I hear all the time from folks in service businesses have no idea whether their businesses are profitable, but would swear that they were, even as they tell me things like, “I can’t afford to take that class,” or, “I can’t afford to go to that conference,” or, “I can’t afford to buy a new monitor to replace the one that just broke,” or, “I can’t afford to take time away from work for vacation.”

If you’ve ever said any one of these—or anything like them—chances are your business isn’t profitable, and what you’re really doing is volunteering for yourself.

But we’re here with this video to start you on the path to fixing that.

Chief Takeaways

  • As a biz owner, what you take in and what you put in your pocket aren’t the same thing. Someone charging $50/hour is putting, on average, less than half that in her own pocket. But the rest goes to paying for some pretty cool stuff, a lot of which might also be a tax deduction.
  • If you aren’t profitable, you’re volunteering for yourself
  • You deserve to have your business pay for business-related things
  • You are profitable if you can pay yourself, pay for all your indirect expenses (real and possibly needed), and have some left over at the end. And if you don’t spend all you’ve budgeted for, it becomes extra profit—you can roll it over to spend more on something next year, invest it in your retirement account, or take it for yourself
  • Regardless of whether you trade dollars for hours or not, you cannot know if you’re profitable without doing the work to objectively find out what your bottom line needs to be. Use the bottom line to help you be sure that the model you move to actually IS allowing you to be profitable.
  • Do the work to know. Don’t assume or guess.
  • Although it may be sad if a current client needs to move on after you adjust your fee to be profitable, know that someone else will be coming along shortly and will easily pay your new rate.
  • Review this yearly to make sure you know you’re profitable with what you’re charging clients.

I mentioned that there’s a handout—you can grab that here.

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