Art of Growth, Business Brainstorm
Part of understanding the way your business works is understanding the costs associated with the way it generates revenue. For a low overhead business–most online or service-based businesses are–costs can be an afterthought.
How much does it cost to hop on Skype with a client? How much does it cost to produce an ebook or a teleclass? Beyond initial investments in design or tools, there is little monetary cost and almost none in terms of distribution or production.
But it’s a mistake to discount the softer costs of this work.
What are soft costs?
They’re the costs that can’t be measured in money. Soft costs could be felt in time, energy, or reputation.
Soft costs are the ones that eat away at your lifestyle, your relationships, and your personal satisfaction.
While the work you produce might be profitable financially, is it profitable energetically? Relationally? Temporally?
In 10ThousandFeet, we work to make sure each business is investing in creating products and services that are profitable across the board. We measure all the costs. We consider whether revenue streams are really worth the soft costs they demand.
Can you reduce the soft costs of your current revenue streams?
Soft costs often add up when a revenue stream demands you to exercise one of your (or your business’s) weaknesses instead of leveraging one of your strengths. That happens when you try to create a service that doesn’t fit the way you like to work or when you create a product that’s popular but not suited to your creation style.
Where are you losing profit to soft costs based on your business’s weaknesses or working style?
Soft costs also accrue when you make a decision that’s either out of integrity or out of alignment with your brand or big idea. It doesn’t even have to be a “bad” decision, it could just be unexpected or a little confusing for your customer base.
Where have you incurred soft costs due to decisions or directions you’ve taken in your business?
Sure, you want to optimize the bottom line just don’t forget the soft costs in your calculations.
Art of Earning, New Economy
My bottom line is impact.
I believe impact can and should be profitable.
I believe profit is abundance. It’s the absolutely necessary positive gain on the energy, effort, and execution your business invests in [value] creation.
I believe an important part of that positive gain is financial. But wealth is not one dimensional. I also measure profit in relational, emotional, and organizational wealth.
I believe business has an obligation, a duty, a responsibility to increase its bottom line and maximize it’s profit margin: increase its impact, find the path to leveraged abundance.
Dollars & cents really do matter. And there’s so much more, too.
What’s your business’s bottom line?
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Art of Earning
In solopreneurship or microbusiness, it’s easy to imagine that every dollar that comes in is “profit.”
Take out the meager fees we pay to web hosts, PayPal, and the odd tech service, there’s still plenty left over to play with. And play we do.
But what does it mean to truly become profitable as a microbusiness owner or solo service provider?
In my own business and those of my clients, this is one place where traditional business teaching falls short of our unique circumstances. What follows below is not something you’re going to find in business books but it’s of utmost importance for understanding the way your business functions:
Being profitable means earning enough money to cover all of your obligations, both personal & business, with some left over to invest as you please.
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Becoming profitable should be the goal of every business but the numbers and percentages are always different.
The key to knowing when you are profitable is to understand your obligations.
Megan and I often join forces to talk about actually making money in a passion-driven business. I talk about the psychological and philosophical side of earning more. Then she swoops in with cold hard facts and a proven formula. I’ll let you guess which side of the presentation garners a bigger response.
Hint: numbers & formulas win. every. time.
Megan’s pricing formula is for a product based business, natch. She’s a jewelry designer. She has certain costs for materials & upkeep, much easier to quantify.
Megan’s formula also contains two pieces that often trip people up: labor & profit.
Yes, two different figures. One for labor. One for profit. Separate. Different. Got it?
The time she puts into each piece is not profit. That time is an obligation that must be accounted for with an hourly rate. The hourly rate she figures is often 8-12 times the hourly rate most people figure for themselves.
Hint: if you’re accounting for an hourly wage that is lower or equal to the minimum wage in your state, you’re doing it wrong.
Intellectually, you know this makes sense for Megan and the type of business she runs. But what about your business? If you create or design physical products, this model works for you as well (but keep reading – there’s more!). If you are a service provider, content marketer, or digital product creator, it is much more difficult use this type of pricing strategy to generate a known quantity of profit.
So then what is profit?
Profit comes after accounting for all of your obligations, both personal and business, and having money left over to invest as you please.
Oh crap, she said it again. It must be important! Click to tweet it, yo!
When you don’t have to use part of every sale to reinvest in materials to make new products to sell, it is easy to see every dollar as profit. To see every dollar as flexible.
Your dollars are not flexible. They are accounted for the moment they enter your PayPal account. But do you know where they’re going?
Those dollars might end up paying your web host, your email service provider, your teleconferencing service, your PayPal fees, or your assistant. Those dollars also pay your mortgage, your grocery bill, your taxes, and your electric utility – that’s your labor, essentially.
You also have obligations to your own charitable giving, education, self-care, and – yes – fun.
When considering your own financial obligations, I think it’s important to look at the big picture not just the bare bones. That’s when you really start to get an idea of abundance.
And when you can really start to develop a profit strategy.
How can you earn enough to cover your obligations and have money left over to invest as you please?
There are no easy answers to this question. But you can’t create a strategy until you know your obligations. You can’t understand or plan for profit until you know where the rest of the money is going.
Why consider profit only after meeting personal & business obligations?
Because it’s important that you have that surplus. It’s important that you have the freedom to decide what the very best use of extra money is outside of the obligations (no matter how pleasurable) you face on a daily basis.
Being a profitable business owner means having the freedom, control, and vision to use your surplus money as a tool for growth, be it personal, business, or societal.
***
Understanding profit and your ability to use it for good is all apart of making money beautifully, making earning an art. I’m hosting an intensive, intentional, and intimate workshop on creating a business that serves you. Click here to find out more & sign up for FREE exclusive pre-event training.
Announcements, Art of Earning, Business Brainstorm
Money and I have a sordid relationship. Don’t worry, we’re pretty cool now. She won’t mind if I talk about her like this.
For most of formative years, my family didn’t have much of the stuff. My single mom employed herself as a seamstress. She was constantly busy but not rolling in the dough. Still, despite earning very little, we were never without stuff.
I had instruments, summer camps, piano lessons, a computer, and even a car.
She figured out how to get me what I needed without incurring massive amounts of credit card debt. We lived frugally but always got we wanted passionately.
She also taught me to save like a mo’ fo’. From my very first gig umpiring a softball game to my last part-time job in a jewelry store, I put half of every paycheck in my savings account for BIG purchases (trip to Austria, anyone?).
Money came & went.
After college, I got stuck. I started equating money with time, tasks, and responsibility. I saw inside the belly of a retail beast and began to believe that if I earned more money, certainly others would lose money.
I began to assume that I was truly worth the $13 per hour they paid me.
I assumed I would never be worth more.
At the beginning of my entrepreneurial journey, this was a burden I carried. I assumed my worth had been set. What I soon learned is that your personal worth surges out of you even when you don’t expect it.
Your personal worth doesn’t always show up in money – maybe it will take the form of gratitude or influence – but it shows up. It’s our job to claim that worth as the dollars & cents we need to earn to experience the world and to improve the world in the ways we desire.
Abundance of personal worth begets abundance of financial worth. It’s your choice how you use it.
An example:
Yesterday, I dropped about $400 at a craft show. It’s the third year I’ve attended this show and it’s by far the best show I go to every year. I love the people who vend. I love the people who show up.
But the last two years, I held scarcity in my heart when I attended.
This year, I came ready to spend. While $400 may or may not seem like a lot to you, it still represents a lot to me. And while I was a bit sticker shocked at what I had done at the end of the day, I felt damn good embodying abundance. And I felt damn good extending my abundance to those I purchased from.
Also, Lola now has a week’s worth of clever indie t-shirts to wow the kids at summer camp.
For the vendors I purchased from yesterday, I changed the world a little. I reinforced the uniqueness of their ease. I shared a smile with my debit card that told them they were worth more than the sticker price.
No, increasing consumption won’t fix our problems but having a better relationship with money might.
* * * * *
In case you haven’t noticed, our relationships to money are changing. Fast. Furious. And unexpectedly.
No longer are finance, law, and medicine fields that guarantee stability, profit, and growth.
Artists – of all kinds – are finding money to be easier to come by, abundance amidst recession, and demand despite saturation.
Your relationship to money is no longer determined by your previous experience with it, your college degree (or lack thereof), or time in an industry. Our ability to earn is instead based on our own view of our unique talents.
Capability doesn’t determine cash flow.
But passion might help determine your profit.
At the Selling Your Soul event in NYC on Thursday, Danielle LaPorte (or, as I affectionately refer to her in my noggin’, DLP) and Marie Forleo provided (at least) 2 important sparks about our relationship with money. One, a question: What do you really mean when you say “I can’t afford it?” And two, a statement: we all have “money stuff.”
Much of my success as an entrepreneur has not been about having the best widget, the fastest fingers, the smartest brain, or the most intuitive spirit. Gaining influence, earning money, finding my niche, and producing my art has largely come as a result of working through my “money stuff” and understanding what I mean when I say “I can’t afford it.”
Let me say again, having a 6-figure business isn’t about being the best. It’s about understanding your relationship to money.
Having a 6-figure business isn’t about producing more than anyone else, having more clients than anyone else, or having a monopoly on your message. It’s about understanding the art of earning.
Scarcity in earning is directly related to scarcity in spending, investing, hiring, and giving.
What I meant when I said, “I can’t afford it:”
I meant I wasn’t worth it. I meant I couldn’t earn it. I meant I made bad decisions. I meant I didn’t value myself.
What I mean now when I say, “I can’t afford it:”
I don’t see it as valuable to me. I don’t need it right now. I don’t want it. I made a choice not to have it.
Making money can be so easy.
My come-to-Jesus moment with money was when I truly discovered how easy it is to earn what you need when you work for yourself. What is easy to you, what comes naturally & beautifully to you, is ugly, difficult, and downright nasty to someone else. That is the source of value.
What is easy to you, what comes naturally & beautifully to you, is ugly, difficult, and downright nasty to someone else.
That’s the source of value but it’s not the end. Value flows forth from your alignment with your purpose and your relationship to those who identify with your purpose. Your purpose is the beginning & the end of the transaction.
What you do – the work that is paid for – may be meaty, but it won’t seal the deal.
The art of earning is offering your valuable bits for sale. The art of earning is finding your purpose scattered throughout the experiences of your life and business.
There is no need to paint a different picture or construct a different model. Take your “easy” talents, your insane passion, your drive, and purpose and box it up for sale.
Nota bene, parts of this equation often missing:
- Ease
- Talent
- Passion
- Drive
- Purpose
- Package
- For sale sign
Money need not control you. You need to control it. Money need not determine your experience. You need to earn money to determine your own experience. Your gain need not mean your customer loses. Your gain needs to be others’ gain.
What does a passion-driven entrepreneur need to know about the art of earning?
So very many things… but I’m specifically curious about what you’d like to know. I want to help you strengthen your relationship to the dollars & cents you & your business needs to survive & thrive in the changing economy. I want to help you find profit in work your soul craves.
This conversation is part of my purpose. And I’m on fire about it.
——
Update! While the conversation continues (and will for the foreseeable future!), my first contribution is all shinied up & put together. The Art of Earning is a digital guide all about making money beautifully. It’s a deconstruction of our hang-ups around the topic of cash, profit, and earning potential. It’s also a reconstruction of a new money paradigm for artists-of-all-sorts.
The best part of all is that you can name your own price. And frankly, that’s a celebration of my own confidence in my earning ability, a party to which you are oh-so invited.
Click here to learn more about The Art of Earning!
“Art of Earning” will help you heal your beliefs about money and start getting into a really loving relationship with moolah and your mojo. It will teach you how to be a Goddess of your own Abundance. The world needs this!
– Goddess Leonie | goddessguidebook.com | author of the Business Goddess ecourse
Big Thinking
I started my business with about $80 that I put on my personal credit card so that my husband wouldn’t see the bill.
That was what it cost for my first web hosting plan. I don’t think I spent another dime on the business for a few months. Nothing more substantial than a fiver here or a ten spot there, that’s for sure.
By necessity, I did everything myself. What I didn’t know how to do, I learned or ignored. It was about 5 months until I started to bring in more that a few dollars per week.
That was the summer I bought Scoutie Girl with a loan from our local credit union. The 2 block walk with the check from my house to Jan‘s was exhilarating. I felt like I walked there a wannabe and walked back a real business owner.
That very real exchange of money kick-started my drive to grow the business. This wasn’t about some cash on the side anymore. It was about profit. Passion-driven, profit-earning business building.
The very first month the site was under my management, I brought in more ad revenue than ever before. I also created a fall advertising package that earned more in a month than I had at my previous full-time job. I was making a profit!
Of course, that was the first time I felt uneasy about the money appearing in my PayPal account. It was the first time I really questioned whether it was okay for me to be pulling in a profit in a way that was just so much fun! I got really uneasy about “me” and my skills.
That initial exchange was also a dive into the deep end of collaborative business relationships. You see, my business is not an island. Nor is yours.
Over time, I came to understand that making a hefty profit isn’t about “me,” it’s really about the “we.”
My profit is part of the community’s profit. My growth is part of the community’s growth. My success is part of the community’s success.
There is no room in microbusiness for a business that is not part of the greater whole.
You’ve heard it said that “you gotta spend money to make money.” I would argue that the flip side is true as well:
You gotta spend money because you make money.
The more money I make, the more I can let flow back out to other businesses that support me: my assistant, my coaches, my technologies, my designers. The more I profit the more sustainable those other businesses are.
I increase my expenses as my profit increases because, each time I do, I gain freedom, security, and support. My business no longer relies upon my ability to get stuff done – now I have a team to fall back on, to trust.
Without profit, there is no team. Without the team, I can’t profit.
If I try to hoard my profits, I end up becoming overwhelmed & disillusioned. And I owe a ridiculous tax bill.
You can’t DIY yourself to sustainability. And you can’t DIY yourself to freedom.
The road between passion & profit can feel like a greedy one.
Who am I to earn money from something that comes so naturally?
Yet, earning a substantial living from your passion allows you to support others in their own passions. The cycle is generous and unending.
Profit isn’t only about “me” – profit works best when you consider the “we.”
{image credit: emdot}
