Accountants can sometimes get hung up on the principles of Profit First. They balk at the idea of taking profit first because they operate under the antiquated system of set a budget and stick with it.
Sure, it’s important to have a budget, but it doesn’t need to look like what accountants learned in accounting school. (Trust me, I know. I’m a trained accountant and Profit First bookkeeper.)
Here’s the thing though: Your accountant doesn’t actually have to be on board with you using Profit First. Because your accountant doesn’t actually balance your books for you and they aren’t creating your profit and loss statement or balance sheet–that’s your bookkeeper’s job.
Sometimes one person fills both these roles, but that’s not always ideal. (Though that’s a story for another blog post.)
Your accountant, on the other hand, is preparing your taxes based on what your bookkeeper provides. It shouldn’t matter to the accountant how you get there.
I started my business as a tax preparer before I started serving as a Profit First Professional. One of the major issues of my business was the uneven revenue throughout the year.
From January to April, revenues were strong, so I paid myself a lot–and frequently. But after April 15th, revenues would drop dramatically. I’d be able to pay myself from the excess throughout the summer. But fall and winter months, I was barely able to pay myself anything from the business, if at all.
Here’s how Profit First allowed me to pay myself a steady salary throughout the year WITHOUT having to earn extra revenue:
Set-Up
The Profit First system required that we set up our 5 core accounts, and allocate predetermined percentages to each account. The core accounts are income, profit, owner’s pay, taxes, and operating expenses. Here, we’re going to focus on owner’s compensation because you deserve to be paid for the work you’re doing!
Lifestyle Lock
It’s important to establish a lifestyle lock amount, the amount you need to maintain the lifestyle you want to live. It’s what you will pay yourself each month, consistently.
The lifestyle lock puts a limit on how much you will take from your owner’s compensation account, no matter how much money is in there, to support your lifestyle. My lifestyle lock number was $3,500 a month. So, during tax season, even though my owner’s compensation accounts easily had more than $10,000 in there, I’d only pay myself my lifestyle lock number ($3,500).
Slow Months
Revenue would still come after tax season, but much slower. But because I only paid myself the lifestyle lock number, I was able to pay myself consistently throughout the year from the owner’s compensation account, well into the fall.
The post-tax-season revenue, although much slower, would make sure that money was still being allocated to my owner’s compensation account. And there was extra revenue built up there from tax season to make up for that lower revenue. The end result was being able to now pay myself year-round, as well as greater confidence in my business’s finances, and a much happier wife (true story).
No-Revenue Months
Every year, especially since implementing Profit First, I have at least one month where I do not generate revenue. Using the lifestyle lock helped (and still helps) me to take a month off, but still be able to pay myself in full. This is huge because typically when solopreneurs stop producing revenue, the impact on the salary is normally felt immediately. The lifestyle lock helped me to break the month-to-month, check-to-check cycle.
Conclusion
Profit First works and paying yourself with your own lifestyle lock works wonders for any business owner who experiences high seasonality with their income. It offers peace of mind for yourself and your loved ones and takes the stress out of the question, “Where’s my next paycheck coming from?”
If you’d like to learn more about how to even out your salary or take-home pay using the Profit First cash flow management system, we’d love to see how we can help you. Schedule an appointment, and we’ll talk about it!
Now you may not be in the same breath with the greats, yet, but it's a worthwhile goal.
And while you may or may not be a master sculptor or painter, you are really good at what you do, right?
The question to ask yourself is "Am I (and my company) SO good at what we do that we not only are first in the minds of prospects looking for our service, but price isn't all that relevant in their decision?"
You've probably seen this ad and laughed...
Not only do you not want to have this guy doing your surgery, you don't want to BE this guy in the minds of your prospects and customers.
Need #5 on the Order level of the Business Hierarchy of Needs is Mastery Reputation.
Question: Are you known for being the best in your industry at what you do?
Being considered a master of your craft most likely means you are going to have to narrow down your focus and commit to serving a specific target market. The individuals who are considered greats usually niche down pretty tight. It's hard to have a reputation as "all things to all people" and attract the best clients, whom I'll describe here as hungry for your services and willing to pay for them.
In the fitness industry the foremost example that comes to my mind is Eric Cressey and Cressey Performance. I have been at Cressey Performance in Massachusetts a number of times, and heard Eric speak when he was an "up and comer." He has always been dedicated to athletic performance, but it is his focus on baseball players, and particularly pitchers, that has made him the "go to" for many in the baseball world when it comes to arm and shoulder health and mechanics. The work he has put into to faithfully and consistently master his craft has reaped huge dividends. When I think of Eric, I think "Baseball". If my son was a pitcher, that's where I'd want him to train.
It's common to think that by adding more services you are are attracting more people. And while that MIGHT be true, the flip side is you are often lumping yourself into a crowd it's very hard to compete with. In the gym world, most businesses we serve are not going to outspend and "out-equipment" the Planet Fitnesses and YMCA's of the world. The Globo gym down the road offers everything from Aerial Yoga to Zumba, do you really want to try to compete with that?
And it's not just gyms. The best Barbecue restaurants don't serve sushi, know what I mean?
So think about it. Who can you and your business be the "go to" for? Who do you really enjoy serving, and how do you enjoy providing those services? Is there something you are doing now that you probably shouldn't be?
How can your business be the masterpiece you've always wanted?
As you digest your year-end financials, what’s the big thing that sticks out to you the most? For so many business owners it’s the lack of profit at the end of the year.
Being profitable doesn’t mean that you, the business owner, are taking home a big paycheck each month. It doesn’t mean that you’re able to invest in the latest and greatest equipment. Of course, it could, but being profitable means a whole lot more than that.
There are a lot of reasons why you may not be seeing a year-end profit, but our goal is to make sure you are. So as you’re wondering what happened last year, we want you to consider some of the circumstances you have in your business today.
You have a large amount of debt
Debt can weigh heavily on anyone’s finances, but especially a growing business. If you’re still in a physical location, lease payments aren’t necessarily a bad thing if your in-person revenue stream is steady. But business credit card debt can cripple your business, particularly if the interest rate is high (and we suspect it is). Credit cards are not a good tool to keep afloat because the debt will eventually drown you.
What to do: Find ways to help you get ahead of your debt and stop incurring new debt. This means you’ll need to find ways to reduce expenses in other areas so you can increase your monthly debt payments. You may not see large profits right away but you’ll reduce what you’re spending on interest charges every month, and that will feel really good!
You’re spending it on year-end assets
The goal always seems to be reduce tax liability as much as possible, but that shouldn’t mean at the expense of your profits. Just because you have money in the bank at the end of the year doesn’t mean you need to spend it on a big purchase. Assets like gym equipment, new flooring, a new computer and the like should be planned for well in advance, not become a line item in your effort to reduce your taxes.
What to do: If your tax accountant suggests you make a year-end purchase to reduce your overall tax liability, ask yourself some questions first. Is this something you truly need right now? If not, there’s no reason to buy. Do you have money saved already for taxes? It’s better to have a plan for both purchases and taxes. With both of these in place, there’s no need to make a big year-end purchase.
You’re paying too much on recurring expenses
Every business has recurring expenses, like insurance, phone bills, cleaning fees and software systems. Often rates go up and you fail to notice because we missed the email notification or forgot to check to make sure you’re still using all the parts of that service. Just because your bill is currently one price, doesn’t mean it has to stay that way.
What to do: Every quarter, make a date with yourself to review your expenses. What services are you no longer using? Is there a way to reduce your rates due to good payment history, longevity of service and/or lowering a service plan? It never hurts to do your research and negotiate new rates to save some cash.
You’re not flexible and open to change
You know how hard 2020 hit local service businesses. Some gyms didn’t make it out of last year intact; those that did were flexible and open to change. The health and fitness businesses that survived are the ones that embraced doing things outside the box and found new ways to bring their services to their clients. Often they were able to shift because they had an emergency savings that gave them a little bit of peace of mind and a little bit of time to think through their next steps.
What to do: The obvious answer here is to build up an emergency savings account so you’re prepared in the future. Knowing this may not be possible for you right now, find ways to be innovative and flexible with your offerings. Relying on only one stream of revenue may not be possible moving forward so identify ways you can diversify.
Most importantly: you’re not taking your profit first
We teach clients how to take their Profit First, which is hands-down the best way to ensure you have a profitable business. It’s about allocating a percentage of your revenue to profit, before you deduct operating expenses, taxes and owner’s pay. Because if you’re not taking that profit first, chances are you won’t have anything left at the end of the month.
But the easiest way to learn how to increase profits and see that year-end profit you so badly want is to book a call with us. We’ll assess your profitability and put you on the right path to a successful 2021.
Do you know how profitable your business is? To be clear, your profitability isn’t the revenue you’re bringing in or even your net income, after expenses.
One of the biggest mistakes we see business owners make is over-simplifying the profit in their business. It doesn’t have to be a complicated process, but it does take a little bit of thought.
And to actually see real profit month over month and year over year? That takes a plan.
For us, Profit First is the plan.
It allows us to take a profit every month, regardless of our revenue, because we take our profit first. The revenue matters, the net income matters, but the fact that we’re profitable means more.
We’re not going to talk about how to be more profitable here; that’s a blog post for another time.
But we are going to address why your bottom line revenue isn’t what matters when trying to grow a profitable business.
It’s easy to get excited about having a big revenue month. As bookkeepers, we know better, but we get excited too! To see a five-figure month is exciting. To hit $20k, $50k or more for the first time in a month is cause for celebration.
But once the confetti settles and the champagne goes flat, what does your bank account look like? Have you paid out all that revenue to expenses? Did you pay yourself a livable wage this month? Do you have anything left over?
Usually the answer is yes, all the money is gone. No, you didn’t pay yourself this month (again) and no, there’s really nothing left over.
So while the revenue looked and felt pretty good while it lasted, there was nothing left for profits and nothing left for you, the business owner. And our guess is that you spent much of that big month feeling pretty stressed out as you made sure the work was getting done.
Being profitable means a few things:
You’re able to reserve a percentage of your revenue as profit each month, usually because you set it aside first.
You’re able to plan out and/or control your expenses so you’re not spending every dollar every month.
You have enough cash to pay yourself and your employees a living wage. Consistently.
You enjoy a quality of life where you’re able to spend time with loved ones and enjoy some of your own hobbies. In other words, you’re not working all day, every day.
You don’t stress out so much about revenue because you have a really good handle on your expenses–and you know where your break even point is because you hit it regularly.
Profit is so much more than your revenue and having a profitable business will help you feel more relaxed and comfortable about where your business is and where it’s going. If this feels out of reach for you, we can assure you that it’s not. It just takes a plan and some accountability.
Let us help you find the way. Book a call with us today so we can show you how.
One of the biggest challenges I have had in my journey as a business owner is hiring. It's this weird dance of the applicant trying to convince you they are THE most qualified, THE most enthusiastic, with THE best work ethic you have ever seen.
And you are trying to figure out all the reasons why they aren't. In my experience it often comes down to making a gut decision. I've been right on those, and I've been wrong.
But if your hiring process is solid, and you know how to filter through the pretenders, there are gems to be found. Really good people, with great work ethic, who put in their all to grow and get better. When you find someone like that, it's your job to keep them!
And the key to accomplishing that is to the second step on the "Order" level of the Fix This Next Business Hierarchy of Needs (BHN).
Need #2: Role Alignment:
Question: Are people's roles and responsibilities matched to their talents?
Another way to ask it is this; Do you have the right person doing the right job?
When you hire, you hire for need. It just makes sense. If you need a coach in your gym, you put the word out in the marketplace that you are hiring a coach.
But what if you find out later that this particular hire is an absolute superstar when it comes to sales? And has the ability to lead? And is hungry to learn and grow?
You see, it's usually not until weeks and months after you bring on a new team member that you actually know who you really hired. Get rid of the ones who don't fit, and help the ones that do fit, shine.
The "superstar" I mentioned earlier is a real live person, and her name is Meagan Sbat. I hired her as a very part-time coach, but she didn't stay there long. She eventually became the GM of one of our gym locations, and a couple of years ago she bought that location from me. Good decision, Dean. I have watched her flourish and navigate this pandemic as well as anyone could. She even just recently moved the entire gym into a bigger location so she could serve her clients better. Truthfully, she is absolutely the right person at the right time for owning and operating that gym. I am pretty sure I would not have had the guts to do what she has done. Under her leadership Get Fit NH has thrived.
In her case, I got it right. By recognizing and developing her skills and talents, the whole business got better. And she isn't the only success story at that business. About a year before we sold the business, I started working with one of our coaches, Adam Gray, on program design and development. That was harder than you think because I am very protective and picky about program design. But he too has stepped up and developed a world class coaching program. And again, the business is better for it.
Sometimes that story won't have a fairy-tale ending. Sometimes the hire doesn't work out and you need to let them go. Other times you will end up developing a person only to have them leave because they have outgrown your company. I am not saying that's easy to take, but you can and should take pride that you helped that person flourish and succeed.
Here's your action step for today. Take some time to think about your team and if they are really enjoying and flourishing in the role they currently occupy in your company. Would someone be better suited in a different role? Is it time to create a role that would benefit both parties and drive the business forward? Is that task you are holding onto really something "only you can do", or is ego getting in the way of letting it go?
When you have the right people doing the right jobs they are happier, customers are happier, and you are happier.
There’s a lot of marketing noise and advice out there in every industry, but in the gym and fitness industry, there seems to be even more. After all, we’ve had to close up shop this year, bring on more health and cleaning expenses and even pivot to the online space–changing up our offers and searching out new prospective clients.
It’s not been an easy year. But yet, some small gyms have thrived. And others? They continue to struggle.
For many business coaches who serve the gym and fitness industry, the answer seems to be marketing. If you can just get in front of more people…if you can just sell more services…if you can just…if you can just…
Sure, more customers and more revenue is great, but it’s not the answer. Not by a long shot.
Before we get to the solution…
We know you love what you do. Your happy place is working with your training clients, developing training programs, and teaching classes. You want your clients to meet their health and fitness goals, and you know how to get them there.
You opened your business–your gym, practice, studio–because you wanted a space where your clients could gather and you could help more people. Working for someone else wasn’t working for you because you couldn’t create and launch the programs you wanted to. Working out of your garage could only get you so far–and the weather got in the way a lot of the time.
But you knew what would help clients so you opened your own place. And while it’s been a lot of hard work, you’re proud of what you’ve built.
Now, with COVID causing all kinds of chaos, you hear from business coaches, friends and family, heck, even your competition, that more (or better) marketing is the answer to making ends meet this year.
Throwing out more marketing isn’t going to get you over this hump. In fact, chances are that more marketing and more sales (aka more revenue) isn’t what you actually need.
What you need is to keep the revenue you already have.
It feels really good to look at your revenue and see that you have a $250k business. Or a $500k business. Especially if you started off training clients in your garage or at the park down the street.
But those great revenue numbers are just that–numbers. They don’t tell the whole story of your business or your lifestyle.
We’ve had the honor to look behind the scenes at some amazing fitness businesses and we see a lot of the same challenges again and again. When revenue increases, expenses also increase. That’s nothing out of the ordinary. But we see expenses increase at a rate that’s not aligned with the revenue.
If you’re building a scalable, sustainable business, you need to have systems and processes in place that help to make your life easier. Having 20 personal training clients should feel very similar to having 10 personal training clients because you have automations that take care of scheduling, billing, follow-ups, and more. Going from 10 clients to 20 clients should double your revenue, but it shouldn’t double your work (or your expenses).
We believe that before you throw marketing at your business to try to make up for the COVID gap, you should take a close look at your numbers and determine where you can make cuts and where you can tighten the belt–as well as where you’re wasting time and money because the operations side of your business isn’t efficient.
Yes, this is one of the less sexy sides of business ownership. But it’s a lot sexier to have money in the bank and some free time on your hands than it is to feel the stress and frustration you’re feeling right now.
If you've been in business for any significant length of time, you've probably heard and read it over and over - you have to have "systems" in your business. Systems for sales, and marketing, and service delivery. Systems for finances, and hiring, and team management.
What you may not realize is regardless if you have all these things documented in a fancy manual, you already HAVE systems for each of these. As Mike Michalowicz writes in "Fix This Next", these systems are "In many cases...simply the routines you and your colleagues follow."
The question then becomes "Are the routines we are following efficient and predictable, leading to reliable outcomes?"
If so, the work becomes documenting those systems. You can write them in a manual, take screenshots, do video screen captures of the task being performed, or all of the above. The important thing is that the system is documented and able to followed by anyone.
On the other hand if your systems aren't working, the job becomes to find out why and work on improving it.
The goal here is not to take hours and hours to write fancy manuals that nobody ever looks at and are hard to understand.
The goal of creating (if necessary) and documenting systems is to help you Achieve Organizational Order.
And not coincidentally, that is Level 3 on the Fix This Next "Business Hierarchy of Needs" (BHN).
The way we define "Order" in this context is important. Order is not only about efficiency, productivity, and getting stuff done faster.
It's about creating a company that is not dependent on any one individual. Including you. Maybe especially you.
A business that achieves organizational order is a business that runs smoothly when you take a vacation, or your admin is sick, or a key employee has to rush out of town on an emergency.
Here's a challenge for you. The next time you walk into a Starbucks, or Dunkin Donuts, or whatever your favorite place to get coffee is, ask to speak with the owner. Chances are, the team member standing at the counter won't even know who that is, never mind run out to the back to get them. How is that possible? Because these businesses run on systems, not on any one person. That is organizational order.
As we discovered on the Sales and Profit levels of the BHN, there are 5 key questions and needs on the "Order" level as well. Over the next few weeks we will cover each one in, you guessed it, Order.
Cash reserves in your business are what will not only keep you afloat but also ensure that you have what you need to prevent an inevitable crisis should…I don’t know, a pandemic hit.
It’s something we need to…we must talk about.
If you have a copy of “Fix This Next,” go to page 115 and read (or re-read) that section. In fact it is so powerful that I am going to include the first paragraph here:
“Desperate people do desperate things. This is not a position you want to be in. Cash will help you avoid it, and generally speaking, more cash will help you avoid it more. An adequate reserve of money enables you to navigate unforeseen circumstances with confidence. To allow business operations to continue unabated, or to take advantage of an unexpected opportunity, your business needs two to six months of your average monthly revenue reserved in a VAULT account.”
The last question on the Profit level of the Business Hierarchy of Needs is:
“Does the business have enough cash reserves to cover all expenses for three months or longer?”
Most businesses we start working with would have to answer “no,” even before the present crisis hit.
For many business owners, these are desperate times. And while we can’t change the past, we can learn some lessons in order to help us prepare better next time.
And keep the ensuing panic at bay a bit.
Trust us, there will be a next time. It may not be pandemic level, but even the normal business cycle can cause a cash crunch on our businesses. And we can’t and shouldn’t count on the government to bail us out every time.
The good news is implementing the Profit First cash management system systematically and reliably starts building this long term savings (VAULT) account, month-by-month, by creating the good cash habits your business needs. The initial goal is to be able to cover three months of Operating Expenses, and then three months of Sales Income, into that account.
You may be thinking “no way can I do that,” and frankly you need to check that thinking at the door. Instead, start thinking how life would be different if you had been working on this before 2020.
I’ll wait while you think that through.
It’s not all negative, either. Your VAULT account has two primary functions: to cover expenses in case of unexpected business disruption and to take advantage of an unexpected opportunity. Imagine having the amazing property you have had your eye on forever come up for sale cheap, and you could pay cash for it, or even just put a huge down payment on it. Or paying cash when a closing business has a fire sale on their equipment. It’s a great feeling and so worth the effort.
Now that we have had THIS talk, give me a call and let’s talk about how to set it up in your business. Click here to tell us a little about your business and schedule an appointment.
In this week’s post, we are going to be catching up with Erin Haag, whom I have known for a couple of years now. We met when Erin owned a fitness studio and she needed to implement Profit First to make her business better than ever.
Erin’s Success Story
Erin owned a pilates and yoga studio in South Florida for nine years, but prior to that she worked for a whole bunch of different companies in corporate sales. You name it, she did it! We’re talking the weight loss industry, wellness centers, nutrition, medical spas, cosmetic surgery centers, and laser hair removal. She helped make millions of dollars for other people and then she was laid off during the financial crisis of 2008.
At that time, she decided she was done making money for other people and that is when she used all of her strategies to open her pilates and yoga studio. Erin had a pretty successful business. She paid herself from day one and her business was profitable. However, about five years in, she had two kids under the age of two. She was working 50 plus hours a week and hadn’t taken a vacation, let alone a day off in forever.
The final straw for Erin was when she was hospitalized twice within four months. The first time was for a kidney stone that brought on an infection and the second was for viral meningitis. She was released from the hospital on her oldest daughter’s second birthday and she realized something had to give.
She began to make shifts within her business. She did that mostly with her pricing and by automating her systems, but she basically changed everything. When Erin and I began to work together, she went from a 4% profit margin to a 47% profit margin. She also started to pay herself a six figure income and began to work only five days a week.
Erin began to work with me about eight or nine months before she sold her studio. In that time, she saw her biggest growth. In the six months from the time she listed her business until the time she sold it, her business became completely debt free. Erin also sold her business for forty times her original investment.
That was all cash in her pocket!
Since that time, Erin has been helping other boutique fitness studio owners, gym owners, and people within the wellness industry do the same within their business.
I love hearing success stories like Erin’s! But you know that she had to have a few points in her story that were not all that glorious! And that is what allows everyone else to relate to her story!
Making Changes to Your Business Model
One thing that Erin loves telling people right now is that if you are planning to start a business, now is the time to do it. She started her business during a financial crisis and everyone thought she was insane. But her business thrived and the businesses that are lucky enough to make it through and get to the other side are going to be so profitable and successful.
And if you currently have a business, now is the time to make the necessary changes in your business. You now have the perfect excuse. One of the biggest changes you can make right now is pricing. You really have to analyze your pricing and take a look at it over the last eight months.
Then ask yourself, “Have you really continued to maintain a profit margin? Have you continued to have a steady flow of cash?”. If the answer is no, then Erin and I can both tell you it’s due to your pricing. If you are still charging a per session class pack, then you must change it to a recurring revenue model. Switching your pricing model is the only way you can guarantee sustainability.
You may not believe that your business problems are tied to your pricing, but ask yourself if you did the proper analysis when you created your pricing. Did you analyze your pricing or did you simply charge whatever your competition was charging or less than what your competition was charging? We have seen the latter so many times and those owners are simply not making a profit.
How to Find Your Pricing
There is actually a formula for creating profitable pricing for your business. The first step you have to take is determining what your minimum monthly sales goal must be. You will find this number by adding in all of your operating expenses, your payroll, your liability, your debt, and your owner’s pay.
This will give you your monthly sales goal. Once you have that number, you will need to do an analysis on your capacity. Then your capacity will tell you what your monthly client value needs to be. This is basically how much each client needs to be worth to your business based on your capacity.
Let’s use $150 for an example. The $150 will be the pricing point for your mid-range package. You would then create pricing that has a weighted price for single services, which will be intentionally high. This will discourage people from purchasing a single class.
The larger commitment packages will be your bottom line number.
Conquering the Sale
Erin uses what she calls the client flow when conquering the sale. The client flow basically goes from when the client first contacts you all the way through to the collection of money. It’s going to be unique for every business and it must be individualized for every client. By the time you are collecting the money from your client, they will know exactly what you have to offer for their life, how you fit into their budget, and how you fit into their schedule.
Remember, that your goal is to solve a person’s problem, not simply collect their money! If a client begins to object, answer their question, reconnect with their pain point, and position your service as the solution that will solve their problem. You’re only asking them to commit to solve their problem.
Both Erin and I recommend using a checklist type script, so you make sure you remember to share everything with your clients. You don’t have to go down this checklist in order, but you do need to make sure you cover all of the points. This will ensure a potential client has all of their questions answered when it is time for them to make a final decision.
A client will contact you because they are interested. Therefore, if a client ends up saying no to you, something happened within your client flow. A step was missed and you allowed the client to slip out. This is why you need to be confident that you have everything your clients need.
Your Ideal Client and Pricing
You have the choice to be the best, the cheapest, or the most efficient. You can’t be all three though. When you are setting up your pricing, you’re targeting your ideal client. Your ideal client is going to be able to afford you, especially if you are doing the right type of marketing.
Profit Margins
Once you have your pricing in place, it is a good idea to do a profit analysis. Determine what your current profit margin is, so you know which direction you are headed in. This will allow you to make adjustments to your pricing and expenses, so you can be where you should be with your profits.
As soon as you have everything where you want them to be, you can work on the systems you have in place. This will ensure that everything is ready for when clients are walking through your door. Those systems will also allow you to re-engage with existing clients and transition those clients into more profitable packages. Those steps alone can help you increase your profit margin by 95%.
The reasoning behind that is those clients are your cheapest clients. They are already in the door and you don’t need to convince them of anything. They love you and want to continue to work with you.
You may be worried about increasing your prices right now in our current situation, but Erin says now is the best time! People are actually expecting price increases right now. Since you may only be operating at 25% or 50% capacity, your clients understand that you need to charge more.
Besides, you should have been increasing your prices every year since you opened and most likely, you haven’t been. A 3% to 5% price increase is normal. After all, your rent likely increases 3% every year and your taxes and expenses increase, so why shouldn’t your prices? So, now is the time to get your prices into current market value.
Learn from Erin’s experiences and price your services properly. You will have a healthier profit margin, can pay yourself more, and hopefully have systems in place that will allow you to work fewer hours than ever before!
