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Episode 21: How to have a profitable business from the start with Stephanie Hill-Manuel

Listen to this episode on: SpotifyApple PodcastGoogle PlayDeezer or Castbox.

Episode Notes

  • Definition of profit margin
  • How much to charge when you are still working a 9 to 5? –
    • What do you need to make NOW? What is industry average for your role? What does your income need to be to reach your goal? Then create packages with buffer time! (math below)
    • Also your rates can be determined by how well you market yourself. Promote yourself!
    • Think: If you can make large impacts and improvements in someone’s business, what is that worth to them? 
  • How to calculate backwards what you need to make to quit your job?
    • Need $3k after taxes so multiply by tax amount (generally 30%)
      • $3k X 1.3 = $3,900 INCOME NEEDED
    • You have 30 hours a month to spend on clients right now (1.5 hours a day, 5 days a week).
      • 30 hours a month / 4 weeks = 7.5 hours a week
      • 7.5 hours a week / 5 days = 1.5 hours a day
    • Each project takes 3-5 hours to complete on average.
      • 30 hours / 5 hours each = 6 possible projects
    • If you can serve 6 clients a month, you need to price your packages at $650 each.
      • $3,900 / 6 clients = $650 per project
    • THIS MEANS YOU MAKE $130 PER HOUR!!!
      • Would you be more confident saying “I charge $130 an hour” or “This project will cost $650 to complete”???
  • How to negotiate with clients?
    • You don’t! You calculate your prices and STICK TO THEM (but you can adjust price IF you reduce scope).
  • 3 tips to treat your business like a client and make it profitable?
    • Set aside time to work on your finances (budgeting, accounting, planning, etc.). Don’t leave it until last.
    • Hire experts. You can schedule an hour with most local bookkeepers and make sure you have things set up correctly. Same for an accountant (one handles taxes).
    • Plan your profit – I like Profit First Method. Find a system that works for you and STICK with it! It is easier to take your income and just divide it out, without the emotions.
      •  Simple way to do it:
        • Open 5 free checking accounts
        • Name them:
          • Revenue
          • Profit
          • Owner’s Pay
          • Taxes
          • Operating Expenses
        • Create a spreadsheet that calculates the breakdown (edit as needed):
          • Revenue = 100% (gets split out)
          • Profit = 5%
          • Owner’s Pay = 15%
          • Taxes = 30%
          • Operating Expenses = 50%
        • Set your income to flow into the Revenue account and set reminders on the 15th and 30th every month to make those distribution transfers. (May need a few months to perfect).
  • How do you help your clients do that?
    • We set up automations for tasks they shouldn’t be spending time on. (Scheduling calls, social media posts, recurring expenses and payments, etc.)
    • Figure out what you can outsource. If finances add a ton of time and stress, hire a bookkeeper. You can find good ones very inexpensive for the low transactions you have to start with.

Where to find Stephanie’s services?

https://www.instagram.com/elevateyourbusiness.co/

https://www.facebook.com/elevateyourbusiness.co

https://www.linkedin.com/company/elevate-business-consulting-coo-services

https://www.pinterest.com/elevateyourbusiness/

I hope you enjoyed these 2-part interview series as much as I did! Tell me, did you know about the Profit First Method and are you going to use it from now? Share your thoughts in the comments below.

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