Why Sales Don’t Always = Profit

Intentional Entrepreneurs Masterminds

I was talking to a friend recently who was very excited because she had 5 new custom orders. She had only been in business a few weeks and this was really cause to celebrate!

Then she asked me how she was going to find the time to fulfill on the orders.

Uh oh.  Red flag!

As we began to talk, it quickly became apparent this wasn’t a time management or fulfillment issue.  This was a pricing issue that could upset her entire business model if it wasn’t addressed NOW.

Her product line?  The one that just received 5 new orders?  It was putting her in the red. 

I see this too often in business.  Sales are great – but the money just isn’t there.

This is often (but not always!) a pricing issue.  It may sound like a no-brainer – but your own business is often the hardest to see.

Pricing is tricky. You have to charge enough to make a profit – and not too much or you might leave money on the table.

There are many ways to determine what you should charge for your products and services including:

  • Competitive Pricing looks to your competition
  • Premium Pricing is based on prestige and results
  • Value Pricing often comes into play with large quantities
  • Referral and Incentive pricing reward customers
  • And the list goes on….

One of the most common pricing strategies is Cost Plus pricing.  It’s pretty simple, and very eye-opening. Basically, you calculate what it costs you to produce a product or service, (your variable costs – Cost of Goods Sold, or COGS) and mark it up so you earn a profit.

What many people fail to realize – and what bites them in the end – is that YOUR labor is a COST.  I find most new entrepreneurs (and some seasoned entrepreneurs as well) consider their labor as profit.

This doesn’t work on many levels.  Your time is a commodity!  It is a cost to your business.

You can’t close yourself (although wouldn’t it be great if you could!!), so if you are fulfilling on an order or a contract – you aren’t available to do anything else.

My friend was investing 4-5 hours of her time on each new order.  She chooses not to hire this work out because it is her passion. That is fine.

What isn’t fine is that she is mentally putting the money in her “profit” category.

With a little quick math I showed her that her hours were a cost of doing business, AND she was losing money on each product she sold!

With that understanding, she can decide on her course of action.  Basically she can:

  1. Raise her prices on her custom orders.
  2. Use them as a loss leader to earn more sales from those (and other) customers.
  3. Focus on making her other streams of income more profitable so she can afford to do the work she loves.

I recommended the choices I would make, (while recognizing it is her business and her choice).  Based on her input, we worked out a game plan to keep her business moving forward and making money – so she can STAY in business!

Fortunately, she sought business advice within a few weeks of starting her business and was able to prevent a potential financial disaster!

As they say – knowledge is power.

Are you making money in your business?  If not, have you calculated your costs properly, allowing for your labor AND a profit?

The main reason businesses close their doors is lack of money.  This breaks my heart, because with proper planning – you can avoid this pitfall.

I’m not sure why people avoid financial planning and projections when it comes to business – to their livelihood!  It doesn’t have to be difficult or complicated.  You just need to know a few simple things:

  1. Cost of Goods Sold
  2. Sales Price
  3. Profit  (in $)
  4. Profit Margin  (as a %)

There are a lot of good free resources out there to help you assess your profitability.  Please invest your time wisely and do the math before you run out of money!

If this is an area you struggle with – let’s talk.  Comment below or shoot me an email and let’s put our heads together to help you figure this out!

Recharge with a Personal WHY Statement

Intentional Entrepreneurs Masterminds

We’re all familiar with corporate mission statements, but have you ever considered writing a personal mission statement for your life? It’s powerful stuff.

A personal statement captures your essence.  It expresses your uniqueness as an individual.  The act of discovering (and choosing) your life’s mission, is an amazing journey of self-discovery.  You will clear away the cobwebs and get to the core of who you are as a person.  Crafting a personal statement to reflect that mission gives you clear direction and focus.

It’s a reliable compass in times of stress, doubt and fear.  Remembering your mission will help you make better decisions and stay the course during life’s difficult moments.   It can also be a powerful reset button in business, reconnecting you with your purpose and reminding you why  you are an entrepreneur.

You may have enjoyed:

  • Interacting with people on a personal level.
  • Sharing your unique gifts and talents.
  • Creatively solving problems and providing solutions.
  • Encouraging others to achieve their fullest potential.
  • Creating amazing art that inspires.

Remembering your entrepreneurial roots provides renewed clarity and direction.

If you don’t have a personal statement, or you haven’t looked at your’s in a while, taking the time to craft a few sentences defining who you are and what you intend to do may be the best thing you can do for yourself today!

Whether it takes you 30 minutes or 30 days, this journey of self-discovery is priceless.

 Step 1:  List your Values and Passions

Can you name your top 5 values off the top of your head?  The things you stand for and that hold the most truth and meaning for you?  Our values can change over time, if you aren’t sure where you stand now, you may want to check out this (amazing!) free and comprehensive Values Assessment.

Now, what are you passionate about?  What makes you excited?!  Put it in writing!  If you can’t, please, take the time to reflect and remember who you are and what gives you meaning.  You owe it to yourself to find out.  Go outside, take a walk and think about the last time you were really excited about something – what was it?!

Step 2:  List Your Gifts and Strengths

Another big question: What are you are meant to do with your life?  What do you believe at your core? If you aren’t sure, ask to be shown. Pray about it.  Create room in your heart and see what comes in.  Ask those closest to you. Take this Personality Assessment to gain more insight:

Now your strengths – what are you good at?  Don’t be shy!  If you need a few reminders, here is a StrengthsFinder assessment to help you discover your best assets:

Step 3:  Write Your Mission Statement

Now, consider your reflections and revelations.  What have you discovered about yourself?

Once you have a clear picture of your unique characteristics, craft a personal statement that describes who you truly are and expresses your special purpose.  It can be as long or short as you want it to be.  Post it somewhere you will see it daily.  Revise it as you grow.   Share it as you choose.

As an example, here is my personal mission statement…

 I strive to live life to my deepest and fullest potential and to use my unique gifts to encourage and inspire others to do the same.  Combining my strengths and experience with my intuition and creativity, I seek to help intentional entrepreneurs find answers to the challenges they face. Through masterminding, speaking and teaching I will mentor others along the way. I believe by working together, we can make a huge impact on the world by sharing our unique gifts in creative ways.  

Taking the time to create a personal statement in alignment with who you are at your core will reap huge rewards.  It will provide inspiration and energy, and can be the push you need to continue your entrepreneurial journey when the going, inevitably, gets rough.

* The three assessments featured here are some of the best I have used, and I’ve used a lot of them with students and clients over the years!  They are thorough and comprehensive, but also very accurate if you take the time to answer the questions honestly, based on where you are now, not where you want to be.

Finding Life Balance

Intentional Entrepreneurs Masterminds

Tips to make the journey a little smoother.

When you’re living a balanced life, you usually feel calm, clear, and motivated. You are often at your peak – in love with life and loving the journey.

Conversely, if you are feeling stressed, tired, and unhappy, chances are your life is out of balance.  Life may feel hard, full of obstacles and potholes to you have to carefully navigate in order to make any progress at all.  If this sounds familiar, you may be surprised how a quick examination of your current location and a few meaningful actions can make the ride much smoother.

The general idea of balanced living is that you look at your life from many angles, trying not to focus on any of them to the exclusion of the others.  This does not mean you devote the same amount of time and energy to each area, but rather that you don’t neglect or obsess with any.

Obviously there are times in life when your balance is totally out of whack.  Like launching a new business, getting married (or divorced), or welcoming a baby into your world.  This is life.  The key is to keep things in perspective, and get back in balance as quickly as possible in order to stay the course and enjoy the journey.

Here are three action steps that you can use right away to help you find, and stay in balance:

Step 1:  Complete the Wheel of Life

(Download the document here)

This useful tool helps you discover where you are out of balance.  Follow the directions and you will see areas where a shift in energy and focus can result in a smoother ride.  This Wheel of Life contains the following eight sections, but as with any tool, you are free to make changes!

  1. Personal and Spiritual Grow
  2. Family and Friends
  3. Significant Other/Romance
  4. Work/Career
  5. Health
  6. Fun & Recreation
  7. Money
  8. Physical Environment

After you complete the activity, take time to reflect on what you have learned about yourself.

 Step 2: Set Intentions and/or Goals

Choose two or three areas from the Wheel and decide what changes you will make.  Consider what may be missing in your life, what challenges you are facing, and why you might be stuck.  Think about where you are and where you want to grow and go. Then craft an intention and an easy goal or two to alter your course.

Intentions are statements, based in the present, on our values and aspirations.  They consciously guide us from moment to moment.  An example is:  I Am Fit, Flexible and Healthy.

Goals have fixed, measurable actions that produce outcomes.  Examples include:

1. Stretch for :10 minutes  3 days per week

2. Drink 8 glasses of water every day

3. Eliminate sugar from your diet.

You don’t need to make big changes to bring more balance to your life. And you shouldn’t try to make them all at once.  Making changes slowly increases the likelihood they will stick.  Start with one or two SMALL changes, and make them habits before you go to the next.   The examples above are do-able actions.  If you set a goal to lose 5 pounds in a week – that is different.  That requires a whole lotta steps that can quickly become frustrating and cause you to give up on you goal.

Think about what your missing in your life.  What lights you up?!  Make time for the things that ignite your joy!

Take it slow.  Be easy on yourself. Rome wasn’t built in a day – and you won’t bounce back into balance immediately.  It takes some time – but the end results are worth the effort.

Step 3:  Review and Assess

Once you have re-discovered your mojo and are back in the flow – remember life balance is a process.  It isn’t a one-time fix.  When you feel your energy shifting into overwhelm, revisit and revise your wheel.  Life is a journey, and living in balance makes it a smoother ride for you, and allows you to share your gifts with the world.