How much money do you make?
How much money do you want to make?
Do you have debt? A lot or little? Positive debt {going towards something that’s appreciating} or Negative debt {going towards something that’s depreciating}?
Continue reading “4 People. 4 Very Different Incomes. 4 Very Different Mindsets”
My first two part series.
So hopefully you’ve heard me loud and clear last week. You can actually have a business and a life {both of which you love}.
But, it doesn’t just happen. In fact, I believe this is the most intentional action you will take in your business. It’s possible, but it’s not probable unless you choose to make it so.
So how do I do it?
Creating a dream day sounds simple. In fact, I almost skipped this step myself recently. Until, I realized the “dream day” running through my head, wasn’t actually my dream day. It was what I thought my day should be based on my clients, my current business, the start of Remy’s school day and Dan’s travel schedule.
It was based on what I “should do” not what I actually wanted.
{oh my moment} Let’s just say I sat down and mapped out my real day and we promptly changed three of the programs coming up and our calendar. It’s that important.
You can create a dream day in a timeline {think 7 AM, 10 AM, 5 PM, etc…} or in a paragraph form like I did last week.
Here’s the questions I want you to ask yourself while you’re doing this:
Yes, my dream numbers. I’ve been writing these down since long before I was making them. Crazy? No…when you establish to yourself what you are worth, it’s a lot easy to establish that when you share it with others.
So here’s what I want to know…. What do you actually want to make. Please don’t give this in an hourly rate. Instead, share with me what you want your yearly salary to be.
Now, let’s solidify this:
What does this dollar amount mean to you? To your life? To your family? To how you actually live day to day and in the long term?
I’ve found in my life, that setting a number goal arbitrarily, never gets me to where I want to go, but knowing why this number matters, changes everything.
Let’s run a few numbers.
First, what’s your Average Client Monthly Value. If you’ve hung out with me before you know this is probably my favorite metric in the whole wide world. I track it every single month. It’s simple to find. Divide your total monthly revenue by the number of active clients you had this month and you have your ACMV.
Total Monthly Revenue/Active Clients =ACMV
What’s the difference between 2015 or the start of 2016’s earnings and where you want to be? Let’s take that difference and divide it by your ACMV to find out how many clients you need to get there.
Difference in Earnings/ACMV = Number of New Clients Needed
First, are you working too much or too little in comparison to this day and/or income?
Or, based on your Average Client Monthly Value, do we have a pricing problem?
Second, if you look at a typical day and your dream day, how much time is spent on major revenue projects—sales, client work, lead generation? How much time is spent on wasted activities that you should be paying someone else to handle {hint: housekeeping, graphic design and bookkeeping are key areas}.
We want to increase the amount of time you spend on projects that generate you income and decrease the tasks that suck time and energy from you. This opens up hours for your dream day.
Third, what do you need to cut out of your current day and what do you need to add to it to in order to create a semblance of your ideal day while still earning your dream income?
For the next 2.5 weeks, Todd Herman, who is my go to guy for productivity is heading through this annual video series {Click Here for a peek at video 1}.
Last year, I took his free content and turned it into something amazing. So amazing, that I decided to do some serious work with him {in fact you’ve, if you’ve been on any of my goal setting webinars, you’ve probably already heard this story}.
The results?
Life changing. Revenue changing. Profit Changing. Schedule Changing.
It’s that good.
And, since I need some series accountability, I decided to take it one step further. I wanted to invite you. Over the next few weeks, I’ll be doing a little challenge for us. All you have to do is watch for my emails, see the videos and HIT REPLY and tell me what you think. That simple.
Take a look and be sure to email us at support@lisekucker.com and tell me what you think of this!
Lise
When I started my businesses I had a clear vision:
I wanted to build several companies, while not having to live accessible to them. These companies would ultimately have several tiers of management so that I would focus on new development and big picture growth.
{but here’s the kicker}
I wanted a typical week to include no more than fifteen hours work. Oh, and I wanted to bring in millions of dollars in revenue. Yes, I just put 15 hours a week work and 7 figures in the same sentence.
Raise your hand if you think what I just said is impossible, if not insane. Yup, I guessed that’s what most people work thinking.
Two years later, this is exactly what my company looked like.
Seven years later, I started consulting with other people’s companies because, well, I was lucky if I had 5 hours work on a given week.
And, this year, I’m on target to sell most of my companies for quite a lot of money {totally answer to prayer}. Add that to the millions we’ve brought in over the last eight and that makes me a very happy girl.
Most people would tell me that I am lucky. I agree. I think that these businesses have been truly blessed and I send up prayers just about every day thanking God for how this path.
But, I also think I built a business around the life I wanted to have.
You see, I’m not a typical business owner. My husband is in the Army, and the last eight years have brought 7 moves {considering we lived almost four years in North Carolina that’s 6 moves in 3.5 years}. He deploys regularly, which leaves me a single mom of a now seven year old away from family.
And, speaking of family, I am crazy close to mine. My grandparents, who were like a second set of parents to me, were in their mid-80’s when I started these companies and I didn’t want my mom, as an only child to be caring for them alone. I wanted enormous flexibility to be home in Louisiana, regardless of where we were living. In 2014 when we lost both of them, I made 9 trips home to New Orleans.
Maybe you’re saying, this is crazy…there’s no way I can do this. And, you’re right. If you don’t set your business up for the life you want to live, you won’t do this.
I have seen these results because every decision I have made has been based around my desire to live a life I have specifically chosen. You can build a business that allows for your dream life, but you have to know exactly what that life is going to look like and shape your business around it.
For most of my clients {and sometimes myself} the hardest part of this is envisioning our dream life. How do I want to feel every morning when I wake up or every evening when I go to bed? What do I want to build in my business? What are our passions? Where is our time for them? Who will we spend our days with? Where will we want to go? Do we want or have a family?
So that we’re clear on exactly what we want this vision to look like, let’s layout a big idea of what this vision looks like by translating it into a single day. This day should be the epitome of a typical day. It’s not a timeline, but the birds eye view of the day {and yes, our workbook will walk you through this step by step…just scroll down to the bottom to download it}.
So my most recent one looks a little like this:
In my perfect day I wake up refreshed and energized to birds chirping and green peering in through my windows. There are four children of mine sleeping in the house, along with my amazing husband. We are incredibly close to our families seeing them every day. I’m prepping for a few weeks of skiing and some vicious tennis tournaments with Pilates and yoga each day and my afternoons and evenings are filled with kiddos and best friends, parks and snacks. During the day, I am engaged with my team, who are located around the country, building a business that helps other entrepreneurs see amazing results in their businesses, but I’m finished most days by 3 PM in time for pickup. My nights always have long dinners around the table filled with laughter and love and bedtimes with my favorite books from childhood. I pickup my paintbrush most evenings because I’m prepping to show at my first major exhibit, the Sausalito Art Festival! My nights end quietly, with the stars winking in on me under a full moon.
Now, a few things you should know: I have one child right now, but I want to expand my family. I love to move and I’m happiest on a hike, on skis or with a tennis racket in my hand. I value super close relationships with some of my best friends and I need time with them each day. I love building people’s businesses. It’s a genuine passion that I need to fill each day and I’ve already started building an amazing team to do this with me. These elements make up my perfect day. And, if I get a few of them into each day, I know I’m blessed.
Your ideal day may look very different from this and that’s okay. The key is to understand what you want in you dream day, your dream life.
For example, many of our clients come to us as solo practitioners. They’ve been working 52 weeks of the year for far to long with no backup and zero vacation. When we build packages with them, we always ask, how often do you want to take off.
{Fact} They always start with one week.
But, as I dig deeper, I hear their kids are in travel baseball and it would be amazing to have four weeks a year to just have nothing on their calendar, but running to a tournament. Or, maybe their town slows down in the summer, so we based their packages around 9 months of the year rather than 12, which let’s them spend time enjoying their life when their clients are normally gone. Or, their spouse has just retired and they want to travel.
Each of these situations warrants a different type of business. We’re often stuck assuming we can’t make changes to the “status quo”, but with your business there is no such thing as the status quo. You can make it whatever you want it to be.
Your business may be based on 9 months or 11 months or 6 months of the year. That’s okay. It’s your business after all. The key is setting up the plan around this from day one.
How do you do that? Well, that’s a very good question. You see, when, I started writing this post, I had no idea what a rant, I’d go on….and since I’ve written a small book and I’m not done, guess, it means this will be my first two part blog. So stay tuned for next week!
Let me lay out a scenario I see far too often: My client {hereafter known as Tessa, simply because I love that name}, has been in business for three years. Her business has been very busy…she’s regularly booked solid, but when I look at her dividend payments, she’s making very little money. After paying babysitters almost as much as she’s making, staying up until midnight to clean her house and pay her bills because her days are so full, and waking up at 5:30 AM the next morning to start all over, Tessa’s done, ready to give up and move onward.
When I dig a little deeper and lay out all of her expenses and analyze her profit margins, they are a dismal 13.5%. And, while there are absolutely some major expense shearing I’d like to see, it’s not the big problem.
Her rates are.
She’s never raised her rates once in three years and is terrified of the idea that her clients that she’s earned by sweat and blood will disappear the moment that she hints at the idea of price increases. So she waits, underpriced and undervalued, drowning in her own financial flood.
Sound familiar?
After working with thousands of entrepreneurs and personally directing the transition to new pricing of over 100 businesses {including four of my own}, I can tell you it shouldn’t be this way.
There are key indicators that can tell you when it’s time to raise your rates and as my clients will attest, if you make a transition correctly not only will you keep your clients, you’ll increased their chances of seeing stellar results.
So, how do you know if it’s time to raise your rates?
1. If you {or any of your employees} are at 80% max capacity of clientele.
It doesn’t matter whether you’re a Pilates’ instructor, a graphic designer, a salon owner or a mental health therapist. If you consistently fill 80% of your max appointments for 12 weeks straight, you are due for an increase. Likewise, if your business has a team of individuals and you see one at 80% of their max appointments over a 12-week period, it’s time to create a new tier and move them into it.
This is simply the law of supply and demand. You have a limited supply of hours and a high demand, which puts you in a prime place to raise your rates.
For those who are wondering, “what does this mean for my current clients?”, the answer is simple. You guide them gracefully {and personally} onto the new pricing. This means you’ll work with them 1:1 to set them up onto the new pricing, without apologizing for it, but thanking them for their loyalty and relationship.
2. If you are now priced at the low end of your competition and are completely immersed in a price war.
I can’t tell you how often I find someone battling it out against a competitor whose main market angle is cheap pricing. Let’s be honest…unless you’re in a town of under 12,000 people, chances are at some point a low priced competitor will show up. They are generally well funded; therefore, marketing isn’t an issue. They scream their prices, but lack on customer service. And, their client will have an experience, albeit not one that will appeal to most people.
Does this sound like your business?
No, of course not. You own a boutique business, which offers a high level of customer service and an extraordinary experience that brings your clients great results. So why on earth are you trying to compete with these behemoths?
Instead, raise your rates and create a more extraordinary experience. The fastest growing sectors in any given industry are almost always the luxury segment and the low-priced giants. The luxury segment has fewer customers who are willing to pay higher dollars for extraordinary service. Having built one of these businesses, I can tell you when you make the turn for luxury, few look back, because they can offer so much more with so much less headaches and work.
3. If you have not raised your rates in a 24 month period. I’m a huge fan of small price increases every eighteen months to two years. These minor shifts will allow you to gradually increase your profits, margins, regularly raise the income packages of your employees or independent contractors.
What does a typically shift look like for me? Normally, no more than 3-5%. That means on a $50/hour service I would raise my rates between $1.50 and $2.50/hour.
Seem doable? Maybe it seems even a little bit on the low side?
Well, assuming I started at $50/hour and raised this every 18 months for six years while working a steady thirty hour week, I would increase my yearly pay from $78,000 in year one to 93,600 in year six. That’s about a 40% increase in pay in just six years…not too shabby considering it’s a graceful transition.
So here’s my question for you…is it time to change your rates? Are these rates holding you back? Is it time to finally move to the next place in your business? If so, what’s your next step?
