Money, rates and budgets…the side of a small business you might not see.
This has been brewing in my head for a while. Questioning if I should say anything publicly for fear of judgement. Then I listened to Elizabeth Day chatting to Brené Brown on her podcast. Something Brené Brown said about fitting in, shame and judgement has made me think differently. Parts of what I’m going to share will be new news to some of you. For those in similar set ups you might some similarities. I’m not speaking for all small businesses but I know there are lots of commonalities that I’m about to share.
This post isn’t about any particular company or person. It comes from a place of wanting to cut through some noise. I’ve over-thought how to talk about money, rates and budgets but this post is where I’ve settled. So let’s see if getting this out in the open helps! I’ll be up front – some of this blog about money, rates and budgets is coming from a place of frustration. Some of it from personal experiences, and some from friends and business associates.
Right, I’ll crack on…
What do you charge?
I’m going to dive in and talk about rates. I’m not about to give you a formula to work out what you should be charging! I do want to share my personal thoughts and experiences around this topic though.
Firstly – I don’t pluck a number from thin air. I do however think about the value that I will add to an organisation and the money I could save them in retaining talent. Time comes into a little bit but that’s far from the main calculation. And surprisingly I’ll always have an eye on what I need to earn to afford to live.
I have had my rates compared to others frequently. It’s been the reason people have walked away, and it’s also been the reason people have started working with me. Once, I even had a client who told me (after I’d finished a workshop) that I was too cheap!
The investment I ask for will be higher than some, lower than others.
I’m not commenting on what other people charge, but you can either afford to work with me or you can’t. I understand a price point is an obvious point of comparison, especially where budget demands are concerned. However, it’s a narrow view and not a reliable indicator. When I was in a corporate world holding a sizeable development budget, some of the (comparably) pricier suppliers got no better results than (comparably) cheaper ones.
For all those times you’ve been told as a small business that you’re ‘more expensive’ I wonder if anybody has ever questioned that somebody might be under charging?
An organisation might want to work with me, but it might not be budget-feasible right now. I’ll happily talk to anybody and I always set out to provide free resources through my newsletter and social posts. You’ll also find me offering bespoke packages and formats that cater for pretty much any budget. That’s the beauty of being a super agile small outfit.
I’ve done a bit of ‘benchmarking’ and know my market. What that doesn’t mean is I follow anybody else’s rates structure – everybody’s set ups are unique. It does however mean two things. Firstly I have a rough idea of the market standards. Secondly I have no intention of de-valuing myself or my colleagues.
There is no magic formula and it doesn’t need to be a numbers game
When I first started out I treated my approaches to corporate clients like a numbers game. The more I tried to contact, surely the greater chance of a reply. If I could get a reply, I could get a paying client. Our survey says: er-er.
I’m sure there will be people that counter my sentiment here – remember I’m not a universal voice. However, since sharing this with people over the years, there are have been way more agrees than disagrees!
Once I figured out that connection was the most important thing for me, I change strategy. I didn’t just think / say out loud / scribble on a piece of paper that I wanted to work with corporates and hey presto I’d manifested all of these partnerships. I didn’t pluck a money target to get to. It took a while (to some) to build my client base and after about a year in (rocky) business I worked backwards. Going through the much needed step of developing a strategy. It’s not as complex as some would have you believe and you don’t need an MBA to do it. Knowing your purpose and what’s important to you will go a long way though.
I have a big issue with social media posts with the authors claiming to get you to consistent ‘5k months’. Follow this formula and you’ll be golden. You know what I’m talking about. It’s the formulaic approach that doesn’t allow for human nuance that does my nut in. It’s the pieces that need to be picked up for those who don’t meet the imposed target and feel a failure. The prescriptive approaches are damaging self-trust, compassion and self-belief.
My plea to bigger organisations…
Slightly different note now, but if you’re still reading, thank you!
If you’re an organisation with suppliers that require payment for their goods or services they’ve supplied to you, please pay them. Pay them on time.
I’ll be blunt – it’s frustrating and disruptive when you don’t get paid on time. For some it will set off a chain of events you’ll never see. When you have to chase invoices (and I’m saying this from being a small business) it takes up a lot of admin time that often you’re already clawing for. It can mean bills don’t get paid or childcare invoices are accruing interest. Sending another email or leaving another voicemail to ask for an (overdue) invoice to be paid is not the dream. The impact on cash flow for some of us will be bigger than you ever realise.
I’ve invoiced for work, been on 30 day payment terms and I’m still waiting for the money to hit my account five months later. No amount of money is insignificant to me, but regardless of the figure I should be paid for work that I’ve done. I can’t begin to tell you how much I hate having to chase for money. I’ve had friends share the tip of setting up a separate ‘invoices’ email address or have a ‘finance director’ appear in the email ether. All solid tips that I know lots of people do. Honestly it makes me cross that I’d have to do that rather than a payment process be simply followed.
So please, pay your invoices on time. And communicate.
All this to say…
There are many things that shape my charges. I love listening to a clients needs and aligning my solutions to what you CAN invest. I’m also overjoyed when I see an invoice hit my account that I haven’t had to chase.
I do have a wobble if someone says ‘oh that’s more than xxx is charging’ but after a bit of time I can ground myself now. I couldn’t have done that in the earlier days of my business. As a result I was ripped off and taken advantage of more times than I care to admit.
It’s partly why I’m sharing this now, because there might be somebody at a similar stage to me a few years ago wondering if you’ll ever be able to charge your worth. Well, yes you flipping well can. It’s your business, and whilst there are going to be market forces that impact – they don’t define you.