When I was in first grade, my teacher saw me browsing the titles in the 4th grader section of the library. She tried to guide me back to the beginning readers, but I was undeterred. I wanted to read Charlotte's Web.
Mrs. McKellar wasn't convinced, so she opened to a random page, pointed to a paragraph, and asked me to read it. I did, adding character voices as I read along.
She never stopped me from reading ever again.
So yeah, I'm a reader. I'm often a double fisted (or more) reader. I have books everywhere, much to my husband's dismay. I also get asked to read and review new books from time to time. So, it made sense to me to give you the opportunity to see what I'm reading, what I like (and don't) and why.
Thus, this new "book of the week" post comin' atcha!
Better isn't better. Different is better.
That's the premise behind Mike's book, Get Different. Mike Michalowicz has a brilliant, linear mind. He can distill anything into a useable framework or system - his past books (Fix This Next, Clockwork, Profit First), all illustrate this very well. But Mike's also good at making that framework understandable and USEABLE by just about everyone. So OF COURSE he developed a framework for marketing.
Justin Wise is the innovator of this system, and he and Mike bring it to life in this book. It's rich with case studies and examples - including from Mike's own business - to help you see how to implement and execute on the Different Is Better framework. The framework is simple - Differentiate - Attract - Direct (D.A.D) - but that doesn't make it easy.
Experiment to find your "different"
I gave this book 4 stars because the opening chapter is SO bro-markety that it feels out of alignment with everything else Mike has ever written. It's definitely DIFFERENT, but I'm not a big fan of the guy he mentions, so the pot-smoking, pool playing, and name-dropping felt icky and not what I've come to expect from Mike's work. I'm no prude, mind you, it just felt out of integrity with the fun-loving, wise-cracking, caring approach Mike takes in his books.
But if you an get past that first chapter (and I did), you'll find a framework that's easy to understand and simple to use. Notice, I didn't say EASY to use. You'll have to test, tweak, and experiment to "find your different." But that's what marketing is all about anyway, so Mike just gives you permission to do more of it. The forms and instructions are very straightforward. It's easy to plug in your customer information and start testing/playing around with it. But you've gotta DO the work. You've gotta reach out to folks to confirm what sets you apart in the eyes of your best customers. You've got to iterate and evolve, too, because different today is samey-same tomorrow.
Overall, it's a solid read and, while I got an advanced (and autographed!) copy from Mike as part of his street team, I also bought several copies for my clients. It's a doable, understandable approach to marketing your business in a way that WORKS.
As a creative entrepreneur, it can be challenging to learn to let go of certain parts of your business. As a Fusion Creative, I still find myself struggling from time to time with asking for and receiving help. BUT, without delegation, you will struggle to see growth.
Delegation isn’t just telling other people to do things on your behalf when you feel overwhelmed - it’s also about giving someone the authority they need to do the task and then managing them accordingly to ensure success. If you're familiar with Mike Michalowicz's book, Clockwork: Design your business to run itself, you've heard this before. You don't just assign a task, you delegate the outcome.
If you’re new to the practice of delegation and want to know how to do it the right way, here are some things that may help you.
Delegation isn’t just telling other people to do things on your behalf when you feel overwhelmed - it’s also about giving someone the authority they need to do the task and then managing them accordingly to ensure success. If you're familiar with Mike Michalowicz's book, Clockwork: Design your business to run itself, you've heard this before. You don't just assign a task, you delegate the outcome.
If you’re new to the practice of delegation and want to know how to do it the right way, here are some things that may help you.
Play to your strengths.
Delegating doesn’t necessarily mean that you need to give up all of the things that you currently do for your business. If you are particularly good at something, then it can be beneficial to lean into your strength and start delegating your areas of weakness.
Start with the "low-risk" tasks - things that won't cause the business to fall apart if something goes wonky. As time goes on, and your trust level grows with your delegatee, you'll be able to pass off more complicated tasks.
Outsourcing or automation are also forms of delegation.
Many entrepreneurs believe that they need to have in-house staff to which they can delegate, but you've got options! Outsourcing and automation are also forms of delegation and can help you streamline your operations and grow your business during times when you can't afford to hire in-house. Tools like Convertkit and Mailchimp automate your email. Zapier can automate a bunch of things, and you can also hire VAs or even outside contractors to help. For example, suppose you’re trying to source a product from China (or have it made there). In that case, you might look to a company like leelinesourcing or Alibaba - experts in that particular field. Just be sure to check out this helpful how-to guide from Forbes first!
Hire for the role, not the job title.
Picking the right person for the job doesn’t automatically mean picking a person who can already do it. There are times when training someone to do it makes sense. If you're hiring a person to fill a specific role in your company, but they're short on one or two skills for that role, training them not only increases their value to the company, it also frees YOU up from having to do it anymore!
Think about it this way... is there someone already in our company who:
needs to develop these particular skills?
has shown interest?
will see your delegation as a reward and not a chore?
is looking for a challenge?
can take on the task right now?
If you've already got someone that fits that description, then it might be a better choice to train instead of hire.
Create a project brief or process document to make it easy.
You must provide your candidate with a project brief or a process document if you expect them to effectively complete the task you have delegated to them. Successful delegators explain not only the steps to take (if it's a repetitive task), but also the result they are looking for (in detail), including how the project fits into the bigger picture of the company. You also need to provide a clear definition of what success looks like and how you will measure it during the project and at completion.
Establish checkpoints or milestones for larger projects.
Delegation doesn’t end when you give your brief. You also need to establish project milestones to check progress effectively. When you first start to delegate, it can be tempting to micromanage individuals. Establishing checkpoints will help prevent you from micromanaging, allowing you to get on with your work. It also helps keep your delegate stay focused without unnecessary interruptions from you! Milestones help you know if a project is on track for completion and doesn't leave you "holding the bag" at the project due date having nothing done.
Delegating is an extremely useful skill to learn. It helps you manage your resources, build a team where delegation is embedded in the culture, and grow an efficient and effective team around you. Want more help? Check out the Creative Freedom Apprenticeship, which is now included in the Level One Incubator!
This one’s all about the dolla billz, baby! Many creative entrepreneurs get emotional when it comes to price increases. So, what if there were an easy, external way to know that it’s time to raise your rates?
What if there were 11 ways?
Your wish is my command! Here are 11 external indicators that can help you determine if the time is right for a price increase in your creative business.
If you haven't already downloaded this week's bonus content, you'll want to do that here. Not a member yet? It's free! When you register for email updates, you also get access to episode transcripts, worksheets, and other downloadables!
Credits and Sponsors
Fashion jewelry from Kerianne at FancyBargain.com. Tell her you saw her bling on Creative Freedom!
It's been a busy month at Creative Freedom HQ! As the first quarter of the year heads into the sunset, I've been plastering my face and voice all over everyone else's website this month in preparation next month's big open enrollment for the Creative Freedom Incubator. If you know you need both coaching and hands-on help in your business, think about applying now to beat the rush. For a limited time, I'm waiving the application fee, so don't dilly dally!
I had the joy of being featured in 4 different places this month. Please check 'em out, leave a comment, and let the hosts know that you'd like them to bring me back! It's your comments, feedback, and recommendations that help me spread the Creative Freedom message far and wide!
Profit. Power. Pursuit. podcast
Host Tara Gentile and I sat down to talk in-depth about the Creative Freedom Incubator - what it is, how it works, and more importantly, WHY it works. Designed for creatives in Early Struggle, the Incubator combines coaching with crucial hands-on business support (VA/Marketing/Admin) that most early-stage businesses need, but can't afford.
We go behind the scenes in how the whole concept was developed, how it evolved, the tough lessons I learned in the first year, and how I've adapted the program to better fit (and inform) my business model. I also talk about what didn't work, client results, and how I've set things up for more success (for them and myself) going forward.
This is my second appearance on Mike Michalowicz's popular show. He's a funny guy, and his co-hosts keep things hopping. Mike's the guy who wrote The Toilet Paper Entrepreneur, The Pumpkin Plan, Surge, and, yes, Profit First. His new book, Clockwork will be out this fall.
This was my first (and hopefully NOT last) appearance on The Strategy Hour with Abagail and Emylee. These two are a powerhouse combination of business smarts and compassion for the creative entrepreneur's lifestyle. We talk about the importance of striving for a six-figure business - or not, and the rare reasons why you may not need to aim that high. We also dig into the Cusp types - something I don't get to do very often when talking about the Creative Entrepreneur Type Spectrum. If you're a cuspy, this could be some great learning for you.
I love me some Charlie Gilkey! I was lucky enough to be a guest just as the Creative Freedom Spectrum was coming into the world, so when they asked me back as a contributor, I was thrilled!
On the heels of Oprah's Golden Globes speech, this post provides some insights for people wanting to speak their truth with their audience in ways that won't alienate their true fans, while still being a genuine reflection of their thoughts, values, and beliefs.
Yep, it's been a pretty busy month for me, and I wouldn't trade it for the world. But we've also got some big happenings coming up around here, too. The new season of Creative Freedom is right around the corner, and I can't wait to share the new episodes with you!
Again, Please take a moment to check out the content that interested you, leave a comment or review, and let the hosts know that you'd like them to bring me back! Your comments, feedback, and recommendations are an important part of making sure I get to be a repeat guest. And if you know some podcast or stage I should be speaking on, let us know! I'd really like to see more people this year and get Creative Freedom into as many hands as possible!
[Note: This is an excerpt from my book "Creative Freedom: A comprehensive guide to personal and financial freedom as a creative entrepreneur". If you'd like to be the first to get updates and excerpts, make sure you're on my mailing list, so you don't miss a beat!]
Suppose you saw this "advertisement" on social media. You'd no doubt roll your eyes, scratch your head, and maybe even wonder aloud "Who do they think they are? Beyonce is like The Highlander... there can be only one!"
Regardless, you'd likely consider this ad complete nonsense and skip right on past - no matter how badly you'd like to be the next Queen Bey.
And yet, how many times have you been lured by other similar, yet equally absurd promises?
Depending on the circles in which you travel, you may have mixed emotions about the phrase "earn six-figures a year." After all, earning six or seven figures is the holy grail of many online business coaches and so-called internet marketing gurus.
The phrase "earn six-figures" is often followed by such deceptive codswallop as "in your sleep" or "in your pajamas" or "part time from anywhere".
These inflated promises are often found co-mingling with sentences like "all you need is a laptop and a dream."
Puh-lease.
While it's true that some people have done those things, the reality is that very few people can replicate their success - and when they do, success doesn't happen overnight. There's no "blueprint" or "formula" that's going to give you those kinds of results overnight.
I regularly write about the fact that those kinds of results take time. Jeff Walker, developer of Product Launch Formula, said he got fewer than 10 buyers the first time he launched. He had to launch more than once before he hit seven figures. Beyonce only became Beyonce after years of focused effort, a few heartaches, and more focused effort.
The same is true about building your own Noble Empire. You have to keep showing up consistently, iterating, focusing on what works and discarding the rest. That's how you build a reputation and make a good living doing what you love.
But too many creatives settle for subsistence-level income in their so-called business. It's time to stop the madness. (Tweet this)
That's why I am a firm believer that every creative entrepreneur needs (yes, I said needs) to build a six-figure company. I call it the Six-Figure Imperative.
The Six-Figure Imperative Explained
At its core, The Six-Figure Imperative is both a mathematical equation and psychological illustration (Fusion creatives, rejoice!). In most casts, a healthy company needs to make at least six figures in order to pay the owner a living wage and still be able to cover the business expenses. Sure, there are places in the world where you can live on less (or might need more), but that's a fair baseline for most creatives, and I don't know many people aiming to live closer to the poverty level - which, in the US, is just over $20,400 for a family of 3 (higher in Alaska & Hawaii).
All you Chaotics out there, breathe a minute and let's explore these numbers. If you want to pay yourself $50,000 per year (before taxes), your company needs to bring in at least $100,000. That's based on the Profit First approach that I use with all my clients. Developed by Mike Michalowicz, the Profit First approach recommends that owner's pay be half of the company income.
So, $50,000 x 2 = $100,000 business revenue
Special notes: Once your business revenue is over $250,000, your owner pay percentage will shrink, and your profit sharing percentage will grow. If you want your take home pay to be $50,000, you'll need to add your taxes on top of that number before you multiply. I'm no tax pro, so you'll have to do that math on your own, but this gives you a baseline idea of how it works.
Now, all you Linears can sit back for a minute while we cover the psychological illustration. Most creatives see the six figure mark in one of two ways:
They reel against it because of all the icky marketing tactics they've experienced in pursuit of it. "Screw this! 'Six figures' is just a marketing ploy the gurus use to separate you from your money!"
They drool over it like it's some pie-in-the-sky fantasy that is only available to the likes of Beyonce. "Someday, I'll get discovered, the world will beat a path to my door, and I'll be rolling in the dough!"
The Six Figure Imperative works to break that psychological block by showing you that six figures is not only reasonable, it's important to the long-term health of any full-fledged business.
There's a wide range between six figures and seven figures
When I say "six figures" I mean it as a baseline. I hope you're able to make as much money as you desire with your Noble Empire. Eight figures? Go for it. Ten? Why not? More? That's okay by me, too. But for most of us, the low-end of six figures is a useful rule of thumb.
But there's a big gap between $100,000 and a million. Where should your personal baseline be?
If you're living in a major metropolitan area, where rent is obscene, the low end of six figures might not even cover your mortgage. I saw an apartment listed in Nashville for $8,000 per month. And a girl's gotta eat, right? So your six-figure baseline might be closer to $250,000. That puts you owner pay at $125,000 per year. $96k for rent and $31k for all your other living expenses.
Only you can discern what will really work for you. Maybe you have no kids, or maybe you have seven. Maybe you have no debt, or maybe you've got thousands of dollars in student loans that still need to be paid off. Once you determine your living wage, you'll be able to determine the baseline income goal for your personal Six-Figure Imperative (and also helps you make the six-figure distinction).
Six-figures for a business (not a hobby)
There's one last clarification I need to make. The Six-Figure Imperative applies to full-fledged businesses. If you're a creative entrepreneur with a "side hustle" or a hobby that happens to earn some income, this may not apply to you. Creative Freedom is focused on helping creative entrepreneurs build a full-fledged business that's healthy, profitable, and sustainable. The Six Figure Imperative is meant for any Noble Empire that's designed to pay you a living wage and stand on its own. That means you don't need to prop it up by pumping your own money into it all the time, and you're not running it down to zero to keep your personal bills paid. You don't need a job to keep it afloat because it swims on its own.
That doesn't mean that your hobby can't make six figures. It doesn't mean you have to quit your day job to do what you love. There are many stories of creatives that have a day job that pays the bills so that they can create on their own terms. Jim Henson started life that way. But at some point, he decided that being a creative entrepreneur was his path, and he built a company that paid him well - and was able to feed and clothe an army of employees to boot. You dream may not be as grand as Henson's was, but The Six-Figure Imperative can help set you on the path for healthy growth, whatever size your company may be.
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If you're ready to set your own Six-Figure Imperative, and grow your creative business in a sustainable way, the doors are open to my new Portable Coaching program. If you need start up money, we recommend qvcredit as our legal money lender Singapore. They are tuned in for tech and innovation start ups. Designed for creative entrepreneurs in the start-up phase of growth, Portable Coaching is an easy, affordable way to get the help you need to grow your business. Beyond early start-up? I also have two openings for one-on-one advising. These spots fill fast, so check it out today if you're curious!
First things first:
I'm THRILLED to announce that the Creative Freedom Entrepreneur Types made their public debut this week over at Charlie Gilkey's Productive Flourishing blog. If you're a creative and you're not familiar with Charlie's work, I highly recommend checking him out.
My guest post is an excerpt from my book, detailing the 3 different types of creative entrepreneurs, along with the process I used to get clear on my target market (which is what started me on this research journey in the first place). Please take a moment to stop in and leave a comment or share the post. The more creatives that we can reach with this message, the better the world will be. I truly believe that.
Also, my accountability partner, Winnie, just posted my interview for her podcast, where we dive into the nature of assessments in general, and why self-awareness is a powerful tool in building your business. The Let's Talk Tech Show takes the mystery out of all the tech-y tools, platforms, apps, and software that solo-preneurs deal with as they grow their business. If you're a Chaotic creative - or otherwise feel overwhelmed by the tech stuff, Winnie's show is a great place to get some basic understanding in plain English.
Okay, on to this week's episode...
I've known Mike Michalowicz for years now. First as a fan of his work, then as a member of his book launch team, then as an editor of his last book, and one of the first certified Profit First business coaches in the world. Now, I think it's safe to say we're friends. And he's an interesting dude. Like me, he's a guinea pig for all the methods he teaches. As a Linear Cusp creative, he's great at creating and implementing systems, but he's got just enough Fusion in him to make it fun and easy to learn what he teaches. Mike's new book, "Surge: Time the Marketplace, Ride the Wave of Consumer Demand, and Become Your Industry's Big Kahuna," is the next installment of his guinea pig adventures. Using surfing as his framework, SURGE is actually an acronym for the steps you need to take to find and ride your own wave of business success.
Does it work? Watch the episode, then read on:
But does SURGE actually work?
If you read the book, you'll see plenty of case studies supporting Mike's process - including examples from his own business. As I mentioned in the video, I was a smidge disappointed about the lack of specifics around the "cool kids" strategy, until I realized I did it myself, without really trying.
I've been doing the research on the Creative Freedom Entrepreneur Type spectrum for about 18 months. Interviewing creatives from around the world, analyzing the data, and testing theories. Back in April, Charlie posted on Facebook saying he didn't resonate with particular a social media platforms. I said that it made perfect sense to me because his creative entrepreneur type wasn't a good fit for those platforms. That got him (and a few others) curious, so I explained a little about the research I was doing. Charlie was intrigued enough to have an email convo with me that led to this week's guest post on his blog (and with a little luck, an interview on his podcast later this year).
Luck is where preparation meets opportunity - which typically looks like work! (Tweet this)
Charlie has a solid track record in the realm of creative entrepreneurship. He's one of the "cool kids" in the marketplace. But I had no idea how to get on his radar until HE said something where I had an opening.
There are a couple of things that you need to understand:
This was not an instant win. Our first conversation was in April. The post didn't publish until June - exactly 60 days from Charlie's Facebook post. I had to do the follow-up work, including the back-and-forth with Charlie's editor and support team, before the post could be published.
I had something of value to offer Charlie (and his audience). I didn't approach him with a pitch. I just shared my experience as it related to his. He responded, and I kept the conversation going with value, not hype.
I did my research and leg work long before Charlie's post. Seneca said that "luck is what happens when opportunity meets preparation." I had been "preparing" for more than a year. Charlie and I have some mutual friends, but this was the first time I'd ever had a conversation with the man. As far as I know, he didn't know me from hole in the ground. When an opportunity showed up, I was ready to share my value in a meaningful, helpful way.
I had to pay attention. The nice thing about being in research mode is that I do a lot more listening, watching, and analyzing. I'm much more reflective, trying to connect the dots. Opportunities are rarely handed to you on a silver platter. I think it was Edison who said opportunity is "dressed in overalls and looks like work". I've been saving, compiling, and researching conversations around this topic for months. Charlie's post gave me a window of opportunity, and I took it. As I said, I'm not Charlie's buddy, so if I hadn't seen his Facebook post, this opportunity would have probably passed right by me.
This was an organic way to "reach the cool kids" - and it worked. Will it continue to work? Well, I have a few more "cool kids" to check out before I can let you know!
On Day One of the Creative Freedom Challenge, we're taking a hard look at the biggest reason you're still stuck in energy-draining work, instead of getting paid well for doing what you love.
And it's not what you think.
Most people think the reason they're stuck is because they haven't made enough money yet to make the leap. If you're just getting started and stuck in a day job, that may be true. More on that in a minute. You can be several years into your career as a creative entrepreneur and still find you've created a "job" for yourself, doing things that aren't fulfilling - like putting out fires or picking up dropped balls.
In truth, "not enough money" is not the biggest reason you've stuck with your "job" for so long.
The real reason you're stuck is lack of clarity.
Lack of clarity often shows up in one of two areas:
1. Who you really are and what really matters in your life and Great Work (that's what we'll cover today).
2. How you want to show up in the world (we'll cover that next).
Meet Amy
Amy Oscar is a friend and colleague. We met at a conference back in 2010, and she was kind enough to write the cover quote for my book, "The Secret Watch." Amy's building a global following on the back of her book "Sea of Miracles." Her Soul Caller program has evolved from a weekly free twitter chat into a series of courses, programs and retreats. She also does private sessions as an intuitive guide and healer. Amy has thousands of fans and followers around the world (some of them pretty well-known), and yet, with all those clear signs that she was on to something, she still hadn't quit her day job.
For more than 15 years, Amy was an editor for a national women's magazine. She LOVED her job, but as her Great Work through Soul Caller started picking up steam, she still hadn't let go of her day job to focus on her Great Work. Here's what Amy told me:
"I sensed that I'd put an important part of my soul in deep freeze."
She then told me how it took her months to untangle what was going on inside her. Ultimately Amy realized, when she considered her job versus her Great Work, the truth so many creative entrepreneurs face:
"One was always going to have me hiding behind someone else's glitter cape. I didn't just have a message. It was MY message to deliver. So many people are telling this story and each voice matters. Each story resonates. We need them all. Mine was different and it had to be heard."
Do you make the leap or let it go?
Making the choice to pursue your creative calling can be complicated. It's not always easy. That's why clarity is so important.
Clarity comes from accepting your truth with what I call ruthless honesty: no judgement. Just seeing the facts for what they are.
Here's how Amy described her watershed moment:
"I was afraid to stand alone. It was never about the money. It was about my willingness to trust the world to love me when it could see me. And not just as a cog in someone else's wheel... It's about the willingness to come out of hiding. To stand in the light and be seen loving what I love. Being what I am. Which doesn't fit into anyone else's idea of what I could or should be or how I might serve their vision. It's about the willingness to step into the image I hold inside of my own heart of what I am.
"I realized that if I was going to be happy - and live a fully engaged, fully present life - I wasn't going to live a normal life. And I finally accepted that. I quit my job because the Soul Caller work was more important to me than a paycheck."
Amy got clear on the life she wanted to live, the Great Work she wanted to bring into the world, and who she would become in the process. When Amy got clear on who she was and how she'd outgrown her day job, she was ready to embrace her "own message to deliver" and share it with the world.
Amy's truth is a common one: more than the ability to make good money at it, the real issue behind making the shift into creative entrepreneurship is a lack of clarity (and perhaps a fear of being really seen).
In order to get paid to be you, you've got to BE YOU.
Look, if a guy can earn a living wage making youtube videos about playing video games or unboxing action figures, there's no reason that you can't get paid well to do what you love, too. But you have to have clarity on who you are and what really matters to you before you can stake your claim on your Great Work and share it joyfully with the world.
Then, you've got to show up that way consistently. Sure, try it on and see how your Great Work can not only serve others, but also yourself. Once you've got clarity on that, you've got to have the confidence to step up and own your message in the marketplace on a regular basis.
But that's the next part of our challenge. 🙂
Today's Assignment
Today, spend a few minutes thinking about what REALLY matters to you - in your life and work. What are your non-negotiables? When I work with clients, we use what I callthe 5 Key Areas of Success as the model for defining success on your own terms. Here are additional resources to help you get more clarity on what really matters and how you want to show up in the world:
Raving Fans Toolkit - a free gift to all my subscribers, which walks you through all four elements of building a Noble Empire.
Believe it or not, you already ARE a success. It may not feel like it right now, but it's true. Success is a destination, not a journey, and you're already here. Everything you've done (or failed to do) has led to this moment. Until you have clarity on what success looks like for your unique situation, it's pretty dang difficult to feel successful.
Are You On The List?
If you want to get all the updates in the Creative Freedom Challenge, along with a copy of my Raving Fans Toolkit, you can sign up right here (that box at the top of the page works, too).
How do you define success?
What resources would you add to this list? Share your comments below and let's be a rising tide for everyone!
At this point in the new year, more than 25% of Americans have already given up on our New Year's resolutions -that is, if we even made them in the first place. By the end of the month, that number climbs to nearly 35% of Americans (more resolution-related stats here).
Some folks (and businesses) are just getting started. I'm still seeing people offering courses on setting up your budget and/or income plan for 2015... that don't start until February!
I hate to break it to you, but you can't get a "jump start" on 2015 if the year is already rolling along!
One of the common problems I see for entrepreneurs stems from income or revenue planning. In fact, if your business is new (less than 5 years old, or making a market transition in the past 2 years), it's not always easy to predict where the money's going to come from in your business.
For many entrepreneurs, the first couple of years feel like throwing spaghetti on the wall to see what will stick. You make offers, do some research, hone your product or service, make more offers, and see who bites. You keep what sells, and table the rest. Sometimes you resurrect that stuff, and sometimes it's gone forever. In my own business, I've had a resurgence of interest in products that I wasn't actively promoting. I had essentially tabled these offerings, so I didn't include them in my revenue planning for this year.
Big mistake. If you've got an offering available, it should always be included in your revenue plan - even if you don't sell many of them during the year.
That got me to thinking about other mistakes I've seen when it comes to planning out your income, so I figured I'd conjure a post to help save you from making the same mistakes in your business.
Mistake #1: Confusing your budget with your income plan
Your budget and your income plan are not the same thing. Because a lot of creative types feel hemmed in by the word "budget" it's become common for coaches and trainers to use a different word (abundance plan, income plan, spending plan, etc.). A budget tells you how you project you'll spend/invest the money you earn. The income plan tells you how you project you'll earn the money in the first place.
I remember one of my early years in business, I created a budget with roughly $50,000 in line item expenses. I had no income plan. Sure enough, about two months into the year, I was pulling my hair out because the income wasn't keeping up with the expenses. I had no idea HOW I was going to earn the money, I had just put down the income of my dreams with no real plan of attack on how to make that income happen. In short order, I quickly reduced my "budget" to align with the realities of the income of my business.
Budgets are often wishful thinking. Income planning is where the rubber meets the road. If you can't figure out how to earn the income, you shouldn't be creating a budget to spend money you don't have.
Mistake #2: Planning that just "covers" the budget
A direct sales client of mine was struggling to get ahead of the curve in her business. She had come to me with an income plan that included very tight margins and little "wiggle room" in case something happened.
Of course, something happened, and her husband was unable to work for an extended period of time. She was panicking about how to make ends meet. After she took a breath, we looked at where she could leverage her existing offers, find better clients and increase her average ticket sale. Then, I illustrated the need to plan for more than just "the minimums" because there's always something for which you can't possibly plan.
Rates go up and "life happens" - yet time and again I see entrepreneurs build a budget and project income based on that budget, without any realistic expectations around the "what if" scenarios of business. What if your current supplier dries up? What if your web host goes out of business or raises their rates in order to stay in business? Most companies give you a 30-day lead time on rate increases, which means you could get hit at the worst possible time of the year if you're not prepared.
Mistake #3: Relying too much on a single income source
One of my previous clients relied heavily each year on the income from one particular offering. Last year, they found themselves scrambling for most of the year to make up for the lost income when they had fewer enrollments than they budgeted for. It wasn't really "lost" income, though, because they never had it to lose! They had put too much reliance on a single source of income. It came back to bite them when they didn't have a plan in place to generate more income with some of their other offerings.
If this is your first year in business, then it makes sense to focus on one thing, get really good at it, and sell the heck out of it. But once you've been working with clients, listening to customers (you are listening to them, right?), and doing your research, you'll see other offers that you can provide to some if not all of your market. Facebook started as a connecting point for college grads (of particular schools), and only after they got good at that did they expand. Now, they've got Instagram, partnered with Google for advertising, and have their fingers in a bunch of pies. That doesn't mean you have to offer auto parts and jewelry (like Murrays Discount Auto Stores used to). If you're seeing an opening to serve your clients (and you are looking, right?), then it's more than likely you'll have more than one source of income over the years.
What if what you're doing today becomes illegal tomorrow? How can you shift and remain profitable?
This year's VAT regulations for international buyers created a firestorm of resistance, but it still went through. And international vendors of digital goods have to deal with the fallout - at a price. If all your eggs are in one basket and that basket is locked down, you're not in business anymore. On the other hand, if you've got more than one source of income, you'll stand a better chance of weathering the storm (I'm moving my "digital only" products to a platform that handles the VAT for me so I don't have to deal with it).
Mistake #4: Not planning for professional development or support
Technically, this could be construed as a budget item, but the reality is that I see a lot of entrepreneurs planning to make all kinds of money, without any kind of support behind it - whether that's a coach, learning a new skill set, or some other type of professional development. Your budget needs to include these items and so does your income plan. As you scale, costs change. You may hire a VA to handle things that you used to do yourself. If you're planning on earning more than six figured, you can pretty much guarantee that you'll need some kind of support. Your income plan needs to cover the costs of that support. Don't assume that you'll be able to cover it with the growth of the business, because, as I've already said "life happens" and you may find yourself in need before the cash-flow comes in to support it. Which brings me to mistake #5.
Mistake #5: Not planning for savings (or your own salary)
I can't tell you how many entrepreneurs I've talked to that tell me they made "six figures" in the last year - only to find out the company may have taken in six figures, but they didn't pay themselves a salary.
Say what?
That means that not only did YOU not make six figures, but the company probably didn't either! There's a difference between income and profit. And no, your salary is not profit. If you're not paying yourself, then you're lying to yourself about the actual profitability (and viability) of your business.
You can bet that Donald Trump, Warren Buffett, and Oprah don't work for free. They have large businesses and each draw a salary that's part of the company expenses. Profit is money that's not allocated to covering expenses. Most businesses erroneously think profit is what's left over after covering expenses. I'll show you why that's wrong in a minute. Regardless, you need to be sure that your income plan is built to cover a salary and savings for emergencies.
Financial guru Dave Ramsey reminds us that it's not a question of if, but when emergencies will happen. The printer dies, the laptop gets dropped, the external hard drive crashes... and those are just the minor emergencies. If your income plan (and yes, budget) doesn't include a line-item for savings, you'll find yourself scrambling. What if your tax bill's higher than you budgeted? That's where savings can be a blessing.
Mistake #6: No profit plan
Regardless of what you sell - or how much of it gets sold - it's imperative that you have a profit plan. If you sell even 20 cents worth of products or services this year, you need a plan in place to ensure that your company derives a profit.
Okay, twenty cents might be a little ridiculous, but maybe not.
Mike Michalowicz, author of "Profit First" says that profit needs to be a habit - not an event - in your business. Instead of making profit an afterthought (profit = income - expenses, like most businesses expect), Mike says pay your business first and set aside a portion of your income so that you always have profit in the business. I recently led a webcast to explain the Profit First approach and help you get a handle on making sure your business is always profitable.
Whether or not you come to the webinar, it's important to see profit with fresh eyes. You don't have to build your business on the "leftovers" - which, if you're anything like most entrepreneurs I know, there aren't many leftovers to begin with. Instead, you can make an intentional step toward building a solid profit plan - and income plan (and budget) - that's built realistically around what you need to accomplish in the next 12 months (and beyond).
What mistakes have you made?
I'd love to hear what mistakes you've made in your budgeting/income planning process. What did you learn and how did you recover? Let's learn from one another in the comments!
As I hear clients, colleagues, and friends sharing their goals for 2015, there's a chorus being repeated over and over:
"This year is the year I FINALLY break __ figures!"
I've heard it so many times that it makes me dizzy and sad to think about the number of folks who continue to miss the mark on this particular goal each year. When I ask why they haven't hit their goal yet, I hear lots of "reasons" - but ultimately, those reasons all mask the truth of why they really haven't hit their big income goal - whatever it is.
First a warning: "Big income goal" is relative. Like dream shame, the fact that you have a goal means it's big. For you, it might be 10 figures, or 6, or 5, or being able to finally quit the day job. The number doesn't matter. The principles are the same regardless of the number of zeroes at the end of the figure.
Why is it that most entrepreneurs that dream of making "mucho dinero" don't hit their big income goal? Here are a few reasons I've encountered (both on my own journey, as well as with my clients): (more…)
What does it really mean to be profitable?
With my newly-minted certification as a Profit First Professional coach (huzzah!), I've spent more than a few hours thinking about this question.
Profit First is a concept (and now a book) penned by business author (and my friend) Mike Michalowicz. The book drives home the point that most business owners make profitability an event (or worse, an afterthought), rather than a habit. Mike says "Shouldn't your profit come first?"
Um. Yes.
In fact, even a "for-purpose organization" (a term my friend Doug uses for non-profits) needs to generate positive cash flow in order to be sustainable.
Yet, so often, people bent on making a positive difference in the world think that focusing on profits is "icky".
*breathe*
There's a good reason for the ick. It stems from a very dismpowering definition of the word "profit". Let me explain...
Profit 1.0
Here's how we typically define "profit" today - courtesy of our friends at Google. The idea of "more" for the sake of more can leave heart-centered entrepreneurs feeling icky. We're not trying to get "more" all the time - especially not at the expense of people. Neither are trying to take advantage of others - or be taken advantage of ourselves! Yet the top two definitions of the word "profit" relate specifically to those two concepts:
For most of us, the word "profit" is synonymous with the word "money". They think about "rakin' in the dolla bills" and then rolling around in a pile of money like Scrooge McDuck. It's the "bottom line" of the balance sheet. It's the account balance, the number that's left at the end of the month when all the bills are paid - and before the next bill comes due.
Evil empires have hoarded it, conquered for it, and some companies have been built to focus on it (and only it) relentlessly.
No wonder we get all icky inside just thinking about it. After all, we're here to make a difference, to make a positive impact on the world. We want to make people happy, bring them joy, ease their pain, and we put the welfare of people ahead of money money.
We want to do good things, and all that ick, can't be good, can it?
We get mixed messages: loving money is the root of all evil, yet it makes the world go 'round.
Ah money, why do you vex us so?
What if profit had a wider, more holistic definition? Or is that too much of a stretch for you?
Share your thoughts and ideas in the comments. Your insights may spark a conversation that helps someone else!
This is my second appearance on Mike Michalowicz's popular show. He's a funny guy, and his co-hosts keep things hopping. Mike's the guy who wrote The Toilet Paper Entrepreneur, The Pumpkin Plan, Surge, and, yes, Profit First. His new book, Clockwork will be out this fall.
This was my first (and hopefully NOT last) appearance on The Strategy Hour with Abagail and Emylee. These two are a powerhouse combination of business smarts and compassion for the creative entrepreneur's lifestyle. We talk about the importance of striving for a six-figure business - or not, and the rare reasons why you may not need to aim that high. We also dig into the Cusp types - something I don't get to do very often when talking about the Creative Entrepreneur Type Spectrum. If you're a cuspy, this could be some great learning for you.
I love me some Charlie Gilkey! I was lucky enough to be a guest just as the Creative Freedom Spectrum was coming into the world, so when they asked me back as a contributor, I was thrilled!
One of my previous clients relied heavily each year on the income from one particular offering. Last year, they found themselves scrambling for most of the year to make up for the lost income when they had fewer enrollments than they budgeted for. It wasn't really "lost" income, though, because they never had it to lose! They had put too much reliance on a single source of income. It came back to bite them when they didn't have a plan in place to generate more income with some of their other offerings.
Technically, this could be construed as a budget item, but the reality is that I see a lot of entrepreneurs planning to make all kinds of money, without any kind of support behind it - whether that's a coach, learning a new skill set, or some other type of professional development. Your budget needs to include these items and so does your income plan. As you scale, costs change. You may hire a VA to handle things that you used to do yourself. If you're planning on earning more than six figured, you can pretty much guarantee that you'll need some kind of support. Your income plan needs to cover the costs of that support. Don't assume that you'll be able to cover it with the growth of the business, because, as I've already said "life happens" and you may find yourself in need before the cash-flow comes in to support it. Which brings me to mistake #5.
I can't tell you how many entrepreneurs I've talked to that tell me they made "six figures" in the last year - only to find out the company may have taken in six figures, but they didn't pay themselves a salary.
I've heard it so many times that it makes me dizzy and sad to think about the number of folks who continue to miss the mark on this particular goal each year. When I ask why they haven't hit their goal yet, I hear lots of "reasons" - but ultimately, those reasons all mask the truth of why they really haven't hit their big income goal - whatever it is.
