditional employment. Double my old wage still resulted in working for pennies per hour. Sound familiar?
The first step towards beating this grounding effect is to realize that it’s happening and then to declare:
My previous jobs do not define my current or future value in the market.
Okay, I’ve done better with rallying cries. But sometimes straightforward is where it’s at!
Go ahead, say it out loud:
My previous jobs do not define my current or future value in the market.
Most likely, in your previous employment situations, you have had to fit your skill set into a predefined container. That container came with a price tag (the lowest price someone could pay another human being to do that work) and, while you may have had some negotiating power, the price was set.
You are no longer defined by a job “container” – you are instead constantly defining & redefining the skills that are of value to you and your clients. This gives you the opportunity create the optimal circumstances for your earning.
If $50,000 – $80,000 – even $150,000 per year or more has never seemed realistic, you can create circumstances in which they are.
Your earnings are not determined by what you have earned in the past but by the optimal circumstances you create around the valuable skills you have.
Your past wage is rendered obsolete.
You can choose to be grounded by your past wages or you can choose to be anchored by your goals.
You can choose to bemoan your past or celebrate your earning potential.
You can choose to concentrate on the going rate for your skills in the traditional market or you can create your own market based on what makes you unique, highly qualified, and oh-so-perfect for the job.
What’ll it be?
the gift of stiff competition: what to do when your bright idea is someone else’s too
Starbucks is often credited with putting mom & pop coffee shops out of business. But this is a bad rap.
Just how many mom & pop coffee shops – slinging espresso & steaming soy milk – were there before Starbucks became a household name? Not as many as there are now. That’s for sure.
Has that hurt Starbucks business? Nope – not a bit.
It also hasn’t hurt the mom & pop coffee shop business. Main street espresso bars open up to a willing audience. No one to “convert” to $4 coffee drinks, we hand over our hard earned cash wholeheartedly.
Having a Starbucks on one corner & an indie on the opposite is great for both businesses. The Starbucks marketing behemoth causes awareness. Indies cause fierce loyalty. Both experience a raised [coffee] bar.
Here is a perfect example of where competition causes business to thrive – not die.
But what about you & your tiny business? Can your business accept the gift of stiff competition?
Lea wrote in last week with a question about competition. Or the possibility of competition. And what to do about it when you want to build your network, your community, and your customer base.
I’m still trying to pinpoint my focus. I’m a Gemini, so of course I want to do it all. I think because I want to do it all, I am reluctant to point my peeps to people who are doing what I might want to do. Does that make sense? At the same time, I understand that we all do what we do in unique ways, and a major intention of mine is to provide resources for indiepreneurs and to create a network with sense of community. So I want to kick this miserly inclination without kicking myself in the behind.
Just like with indie coffeeshops and Starbucks, the online community is a place where competition can cause us to thrive not die. Instead of considering your actions in reaction to others, consider how your actions & your business is complementary to others. This is not a zero-sum game. This is about cooperation – not competition, in the traditional sense.
Not sure where to start? Consider these three ways to view your competition as allies in your mutual success.
Have you been suffering from a lack of direction?
Take a look at your competition. What’s their angle? What do they offer? What are their strengths?
When it comes to direction, the gift of competition is simple: it forces you to clarify what makes you great. Competition allows you to see how your unique talents fit a hole in the market.
Competition asks you to identify what sets you apart, amplify those talents, and present them to your audience in a way that says, “This is what I’m all about!”
Once you differentiate, you’ll find that decisions are easier to make, sales pages are easier to write, and attention is easier to garner.
Have you been suffering from a lack of clients?
Good news: competition is great for boosting your client load.
When I wrote my first ebook, it was really the only ebook available to the Etsy-style arts & crafts market. It was a tough sell – $15 for a pdf? Really?
Over time, more & more people have released ebooks. Some very similar to mine. The more & more ebooks are on the market, the more I sell.
Similarly, I call myself a business coach. Google “creative business coach” and I rank pretty highly. But I notice more & more creative business coaches setting up shop every day. This hasn’t effected my client load at all. I’m coaching more than I ever have and have clients wait listed 6-8 weeks in advance.
The fact is that a year ago, far fewer people were searching for business coaches. There simply was no demand. Because more people are calling themselves business coaches, more people are looking for the services of business coaches. The supply has led to an increase in demand.
Don’t shun your competition. Welcome it. Work together to increase the awareness of your product or service.
Have you been suffering from a lack of support?
We all know the hardest part of working for yourself is having only yourself for company.
You’ve been tempted – admit it – to court your competition as friends & supporters. But then you thought better of it. You decided that would be silly. Trade secrets and all that…
My best friend offers creative business consulting services. For quite a bit, her services cost less than mine. She sells ebooks. We serve a similar market. We know similar people in need of our services.
Doesn’t bother me in the least.
Your competition can be your greatest allies. They will expand your horizons (and you them), they will inspire you (and you them), and they will teach you what you need to get to the next level (and you them).
These truly are the gifts of stiff competition. Are you willing to accept them?
Is the Creative Class a Lie? Why Salon.com gets it so very wrong
The jobs just aren’t coming back.
They left on what was supposed to be a round-the-world cruise and the ship sank somewhere off the coast off China. Recession is supposed to be a cyclical phenomenon where what is lost comes back to us in spades.
One part innovation, one part government intervention. And sometimes one part war for good measure. Hard times are temporary.
Not this time, it seems. Things just refuse to go back to “normal.”
It seems this led Scott Timberg of Salon.com to announce yesterday that the creative class is a lie. Timberg would like you to believe that this “utopian” society where you can get a job with a master’s-degree-in-just-about-anything is too good to be true. Salon would also like to sponsor your prescription for Zoloft and help you settle your credit card debt.
Okay, I made that last part up.
Timberg paints a dismal picture of what is happening now, economically speaking, without providing any sort of recommendation bringing about a brighter future for the world’s brightest minds.
I’ll grant him one part of the thesis: the transition from old economy to New Economy is not an easy one. And it doesn’t involve the return of the jobs.
The rest of their thesis is myopic. While Timberg was quick to point out that “the Creative Class” was hard hit in the economic downturn, they failed to consider how Richard Florida (the sociologist who made the phrase popular) described the great reset occurring in today’s reality:
The Great Reset … [is] the result of the multitude of tiny resets that individuals are making all over the world.
The root of the problem is not that college grads and highly trained professionals are out of traditional work. It’s that they’re being told to look for “jobs” at all.
We need to forget trying to jump start the economy in all the old ways and start educating individuals on how to make their own tiny resets.
These tiny resets are fueled, not by economic policy, but by the spirit of innovation and a willingness to think beyond the status quo. Why mourn a system that kept so many imprisoned by their own paychecks?
Daniel Pink – curiously missing from the list of visionaries Timberg quotes – describes the greater shift as such:
We are moving from an economy and a society build on the logical, linear, computerlike capabilities of the Information Age to an economy and a society built on the inventive, empathic, big-picture capabilities of what’s rising in its place, the Conceptual Age.
This isn’t a top-down shift. This is bottom-up. That’s why the rest of his book, A Whole New Mind, is dedicated to teaching people how to survive in age that was taking shape. This book was written at least 2 years pre-recession. And yet, it describes in detail the skills need to hoist oneself out of the mire of what would come.
Pink never claims these skills are easily acquired. But he does lay out a framework for adding them to the palette of colors one has to paint their own picture of fulfilling work.
Just last week, Seth Godin also described the difficult work that was required of the creative class:
The future is about gigs and assets and art and an ever-shifting series of partnerships and projects. It will change the fabric of our society along the way. No one is demanding that we like the change, but the sooner we see it and set out to become an irreplaceable linchpin, the faster the pain will fade, as we get down to the work that needs to be (and now can be) done.
Both government and the media get it so very wrong. The focus cannot be on the return of jobs. It must be on the cultivation of skills and the realization of a new mindset for creating work that produces value for others.
We can no longer rely on the old ways of paying bills and putting food on the table.
Creating our own work – and a new landscape for prosperity – is the ultimate task of the Creative Class.
And it’s one we’ve only begun to pursue.
***
Edited to add:
Creating your own work doesn’t necessarily mean self-employment. Creating your own work is more about self-awareness.
What are you truly good at? When do you have the answer that no one else has? What problems are you uniquely gifted to solve?
This is not about creating a go-it-alone economy. It’s about understanding how we work best together.
***
Hat tip to Nicole for putting me to the Salon.com article.
All night. Every night. on the will to succeed and celebrating the learning curve
Last week, one of my current Website Kick Start students wrote to tell me that she had gotten her first job designing another person’s website. She’s only half-way through the course.
This isn’t the purpose of the course – although quite a few have used it that way – and she’s still got a lot of learning left to go. But it was her response to that learning – and the fear that goes with it – that made me literally yelp & clap out loud:
Part of me thinks I should feel nervous but the biggest part of me is excited and knowing I can kick some serious butt! Even if I have to stay up all night every night to figure it out. So happy for the experience and learning curve. Why wait, right?
If I have ever given you the impression that starting your own business is easy, that “making money online” is doesn’t require sweat & tears, that all you need is an ecourse & a few marketing books to make it big, I’m correcting the record right now.
Being in business for yourself means that there will be times when you have to stay up all night to learn the things the hard way. Or to teach yourself the skill you need to get the next gig. Or to write the book. Or to just finish the 57 unread emails that have piled up from just one business trip.
Of course, this isn’t just a business lesson, is it? This is the reality of “getting lucky” or making things look easy. Whatever spit & shine you see on the surface is just that: surface. In the depths of the true experience, there is all the all night. every night. of reality.
It’s the will to do what’s necessary.
Doing what’s necessary means learning hard lessons either through experience or hard-won education. There’s a steep learning curve. Unfortunately, we’ve been given the impression that learning things in adulthood shouldn’t be difficult. Learning things as adults is supposed to be a slow & easy climb towards greater understand.
Bull shit.
Growing into an adult, becoming a mom, building a business, learning new skills – I’ve been in the steepest learning curve of my life for about 4 years. The peak is nowhere to be seen.
And I’m so grateful.
I celebrate this learning curve. I embrace it. I cherish it.
Learning this is hard and I love it.
And I’m willing to stay up all night. every night. to continue climbing.
This is making your own luck. Creating the circumstances for ease. Rejoicing in all that is yet to be learned.
Not everyone sacrifices body & sanity in the realization of their dream. But we’ve all been willing.
Are you?
***
I’m opening up a group coaching program for “fresh” entrepreneurs tomorrow bright and early. Twelve people. 5 weeks. Talking about community building. How can you gather a tribe of like-minded, engaged supporters to fuel your business & your passion? Get an invite by signing up here.
there is no recipe: your great work is a process not an epiphany
I do business much like I cook.
I was reminded of that this weekend at The Creative Connection Event in St. Paul, Minnesota. I took a cooking class with Terry Walters, author of Clean Start. At the beginning of the class, she reminded everyone that, while measurements appear in her books, she never cooks by measuring. We shouldn’t either.
Oh, and the ingredients are just a guide. Don’t have something? Substitute something else.
Really, the whole recipe is just a template for your own creations. Get creative. Try new flavors. Mix it up.
Too many people are looking for a recipe for business success. They want to know exactly how much of this and exactly how much of that it takes to create a 3 course meal of profitability, sustainability, and life fulfillment.
I’m a business coach – not a consultant – because I know that’s not how it works.
Business is about using what you’ve got, trying new things, and seeing how it comes out at the end. That’s not to say that you don’t consult the recipe binder or make a trip to the farmer’s market. But you don’t let small hang-ups or unexpected events ruin your dinner.
You learn a framework that allows you to create success for yourself with as many different ingredients and in as many different environments as possible.
The three pillars of my business framework – my recipe – are passion, profit, and productivity.
Passion you get. That’s why you’re here. Even if you haven’t discovered what moves you to work at 3am or to forget about the passage of time, at all, you sense that “great work” is out there. That your heart is calling to you.
Profit you get, too. She may not be your best friend yet but you’re certainly her Facebook friend. You understand that being in business means making money above and beyond your output.
Productivity is often the missing link.
Productivity in cooking is making breakfast, lunch, and dinner 365 days per year. Maybe you don’t cook all of those meals – but you cook day in & day out. You feed yourself daily. You know what to do when you’re hungry.
My idea of productivity is not that kind that comes on a micro level. I believe the missing link between passion & profit is actually producing the things that you put on the shelf to sell.
Literally, the manner in which you make products.
Productivity in business is not about answering 5 hours worth of email in only 3 hours. Productivity in business is about producing – innovating – creating without end. It’s not once & done. There is no finish line to cross. It’s continuous and constant.
All too often, I hear about passionate people who long to become passionate entrepreneurs but they are too busy struggling with the hows and whats of producing a final product that they never produce anything at all. They wait for the illusive “great idea,” they pine away for the perfect process, they linger at each stage of development to make sure it’s “just right.”
But the final product isn’t an ending point. The final product is the jumping off point.
Once you’ve got a final product – something you can bring to market – created, it’s your job to discover what it’s missing, what is unnecessary, and what can be improved. Then you create the next final product, and the next, and the next.
You can’t get to the awesome thing until you produce the great thing and you can’t produce the great thing until you produce the good thing.
Productivity is not just making more stuff, but systematically figuring out the right things to build.
– Eric Ries, The Lean Startup
When you believe there’s a right way or a wrong way to make the dish, you get stuck in the recipe. You measure out the right ingredients and you ignore the opportunities to get creative or try something new. You fixate on making everything come out just so.
Just as in cooking there is no perfect dish, in business there is not perfect product or service. Stop waiting until you think you have all the ingredients necessary and start working on the recipe right now. Pay attention to opportunity, chance, and possibility. Allow them to inform your work.
Your great work is not an epiphany, it’s a process.
what’s your hypothesis? making the art business a science
You didn’t go to business school. You don’t have an MBA. You don’t run a tech startup. The only “C” in front of your title stands for “cook” or “cleaner.”
You’re an artist. You may not use paint or stone or metal. You may not sing or dance or write. But your work is an art and your passion changes people. And you, my friend, have taken this art and turned it into a business.
What could your business – one that’s based on soul stirring, passion inducing work – learn from the science of creating corporations? Turns out, a whole helluva lot.
Your business is here to prove something.
Maybe:
- that great writing changes lives & leads to more sales.
- that elegant jewelry boosts your self-confidence and takes the pain out of the morning routine.
- that quality materials & craftsmanship really are worth the big bucks.
- that creative expression saves lives.
- that great design tells a story that words & pictures alone cannot.
- that a well-decorated home keeps a marriage happy & healthy.
- that a New Economy can be built around artist-business owners.
Yes, indeed. Your passion comes from your undying determination that part of your worldview is a Truth for many others. Your productivity comes from the resolve to share that with as many people as possible.
But, like any hypothesis, it’s not simply enough to state it. To deem it so.
Your business hypothesis must stand up to scrutiny, experimentation, analysis, and… dun dun dun… customer feedback.
Your hypothesis isn’t an excuse to put on your dreamer hat and sit in the corner while the MBAs play at profit. Your hypothesis is what gets you into the trenches and compels you to do business.
People don’t by WHAT you do, they buy WHY you do it.
— Simon Sinek, Start With Why
In starting businesses, we are most often concerned with what product we’re going to sell or what service we’re going to offer. It’s easier to understand the transaction when you know what’s changing hands. But it’s not the particular service or product that creates crowds of loyal fans. It’s not the product or service that spurs us to innovation & creative thinking.
It’s stepping outside the this-for-that exchange and stepping into something bigger & more powerful: our vision for the world.
Startups also have a true north, a destination in mind: creating a thriving and world-changing business. I call that a startup’s vision.
— Eric Ries, The Lean Startup
Business starts with a vision. The vision inspires a strategy. The strategy ends with the product or service being sold.
You can’t know what you’re selling until you know what you’re trying to prove.
To prove your hypothesis, you must experiment with a plan. Build, measure, learn.
Eric Ries, author of the brand-new book The Lean Startup, explains this process in depth. It’s a constant cycle of innovation & iteration that has at its goal creating a product/service that works to prove your hypothesis and achieve your vision while serving your customers.
This is true startup productivity: not just making more stuff, but systematically figuring out the right things to build.
— Eric Ries, The Lean Startup
How do you test the hypothesis? How do you figure out the right things to build?
Eric suggests the Build-Measure-Learn feedback loop. That’s a fancy (or not so!) way of saying: do it, discover what happens, and figure out what it means.
Build
Sadly, the first step is where so many get stuck. Without a clear hypothesis, it’s hard to know what to build. Of course, “knowing what to build” is truly overrated.
The first few times through this loop, it’s not your job to know what to build. It’s your job to learn what to build. So we start somewhere.
Back when I started growing my business in earnest, the first product I created was 52 Weeks of Blogging Your Passion. It’s an ebook with 52 blogging prompts. Not fancy. Not overly sophisticated. Just a response to what I perceived as a need.
I didn’t stress about making the most comprehensive product or making the snazziest design. I built a product it and I shipped it. That’s when the real work started.
While you’re “building” consider:
- Am I wasting time on details that don’t enhance the benefits of the final product?
- Am I wasting energy on making the product more comprehensive than is necessary to test my hypothesis?
- Am I wasting attention on tangential pain points that are unrelated to the product I’m currently building?
Measure
In the tech startup world where The Lean Startup was first developed, there are loads of customized metrics and formal experiments that can be run with the data from the first (and subsequent) product builds.
I would argue these sophisticated methods of measure are a distraction to the microbusiness owner.
Forget the percentages, click thrus, and dollars, and focus on what your customers actually tell you about the product. Consider not only the specific feedback but the tone of their words, the setting of their usage, and the community of users.
After releasing my 52 Weeks of Blogging, I got customer feedback. It was good. But it’s not enough to just revel in good feedback. Ask WHY? I probed deeper to find out how people were actually using the book and what questions remained for them. That process then lead to several other books and a course.
Measure the effectiveness of your product by considering:
- How is the customer using my product?
- What results is she achieving?
- Is she closer to believing in my greater hypothesis?
- What themes are emerging about the product I’ve built?
Learn
Learning is all about figuring out what you’ll do differently next time. If you thought building your product was the end of the production phase and the beginning of the promotion & PR phase, boy, were you wrong!
Production is constant. Learning helps you know what to produce next. What tweak to focus on. What features to improve. What about-face to make.
Each time I build a new product, I learn so much about the people who purchase it. I learn things from the metrics, of course, but I also learn from their reviews. Their frustrations. And their questions. I build those questions & frustrations into subsequent products, blog posts, and emails.
I engage buyers via social media and create conversation around these areas. I build a bigger & bigger picture from my learning so that I can act & produce based on what I’ve learned.
Learn about your product or service by taking the feedback you’ve gathered & measured, comparing it to your initial hypothesis. Contrast your actual customers’ reaction with the way you thought they would react. Compare their concerns with what you feel to be true.
And then build again.
While in the learning phase, consider:
- What assumptions did I make that proved false?
- What surprised me about the customer feedback?
- What could be eliminated from the initial product?
- What needs to be added to the product?
Just as scientific experimentation is informed by theory, startup experimentation is guided by the startup’s vision. The goal of every startup experiment is to discover how to build a sustainable business around that vision.
— Eric Ries, The Lean Startup
Bottom line: to effectively change and grow, your business needs to be plugged in to your vision for the world and the hypotheses you hold true.
Forget discovering what to sell and who to sell it to until you’ve got those details ironed out.