Accounting and bookkeeping is a mystery for many people launching businesses. Even if you’ve been operating a business for a while, you might not understand what your accountant is actually doing. (Are they casting magical spells?)  

No matter where you are in your business journey, your finances don’t need to be a mystery. Let’s start at the beginning with an overview of accounting, bookkeeping, and how it all works from a high level. In later articles, I’ll get into the specifics, like how to regularly tend your finances and how to understand the financial health of your business. 

Your financial accounts are a key record to keep about your business. It’s proof you can show to the IRS, banks, and anyone else who needs to know how your business is doing. Regularly tending to your finances will save you headache at tax time. Your books let you make proactive, informed decisions about the future of your business. 

Your Books, Illustrated

Your "books" are essentially a record of all the money coming, going, and moving around in your business. This means it includes all your revenue streams, expenses, bank accounts, credit cards, cash, sales tax collected, point-of-sale system fees, unpaid invoices... EVERYTHING. All these get funneled into and (hopefully) organized into a standard format. This means that generating standard reports is super easy. It's ok if you're not familiar with these standard reports; we'll get to that soon. 

Accounting 101

All those transactions and accounts get sorted into 5 basic types of transaction categories. These are represented in your Chart of Accounts. (Does accounting use the same words over and over again until they have no meaning? Yes. So sorry; I don't make the rules.) Your Chart of Accounts can be over-simplified into the categories for your transactions.

The primary three account types are assets, liabilities, and equity. Nestled inside equity are the final two categories: expense and income. These all relate to one another, but let’s start by defining them. 

Assets

Like how you colloquially use this word, these are the valuable things you have. Most obviously, this is any cash that hangs out in your bank accounts or in your wallet. But it’s also a bunch of other things. This includes revenue you’ve invoiced but not received yet, store credit for an item you returned, and any inventory or property. If none of these happen in your business, then they won't appear in your books. But if you have some, it’ll show up as an asset in your bookkeeping.

Liabilities

Think of this as money that’s not yours or money you owe to someone else. A common example would be a balance on a credit card or a small business loan. Consider that it also includes sales tax and payroll taxes. You collect these, but the funds actually belong to the government. Some liabilities are not vital for self-employed businesses to track. For example, invoices from vendors that you’ve not yet paid are technically a liability. But the gap between receiving and paying them is small enough to be negligible. Gift certificates that you’ve sold are another potential liability. In the strictest sense, they're a liability until the recipient has redeemed them or they expire. For small volumes of gift certificates, you can get away with categorizing them as income.  

Equity

This is your investment in the business and the results of your business efforts.

Let's say you put $100 of your own money in the business bank account to get started. That means you’ve made a $100 owner investment in your business. If you transfer money from the business account to your personal account, that’s called an owner draw. Both the investment and the draw are recorded, and they zero each other out.

The goal of your business is to generate more revenue than it spends. When this happens, it means you're increasing the equity. This type of equity is called retained earnings. A positive balance in retained earnings will hang out until you decide to do something with it. For self-employed businesses, your retained earnings will probably become an owner draw. (aka you're gonna pay yourself!)

The retained earnings category encompasses all the income and expense categories.

Income

These are all the ways your business earns money. The amount should be how much you receive from the customer, inclusive of any payment transaction fees, taxes, or direct costs. i.e. the grand total that you got from the customer.

For example, let's say you buy a widget for $10 and sell it to a customer for $20. Due to local sales tax laws, you have to add $2. Your payment processor then takes $0.40 as a transaction fee. In your accounts, the income recorded is $22 (the total paid by the customer). All those other numbers do reduce your income. However, they're categorized as expenses or liabilities.

In your bookkeeping, there are a few delineations that it’s important to keep clear. Income from products needs to be separate from services. Purchases of gift certificates (or other forms of client credit) also need to be in their own category. Beyond that, you can group your income streams however makes sense to you. As an example, I have separate income accounts for one-on-one coaching, group coaching, and Launch Pad subscriptions.

Expenses 

This is everything your business spends money on. It doesn’t matter if it’s tax-deductible or not. Expenses include payment transaction fees, employee pay, and independent contractors' pay. It does not include owner draws. (That’s an equity account, remember?) 

In your bookkeeping, it’s most important that your expense categories make sense to you. There are also categories that are nice to have since the IRS includes them in tax filings. Most accounting software starts with a Chart of Accounts that aligns with IRS filings. In case you want to be extra sure, the expense categories that the IRS cares about are the following:  

• Advertising

• Car and truck expenses

• Commissions and fees

• Contract labor

• Depreciation

• Employee benefit programs

• Insurance (other than health insurance)

• Interest

• Legal and professional services

• Office expense

• Pension and profit-sharing plans

• Rent or lease (vehicles, machinery, equipment, or business property)

• Repairs and maintenance

• Taxes and licenses (not federal income tax!)

• Travel and meals (meals are typically 50% deductible)

• Utilities

• Wages

• Supplies

• Other expenses 

You do not have to spend money in each of these categories. You can also have many more categories than this. I have a dozen categories that are all a part of the IRS’s “other expense” category. They are still business expenses. Use categories that are helpful to YOU! 

Standard Reports

All these account types relate to each other. Their current state appears in two standard reports: the Balance Sheet and the Profit & Loss Report, or P&L for short. Small businesses can operate just fine without being familiar with these reports. But it's a lot easier to understand your financial health with these reports.

P&L’s for Beginners

This is the more interesting report for self-employed businesses. This fundamental business report shows all your income and expense accounts. All individual transactions are totaled by account. The accounts are then summed by type into a total income and total expenses. The end of this report shows the income minus the expenses. Also known as net income or profit. If it's negative, then you're taking a loss.

A P&L illuminates a few things. First off, it's a great place for a gut-check. If you look at the value for a category and think "that can't be right," follow that thought! Investigate!

This report also helps you investigate profit problems. That final number of the report is just the tip of the iceberg. Knowing that you're turning a profit or a loss doesn't help you change that situation. However, seeing that an income account is underperforming or that expenses are unexpectedly high does. Understanding these things helps you right the ship if you’re not turning a profit. 

That final number on the P&L is the amount that shows up in the Retained Earnings equity account. And that shows up on your Balance Sheet …<segue>

Your Balance Sheet

Don't overthink this one. This report is telling you things you already know, but in accounting-ese. Do your bank accounts have money in them? Is your credit card carrying a balance? Does your business have retained earnings or not? Your answers to these questions should match what you see on your balance sheet.

This report is a big nothing burger kinda by design. The assets always equal the liabilities plus the equity. Any accounting software worth its salt will create a balance sheet report that achieves this goal. Businesses with complex financing will have much more involved balance sheets. For self-employed businesses, your balance sheet should be pretty simple. An accounting of what’s in your bank accounts and credit cards, balanced by how much your business has brought in and how much you’ve taken out.

When you check your balance sheet, focus on the things that don't seem right. Those are signs of an accounting error, so get that fixed! 

An Invitation to Go Deeper 

These are just some foundational concepts, and you probably have more questions than you started with. But you also have more knowledge. You aren't in this learning journey alone! I'm here to help, as well as your accountant, tax preparer, and/or bookkeeper. (Need help finding one of these? I've got guidance in The Launch Pad!) Don’t let perfection be the enemy of done! Take your accounting bull by the horns.

As my Year in Books from 2025 demonstrates, I really got into fantasy this year. Truth be told, I've struggled to get into fiction. I've been a voracious reader of non-fiction. My mind feeds off of business books, self-help, and memoirs. My mind loves to be in charge so much that I've struggled to see the value in fiction. Where non-fiction has facts, fiction has stories. And stories are profoundly compelling. (If my logic brain would just get out of the way!) But I digress... 

In my reading, I came across a nugget of wisdom and immediately thought of my clients. It occurred to me that others might not apply the fictional wisdom the way I would, so I wanted to share an explanation. 

The book is Mistborn: The Final Empire. In it, the character Sazed counsels the main character. He says: “Belief isn't simply a thing for fair times and bright days… What is belief—what is faith — if you don't continue in it after failure?” In the context of the book, Sazed is a sort of religious scholar. He and the main character are talking about the failure of their plan and the death of the main character's mentor. 

While plans failing can be part of my work, I deal more frequently with the fear of failure. When starting a business, we often don't have a ton of confidence. Or maybe we do, but it's tenuous. We know starting a business isn't easy. We're afraid we don't have what it takes. Or maybe we have had these things but our resolve falters because things don't go to plan. We end up doubting ourselves, and we fear failure. And as Sazed points out, belief and failure are intertwined.

About Fear, Belief, and Failure

Fear is an emotion; you can literally feel it. Belief is even more ephemeral than an emotion. Belief is like a human version of an operating system. Most people don't know there's a problem until the computer crashes. When a belief in something external breaks down, we can rebuild without making edits to our sense of self. However, self-reflexive beliefs are integral to our sense of self. They're so core to our being that they're difficult to acknowledge, much less change. In short, your belief in yourself is sticky and difficult to even be aware of. And that doesn't make this impossible! 

Strategy #1: Practice

First of all, you're going to practice in the straight away what you’ll use in the curve (as Molly Lannon Kenny has been known to say). No matter when you're reading this, develop a method to cultivate your own belief in yourself. This will be harder if you're in "the curve," and it might feel superfluous if you're in "the straight away." Either way, learn what you can have confidence in. Check in with your self-talk and make sure it's celebrating what you're good at. For those of us "realists" out there, make sure your pragmatic perspective isn't downplaying your strengths. Dive more into thought work to make changes where necessary. 

Strategy #2: Faking Faith

Secondly, you're going to employ this terrible piece of advice: "fake it till you make it." This is terrible advice because I believe it's actually just lazy shorthand. You don't actually need to fake any skills. You've already got the skills. You've built them up over time, and those are real. You might not have done this exact thing before, but logically, you can accomplish it. The thing you're "faking" is your faith in yourself. On some level, you know you can do this, but you need to fake the confidence so that you actually get through it. 

Does Failure Even Matter?

The wild thing about believing in yourself is that when we stop doubting ourselves, we can arrive at a place where failure is no longer relevant. That doesn't mean failure doesn't happen, just that its significance is different. If things don't go to plan, you have faith that you'll come up with a new plan. You believe in yourself, and so you'll keep going and keep doing the things you're good at. If you're doing that, then you'll never fail even if a given project does. And I think that's the real lesson Sazed was intending to teach.

Please note, I am not a lawyer and this should not be construed as legal advice. These are only general recommendations.

Self-employed businesses often have a lot of questions about contracts. Most of them start with a fair amount of trepidation. Contracts can feel like a very formal or even icky document. A non-zero number of us have felt trapped or screwed over by a contract in our personal lives. Why would we want to propagate that damage? 

We might try to get out of needing a contract by rationalizing. If you're working with a friend or a person you respect highly, do you really need a contract? If you've already been working with a client for years, it can feel awkward to ask them to sign a contract. You might even be afraid that if you put it in writing, it'll inspire them to quit you. 

Let's start by reframing what a contract is and isn't. You can call it a contract, agreement, scope of work, or informed consent; we're talking about the same thing. It's putting into writing how you and your client will work together. This document absolutely does not exist to trap the other person in the arrangement. Yes, some contracts are crafted that way, but yours doesn't have to be. In fact, it should include an exit strategy! The terms of the contract exist to protect both you and your client. There are three key things a contract needs to achieve: documentation, clarity, and legal protection.

Documentation

The risk of a verbal or casual agreement is that each party's intent is not documented anywhere. Let's pretend you and a friend decide you're going to produce a widget for them. You both agree on a price and a timeline, but no one writes it down. Human minds are crap at remembering things, and we tend not to be aware of how crappy our memories are. When it comes to the end of the project, how will you be sure you both remember the same things? What happens if you remember a different dollar amount, a different end date, or differences in the end goal? ...well, it sure would be nice if ya'll had written all that down and could refer to it instead of going off memory!

The most important aspect of a contract is that it's written down. I don't care if it's on a napkin or in an email, signed or unsigned. If some level of terms are stated in black and white and both parties agree to them, you're over halfway there! This written record is key to preserving a positive friendship. When you disagree at the end of the contract, we can look back through our records. We'll see that, oops, we did agree to that, check our emotions, and try to right the ship. 

Clarity

The next biggest impact of a contract is getting specific and clear about the terms of the agreement. Let's use this friend you're producing a widget for. Let's say you do document. You put in an email that you'll produce this widget by the first of the month, that it should take 10 hours of work, and you'll get paid $200. If all goes to plan, then you're golden. But nothing ever goes to plan. What happens if it takes longer than 10 hours to produce the widget? Do you stop after 10 hours? Do you complete the project anyway because that's what you agreed to? Do you get paid an additional $20 per hour to complete the work? Or is it more or less than that per hour? 

These questions are why an agreement benefits from being thought through. And this is why a template for a contract is so long and has so many sections! The contract wants to capture a plan for every possible failure (or success!) scenario. If the widget becomes the next Labubu, do you get royalties from it, or is it only that first $200? 

Legal Protection

From my perspective, this is the least important aspect. Yet this is where most new business owners focus. Self-employed businesses care about their work and are well aware of when a client is unhappy. You're going to be taking action to prevent any issue from becoming a legal matter. The chances that things will go so poorly that you'll need to leverage a contract's legal protection are very, very slim. If the terms are thorough and it's in writing, you don't actually need a judge to make a decision. In fact, it wouldn't even make it to a judge. The first lawyer who looks at it would advise you that there is no case. Plus, we all know lawyers are expensive. None of us wants to involve one. Which is why the first two aspects I cover tend to prevent it from escalating. But. 

The point of a contract is to think through all the possible scenarios, including the worst case. To that end, here's what makes your contract more better, legally speaking: 

• Use a good template or have one customized for you. There are many resources for this. Signature systems, payment systems, CRMs, and EHRs often provide them. LegalZoom will sell you a customized contract for $60. If your client insists on using their contract, please read it and don't be afraid to negotiate the terms. And when in doubt, consult a lawyer.

• Have it signed by both parties in a legally binding way. This is not expensive or difficult! Google Workspace now includes digital signature features. Dropbox Sign offers 3 free signatures per month.

• Keep it stored somewhere you have easy access to it. Google Drive, OneDrive, and paper are all equally valuable, but only if you can find it when you need it! 

Lock. It. Down. 

Consider this your sign to take the contract bull by the horns! You'll be LEAGUES better off by merely documenting with clarity. Think of it as putting into writing how you and your client will work together. (Or "have been" in the case of those clients you've already had a relationship with.) A clear written contract provides safety for both of you. It's so that both of you understand what you're agreeing to. And then slap a signature on it for good measure! If that's an overwhelming place to start, take the first next step. You can strengthen your efforts over time.

Interested in learning more about key parts of a contract? Check out Contracts 101 in The Launch Pad.

In a recent group coaching session, I made a confession: I’m behind on my blog writing. It’s unlikely that I’ll publish one by the end of the month, I said, swallowing my pride. One of my clients turned my own advice back on me. She reminded me to take my own medicine — to stop overthinking and start doing. So here I am, following through on that. This article isn’t about perfection. It’s about action.

The Lifelong Learner’s Trap

Most of my clients are lifelong learners. They love soaking up knowledge — whether that’s a new book, a workshop, or an online course. I’m the same way. I love learning! It feels productive, inspiring, and an intoxicating balance of discomfort and safety. But here’s the truth: learning can become a distraction from doing.

Taking one more class or earning another certificate can feel like progress. But adding credentials doesn’t build your business — especially if you’re just getting started. Improving your skills at the service you offer is valuable, of course. But it’s not the same as finding and serving clients. You can be the most skilled practitioner in your field, but if you never tell anyone about it, you won’t have a business.

Why Self-Help Doesn’t Help

I’ve read my fair share of self-help books, and I’m willing to bet you have too. They promise clarity, motivation, transformation — but more often, they deliver a temporary high. You feel like you’ve accomplished something by reading the book… even though nothing has changed. Or maybe you've experienced an awesome mindset shift! But is there action that will follow that up?

Most self-help books don’t work because they give a false sense of progress. They offer advice that’s common sense but hard to actually do. And they don’t come with accountability — the missing ingredient that turns ideas into action.

The result? A cycle of consumption. You read one book, feel a burst of motivation, stall out, and then buy another book to feel better. The pattern feels like progress, but it’s just a prettier version of procrastination.

Why Business Books Aren’t Your Business

Business books often have a similar problem. Many are written to promote the author rather than to genuinely help readers. They lay out one-size-fits-all formulas that might have worked once, in a specific context, for a specific person. But business success isn’t a paint-by-numbers process.

These books might lead you to think they’re not “ready” yet. You read, you plan, you refine your idea, you tweak your offer — and all the while, you’re not actually selling anything. You're not taking anything to the market to get real results! Books can give you inspiration and frameworks, but they can’t give you a business. When the rubber meets the road, only you can take the necessary actions (and fail the necessary amounts of times) before you succeed. 

The Difference Between Learning and Building

There’s a huge difference between learning your craft and learning how to sell your craft. Courses and trainings teach you the first part. But it’s the second part — the business part — that makes self-employment sustainable. No one skill or certificate will have customers banging down your door without having to market or sell your business. 

You can keep learning forever, but at some point, you have to take what you’ve learned and put it into action. That means showing up, telling people what you do, and asking them to buy it. That means imperfect websites, awkward first client conversations, and trying things before you feel ready. Because that’s how learning actually sticks — through doing.

So, Stop Learning (for Now)

Don’t get me wrong: learning has its place. But when you catch yourself hesitating to take the next step — waiting until you’ve read or learned “just one more thing” — that’s your cue. You don’t need another book, or another course, or another plan. You need to start. So whatever you’ve been putting off — posting about your offer, sending that follow-up email, launching that service — take your own medicine and do it. You can always learn more later. But first, let’s see what happens when you act on what you already know.

How do you get people to read your blog article? Strong writing and telling people you've published a new one are pieces of it. But that's not the end of it! Your article's title is important for encouraging people to read it. An engaging title increases the reader's interest in a topic that they're, hopefully, already interested in. It's also how search engines understand what your article is about. This is key to how a search engine ranks your article in search results. But what makes a good title? 

Each search engine and platform will preference certain things, but there are some general universals. Likewise, humans vary widely and will connect to different things differently. And we're more alike than we are different. Here are the three main things to consider. (If you want a full how-to, check out The Launch Pad.) 

1) Statements are dull.

I know it can sound intelligent or clever to mimic other famous titles. An homage to "On the Origin of Species" feels like it's a good idea. Unfortunately, the internet doesn't care about hot topics from 1859. We connect with titles differently when perusing the World Wide Web. Even over the last couple of decades, there has been immense change. We've experienced the rise (and fall!) of clickbait. Nowadays, we're inundated with highly refined crack levels of marketing titles. Your title needs to pique the reader's interest. (And if you follow through with your promise, then it won't be clickbait.) How do you do that? Here are three key ways:

• Make it a list. 

• Ask a question. 

• Use "because" or "how to" to imply the answer to the question they have. 

The tactics might seem salesy, but there's a reason for it. It's because they work! Are they also overused and abused? Yes. But you have the power to make the title make sense for your article, and that will actually make it a better title!

2) Short is not sweet. 

Titles can be too long or too short. I notice in myself and my clients that we tend to default a bit short of what will work well. Not having a long enough title means there's less information for your human reader to latch onto. Not to mention, you might really leave the robots guessing. Even with AI, computers don't know how to understand things if you don't give them enough to start with!

This doesn't mean we want to string many long concepts together. The title still needs to focus on a single topic and its relevance to the reader. What we're looking to do is give the reader the emotional impact they need. We want to increase the descriptive words and clauses towards that end. How do you pick emotionally impactful words? So glad you asked... 

3) Power words pack a punch.

There's not a secret list of marketing words that rewire the reader's brain and get them to do what you want. There are words that have more emotional weight than others. Marketers call these Power Words. Find yourself a list of them and start using one or two in every headline. 

A Title is a Process

Take the time to really consider a strong title. I frequently set a working title for my article while I'm drafting it. This simple, dull phrase focuses my writing process. It almost never becomes the published title. Before I publish, I take time to craft a strong title.

I go into the whole process in The Launch Pad, but here's a quick illustration. My June 2025 article had the working title: 2025 Biz Plan Series - June = Operational Plan . If you read that article, hopefully it makes sense why that was my working title. It's not my final title because it's not going to entice someone to read it. Even if they're really into operational plans, this isn't gonna work. The reader needs to get a hint of what they're going to get from reading it. Or what makes this different from other stuff they already know? There needs to be more substance and more emotional hooks.

The published title became: How to Do It All (Without Doing It All): Streamline Your Solo Business. "How to" promises what the reader will get from this article. "Do it all" is a powerful concept, as is "streamline." You'll notice it doesn't include "operational plan" in the title. Instead, it describes the outcome of a good operational plan. The reader wants that outcome more than being able to check the box for having an operational plan. 

Take your time to intentionally craft a title for your article. This is key for your articles actually doing what you intend them to. Whether those goals are encouraging your community to read the article, enticing strangers to read the article, or helping a search engine rank your article appropriately. A little effort on your title will go a long way!

One of the things to love about self-employment is that you don't have a boss. It's a freedom I never thought about until I was self-employed, and now I can't imagine living without it! Those considering self-employment often face conflicting emotions. Both excited to not have a boss, and anxiety about how to motivate themselves to get things done without one. This is where your business's management plan comes in.

The management section of a traditional business plan assumes there are many people involved. It's necessary to create an organizational structure and position descriptions for key positions. A funder would also want to know the experience of the person managing the day-to-day of the business. As a solo business owner who's not seeking funding, all these parts are pretty pointless. I don't think it's helpful to draw an org chart that is just one square! (But if you do, go on with your bad self!)

While the management plan for a self-employed business is not complicated, it is tricky! Why? Because it's difficult to figure out how to motivate yourself! Your "personal management plan" cannot rely on extrinsic factors you may have relied on in employed work. Where you used to have a boss checking in on you, you don't now. You need a set of strategies to motivate and organize yourself. This plan is underpinned by your mindset, positive self-talk and realistic expectations. I’ve written a lot about these topics so I've conveniently collected them all into this list of personal management plan articles. Today, I’m going to stick to the plan-making process.

A Straightforward Plan

I plan reflexively, so this isn’t something I’ve painstakingly learned how to do. This makes me a good planner, but a less good teacher of planning. I’m going to share some highlights of how I craft a plan. If this doesn’t work for you, that doesn’t mean there’s anything wrong with you! From my clients, I see how a one-size-fits-all approach to planning just doesn’t work. My strategy might not be the right one for you. Find (or develop) what works for you! (And then lemme know so I can spread the word!)

Step 1: What’s Your Goal?

Ok, it’s probably something like: “I want to have a thriving business.” That’s a very valid goal. But it’s not really gonna work for our purposes. It’s not measurable - “thriving” is not concrete enough to know when you’ve achieved it. It’s also not time-bound. Do you want this thriving business before you’re 80 years old? No, maybe sooner? It’s also unclear if this goal is achievable. The achievability of any business idea is far from concrete. But it’s really obfuscated without some foundational work. So let's try again.

You might refine your goal to be: “I want my business to be bringing in $4,000 per month by December.” We’re hitting all the keys of a “SMART” goal, e.g. Specific, Measurable, Achievable, Relevant, and Time-bound. That’s it, right? All the boxes are ticked, now go do it! …and this is my issue with it. That goal is not within your control. There’s not even a guess at what actions will bring that goal into existence.

Here’s an example of a goal I’d recommend in place of “have a thriving business.”

I need my business to gross $8,000 per month in sales for it to be sustainable. I will reach this goal if I have 10 monthly clients. I think I can get clients by (a) posting monthly blog articles (b) connecting with professionals who also serve my ideal client.

This goal does not stand alone. It would be preceded by goals to work on all the factors that contribute to this goal. E.g. finding out what revenue goal is sustainable for the business, and other business planning aspects. It’s also open to revision. You think you can get clients through those methods, but only time will tell. The key part of this is it gets down to only one to two projects that are fully in your control to achieve.

Step 2: The Projects That Support Your Goal

Continuing with my example goal above, I’d have two projects identified by (a) and (b). The next step is to break down each project into actionable steps. Here’s how I’d break these two projects down:

• (a) posting monthly blog articles

  • Come up with a topic

  • Draft an article

  • Edit the article

  • Zhuzh for clarity and/or SEO

  • Give it a good title

  • Find an image to go with it

  • Publish it & share to… where?

  • Repeat the subsequent month

  • Assess annually what's working and what could be improved.

• (b) connecting with professionals who also serve my ideal client

  • Pick a focus professional (e.g. physical therapists OR members of my chamber of commerce, etc.)

  • Locate contact information for those professionals

  • Draft an introductory email invitation to coffee

  • SEND, one by one, customizing each email as needed.

  • Conclude: after a period of time, assess the impact of this effort. Repeat as needed, each time focused on a different profession.

Step 3: A Game Plan for Success

Knowing what the steps are is different than achieving them. When or how are you planning to complete these steps? How do you usually get stuck when taking action? It's inevitable that things will not go to plan. Let's have our resources top of mind when that happens. Those resources depend on knowing your habits and where they usually break down. Here's myself as an example:

My game plan is to work on my business on Wednesdays between 10am and 2pm. I could also when I don’t have a client booked during business hours M/T/Th/F. I’m specific about when I expect this work to get done, and that allows me to better diagnose problems. This means when I hit the end of a full day of clients and realize I made no progress on my blog article… well, that’s to be expected!

The barriers to me achieving my tasks are usually:

• The writing muse has not graced me with her presence

• Nice weather/garden/other interests

• Non-ideal work environment

• Need to reset or decompress (i.e. phone games, lol)

• Time-sensitive client needs

• Bio-needs (i.e. bathrooming, food, water)

By knowing my typical barriers, I can better honor the reality of the situation. Without thinking of this in advance, I notice people identify certain areas first. The go-to explanations are being distracted by other interests, sucked into technology, or not having the right setup. These are the barriers that can be changed, so it's a reasonable place to start. They're also the barriers that we often have a history with, and often some amount of shame. They're also not the only barriers!

When I'm talking things through with a client, it's not uncommon that I make a discovery. They will have jumped to their choice habitual barrier. I ask some questions and discover there's a client or bio need that they've neglected to take into account. For example, if you've been struggling with an impinged nerve, you're not gonna get your website done. You're just not! Focusing on what you can change is good, but it runs the risk that you'll berate yourself unnecessarily. These things that we can't change need to be accepted. And this is an acceptance can be difficult to come by. This is where mindset practices and supportive habits can be helpful.

For those barriers I do have control over, there's an element of showing up for the work and for ourselves. When that muse isn’t showing up, that doesn’t mean I get the day off. Instead, I get to sit and try, regardless of if she ever shows up! Part of this work might be wrestling with feelings of self-doubt or inadequacy. But this is the work that I actually have control over. For more guidance on navigating this, check out these other things I've written.

YOUR Personal Management Plan

Like I said earlier: this might not be a good framework for you. Start by assuming you're NOT wrong. If the framework isn’t working, how can you better set yourself up for success? Be curious. You're not a machine. How does your perfectly flawed human self work? What could help you work better? Remember to check your mindset and give yourself credit for ANY progress. You even get credit for learning that a certain strategy doesn’t work! With time, introspection, and self-care, you'll find the personal management plan that works for you.

It's the double bind of self-employment. You welcome the independence of being your own boss, but struggle with how everything can get done by you alone. Getting clients is the first question on your mind. But the second question is just as important. How do I navigate not just the client work, but all the other things to keep track of with a business? You know there are solutions out there. You've used software and tools in the past that could work for some things. But are they the right thing for your business? And what about solutions for the business operations side of things?

A business' operational plan lays out how everything gets done. In a traditional business plan, the Operational Plan comes later in the document. It covers the daily operations of the business. This includes its location, equipment, people, processes, and surrounding environment. (In this context, environment can mean the ecology, but also the legal environment.) Since we're self-employed here, I'm going to talk about processes at our scale. We don't need to write down how we expect to do it all, though plenty of folks like to document their plans in writing. As a one-person business, it can feel like we have to do it all. This is always a short-sighted notion, but even more so in the modern era. Now days technology can save you time and effort! 

In any business context, there are plenty of things that are repetitious. Do you have to meticulously craft each email from scratch, or can you apply a template? Scrappy solo-preneurs often try to patch together systems on a shoestring budget. And that can mean we duplicate data entry, or struggle to get paper documents into a digital format. Some processes are multi-stepped and definitely need a human in the loop. ...but does that mean it always has to be done by you? Let's take a look at it. 

Option A: Human Solutions 

Self-employed business owners are often cautious about getting help from people. If by "help" we mean "employees," it does open some areas to be aware of. You'll need to follow employment laws, file related taxes, and, oh yeah, deal with the employees! There are always challenges when working with others. For independent folk like us, it can be hard to navigate these challenges or hand over control. And then there's the perceived expense: This has to be too expensive, right?! 

I say "perceived expense" for a good reason. Getting help doing the work can be very accessible and affordable. You can hire a virtual assistant (VA) for as little as 5 hours per month. Plus, it's billed as an independent contractor, not an employee. There are no taxes and far fewer employment laws. It's a very simple transaction. To explore how I make use of my VA, you can check out the other articles I've written about it. Or maybe you'd rather start with more specialized help? Bookkeepers, accountants, or tax preparers are great helpers to bring in early. A specialized professional in this area can take onerous tasks off your plate. Some will even file your state and city taxes and licenses on your behalf. (But ask if they include that with their services!)

Here's the thing about paying someone to do stuff for you: you and your time are your business's most limited resource. As solopreneurs, our billable hours are the only thing bringing in revenue. Once your time becomes limited, anything you can get off your plate allows you to earn more. Yes, the amount you offload does need to balance against what you're bringing in. That's actually pretty easy to attain mathematically. If you bring in more per hour than you pay your VA, you're most of the way there! Plus, a lot of times our helpers can do things faster and more efficiently than we can. 

The scarier part of this is the speculative aspect of it. You're trying to free your time to earn more, and you don't have that "more" earned yet. There are only two ways of solving this problem, and neither path forward is ideal. Some will choose to work more than they want, so that they have the earnings to pay their helper before hiring. But it's really hard to set your helper up for success when you're already overloaded. Or, you can take a leap and hire your helper before you have a comfortable amount of money to pay for them. A strong financial plan will mean you'll have the wiggle room to hire before you really absolutely need help. But without one, you'll have to sacrifice your own income for future earning potential. (To avoid this, develop your business plan with enough wiggle room (aka profit). Read more about how in my End Financial Overwhelm article.

Option B: Computer Solutions

Hiring help isn't the only way for you to do more with the same amount of time. Computers have been able to save us effort for a long time now, and they keep getting more capable. It's easy to fall into the trap of doing things the way you're used to, instead of leveraging new/improved technology. I'm far from an "early adopter," but I also don't like doing busy work! Make sure to carve out time to figure out how technology can save you time in the long run. 

The Task:

To understand how to lighten your load, we need to do some analysis of the work that goes into your business. For those of you just getting started, this is less of an analysis and more of something to keep an eye out for. Anytime you notice yourself repeating something, make a note. That's an area that's going to need streamlining, and the sooner the better! 

For those of you who have been operating for a while, it’s better to analyze in a single sitting. This involves recalling and examining the tasks you repeat. What kind of emails do you craft (or copy/paste) frequently? Are there processes where you have to click many things before the task is complete? What about getting information from one system to another? (Including information on paper into a computer!) And for each of these tasks, does it need human involvement? Does it need YOUR involvement?  

While you can do this simply enough in your own notepad, I've built a spreadsheet to help. I can't solve the part where you need to write down the tasks you do. But this tool asks you to categorize the tasks in meaningful ways. Based on that, it gives you clear ideas of what tasks you can streamline and how. Get your Operational Streamline Analysis spreadsheets for free! 

5 KEY TIME SAVERS

Now that you've got a handle on what these tasks are, what is there to do about them? I have some ideas. 

 Copy/Paste But Fewer Clicks

Templates have been around since the 90's and this is your sign! Make sure you're using them to their full advantage -particularly for emails! Any email you find yourself sending more than once, turn it into a template. Even if you have to make edits to the template, it saves much thinking time! The next time a client inquiry comes across your inbox, write your response. Before you hit send, save it as a template. For the next client inquiry, you'll have a place to start from. Not sure how to make an email template? Learn how to in Gmail or Outlook.

Make The Computers Talk to Each Other

The techies call it an API; most of us know these as plug-ins, integrations, syncs, or the like. Whatever tech you're using, try to reduce any need for data entry or looking something up in another place. You don't need all your stuff in one system if you can get the systems to talk to each other. For example, there's an integration between QuickBooks and Square. The integration imports transactions and client information from Square into QuickBooks. This allows both systems to have the same information. This is an equally seamless solution as accepting payments via QuickBooks Payments.  

Even if two tools aren't designed to work together, there are 3rd party solutions. Tools like Zapier and IFTTT can help pass information between systems. (They have free plans!) For example, I use integrations to connect my calendar, CRM, and newsletter systems. My calendar, Acuity, collects email addresses. A Zap adds new emails in Acuity to my CRM database, Insightly. Daily an Insightly integration adds new contacts to my Mailchimp email newsletter list. All three of these systems have coordinated data, all with ZERO involvement from me. 

Unsubscribe Fest 

Triaging emails takes time. Not a lot, but enough. Consider this your sign to go on an unsubscribe fest. Clutter doesn't help you or your inbox function, so set your email up for success. Forefront the unique communications and those that actually require a response from you. Let go of the emails you're "gonna get around to reading eventually".

Hold your unsubscribe fest over the course of a week. Examine your inbox once a day, and make a decision for each new email. If you'd normally archive an email, set up a filter to move these out of your inbox expeditiously. If you'd usually delete an email, click into it and unsubscribe from it. If it's something that actually needs your response, then it stays. At the end of the week, go back to email operations as usual. Chaos will inevitably infiltrate any system, so plan on holding an unsubscribe fest once a year or so.  

Scheduling Systems

If any of your emails have to do with scheduling, add a scheduling system to your world. Even if it's a rare occurrence, a cal.com account is free and can just exist until you need it! 

For those of us with businesses more focused on scheduling, I've written about this before. You don't personally need to respond to people when it comes to scheduling. If someone needs or wants that level of involvement, they can opt not to use the scheduling system. For most people they appreciate the ease and immediacy of online scheduling. Don't waste your time tediously scheduling over email! It's such a better use of your time to reply to actual questions and folks who don't want to use online scheduling.

Smart Scanning

The cliche of a shoebox full of receipts that gets handed to a bookkeeper is a thing of the past! First of all, receipts are so often digital these days. In fact, bookkeeping tools let you email receipts into them! (And scan paper receipts, if necessary.) If you haven't discovered these bookkeeping features yet, now's the time! Learn how to use the features on QuickBooks and Wave Apps.

But receipts aren't the only pieces of paper that businesses face. Signing a document used to require a printer and scanner. Now it's all done online! Check out Dropbox Sign - they have a free plan! Or if you're creating your own documents for signature, check out Google's sign feature. Some of us create paper by taking notes. You can handwrite notes digitally using any smart pen and tablet. There are even tools specifically designed for the task, like Kindle Scribe and ReMarkable.

But sometimes paper just happens. Luckily, getting paper into the digital world has never been easier. Your smartphone can scan anything! Many native camera apps have this feature. File sharing tools like Google Drive or Dropbox have built-in scan and save features.  

What Only YOU Can Do

If this is sounding too overwhelming, we can flip it all on its head. This also serves to highlight the stuff that you should NOT delegate. Create a list of the things only you can do. And by only I mean the things that must happen for the business to deliver the same service and be intrinsically your business. 

What makes the business intrinsically yours? It has nothing to do with access to a password or creative influence over your marketing. (There are tech solutions to sharing passwords, and you can always maintain approval rights!) We're talking about the nugget that makes your work YOUR work. And even that might be able to be taught to another person. Hold fast to the things you love doing that are unique to you. Be willing to let go of everything else; it's not what's actually important. 

Your Efficient Operational Plan

Hopefully you're now a bit clearer on things that could leave your plate. You've got free and low-cost computer-based tools and automations. And for the things that need a human touch, you know more about identifying someone to help. A well-tuned operation plan not only saves you time but also allows you to do even more of the stuff you love. 

It's pretty universal for first-time entrepreneurs to dream about success but also fear financial ruin. No one thinks of launching a business as particularly easy. Even I, who finds it super fun, acknowledge that it's never easy. But risk is something that can be mitigated. A well-thought-through business plan is the classic safety net for launching a business. And the financial plan within it is the most direct, concrete section. It's also the most imposing for those who are not a fan of math. And the easiest to skip when you're self-employed and no one's demanding to see your plan. 

It's so important not to skip understanding your financials. It can become the difference between an affirming, spacious, thriving business and never feeling like your business ever will be successful. It's also never too late to take a look at them. Check in with your financials anytime you're feeling like you're working too much, earning too little, or wondering if you're charging the right amount. The formulas here work no matter what state your bookkeeping is in.

Your financials are more complicated than your hourly rate times the number of hours you work. Don't get me wrong, that's a great place to start! And that doesn't account for any expenses. Or admin time. Or that pesky self-employment tax. Let's take a smidge more time and get leagues' more accurate numbers! 

Financial Planning From the Top

Let's start from the top down. The financial plan in a business plan shows a lender or investor the likelihood that you'll bring in enough extra revenue to pay them back. For self-employed businesses, we are the only lender or investor. We don't need an immense profit, but we do need to know that success is a possibility. Fun (terrifying) fact: a business can succeed while its financial plan fails. (Let's not be one of the unfortunate entrepreneurs who discover this fact!) When a business succeeds you'll have tons of clients and be working your butt off. But if the financial plan fails, then all that work doesn't result in the money you expect it would. To prevent this from happening, you need a solid financial plan as early in your process as possible.

Introducing the Trifecta

In a traditional business plan, the financial plan is where you outline your financial resources, needs, and forecasts. This is usually accomplished with a series of reports: 12-month Profit and Loss; Cashflow; 4-year Profit Projection; Break-even Analysis; Estimation of Startup Expenses; Personal Financial Statement. All these reports are helpful for larger or complicated businesses. (Those businesses selling products, with numerous staff, or complicated payment or ownership systems.) All those reports are overkill for self-employed businesses. We just need to ensure three key things balance:

• the amount you're paid

• the amount you work

• the amount you charge

These three things are your trifecta. And here's how they go wrong:

• Planning the business so that the amount you're paid is just "what's left over." You're going to be broke, or overworked, or both.

• Planning to work as hard as is necessary to be successful. This doesn't guarantee your success, but it does guarantee your eventual burnout.

• If you believe the amount you're paid is the same as the amount you charge, then you're not grounded in reality. Self-employed businesses often have very low overhead and very low start-up costs. And our expenses are not zero.

If you make these mistakes, you're going to always feel like you're trying to keep your head above water. (Keeping this swimming metaphor going...) you can feel like you don't even have to tread water if we plan in a profit margin. Like I said before, we're not in this for the profit, but we are taking a risk. In our economy, a risk that works out comes with a financial reward. 

The goal for our trifecta is balance, plus some room to breathe (aka profit).

I'm going to spell out the arithmetic behind this in this article. But let's get real, these kinds of calculations are easier in a spreadsheet! Join the Launch Pad to gain access to my custom-built Trifecta worksheet. (Along with tons of other business launch resources!)  

Constant Expenses

Before we can find that balance, we need to take into account your expenses. Specifically, we're talking about ongoing or repeated expenses. This is stuff like: website fees, business license renewals, liability insurance, business cards, and software subscriptions, just to name a few. Tally these up to get your average monthly expenses.

We also want to take into account that not all your time will be "billable" or client-facing. You've got to do administrative things like bookkeeping or renewing business licenses. You'll also be doing work to generate and nurture prospective clients. Conventional wisdom says that self-employed business owners spend 20% of their time on non-billable work. 

And then there's taxes. Unlike when employed, your taxes aren't withheld from every paycheck. You also have to pay the employer portion of your payroll taxes. (Sometimes referred to as self-employment tax.) The advice I find that works is to set aside 20% of all the money you bring in. 

Trifecta Calculation

Once we've accounted for all those relative constants, we're ready to find that trifecta balance point. I find it's easiest to start with some ideal values for what you charge, what you're paid, and how much you work.

• We're looking for what you expect to charge clients on a per-hour basis (or price per hour.)

• Figure out what you want to get paid after tax and on a monthly basis. This is your desired monthly pay.

• The amount you want to work in a given week should include all admin time, travel time, and client-facing time. This is your total hours goal.

Take your total hours goal and multiply by .8 to get your billable hours goal. Take that number and multiply it by your price per hour, and multiply it again by 3.4. (This accounts for taxes and makes it a monthly total instead of weekly.) The result is your monthly gross revenue goal. Deduct from that your average monthly expenses and your desired monthly pay. This final number is your breathing room.

I call it breathing room, but you could also call it surplus or profit. If it's a negative number, then when you're at your ideal workload, you'll be that much short of your ideal salary goal. If it's positive, then that's how much profit your business will bring in when it's at those ideal numbers. Congratulations, your business is, by definition, profitable!

If your eyes have glazed over, remember that I've built a streamlined tool for this in The Launch Pad. A guided spreadsheet means you can focus on what the numbers mean instead of the math behind them.

What Does it All Mean?

I recommend your profit be 6%-20% of your gross revenue. If your profit is less than that, or a negative number, make adjustments to the ideal values you started with. Here's guidance on changes you could make and their impact:

• Reducing your desired monthly pay is the easiest way to increase your profit. But it's also the least effective. The profit and salary both go to you. Reducing your salary directly increases your breathing room. But it doesn't actually improve the reason we want breathing room. If you choose to reduce your pay, be sure to keep it at a "comfortable" to "more than comfortable" salary amount.

• Increasing your price per hour will give you the most bang for your buck. This is where I recommend starting your adjustments to your ideal numbers.

• Increasing your total hours goal will also shift things. I find that adjusting your total hours goal makes less impact than price. 

• You could try cutting monthly expenses, though self-employment already has such low overhead. It doesn't make a significant impact most of the time.

If you feel you have too much profit, consider lowering your hours or finding ways to give back. This is a great opportunity to explore offering your service on a sliding scale. Or you could try donating your expertise to a non-profit. (FYI, you don't get a tax benefit for donating your time/services. If you want a tax benefit, bring in the excess profit and then donate it to a non-profit.)

Increasing Your Price

I've advocated that a strong place to start righting an imbalance is to increase your ideal price. But your price isn't dictated by costs alone. There are also market forces. In the Launch Pad, I provide guidance on Market Price Research. This is a process that helps you understand the norms of your market. The norms are only part of your market. How you spin what you're doing and the position within the market are also factors. These tie into your understanding of your ideal client. If you haven't looked into these, do some learning and then circle back to the trifecta. If you're undervaluing your service, that's gotta stop.

Increasing your price can also be uncomfortable because it connects to our self-worth. It can feel boastful or proud to claim a large number, even when we know we're worth it. It can also be scary to tell someone your value and have them disagree. (Even though this isn't actually what's happening. If someone doesn't accept your price, it means they're not your ideal client. You're still worth what you're worth.) Your value as a person is immense and immeasurable. Your self-worth is not actually up for negotiation. Sussing out what's market forces and what's internal forces can be tricky. This is part of what I can help with as a coach.

Now What?

If you've found that balance point, then, guess what? Your business has a financially solid plan! You now have a price, salary, and workload that will meet your goals. From this solid financial foundation, business success is a real possibility. In order to bring success to fruition, we'll need to rely on the stuff covered in all the other parts of a business plan. Join me again next month when we'll get into a business's operation plan.

The biggest question my clients ask is, “How do I get clients?” There’s not a singular answer because there are so many different ways to market. Different marketing is appropriate based on differences between business owners, industries, and customers. But every business will find their answer in the realm of marketing! This article is part 4 of my series that kicked off with Do You Really Need a Business Plan? Collective Liberation and the Confidence You Crave. This article covers the section of a business plan all about Marketing. It’s a big section of a business plan. And it is no less important for self-employed businesses than it is for any other business!

The Marketing Section of a Business Plan

How you spin and frame your work matters, and this is distinct from what your business does. Other parts of a business plan ask you to speak plainly about how the business functions. In this section we want dive into your positioning and spin. This is the difference between a company that sells t-shirts and a lifestyle brand. Both sell t-shirts, but the latter is putting the shirts into a context that is appealing to a specific group of consumers. If you have a social good or community you’re serving, this is the time to appeal to those factors. And if you don’t have those, don’t fret. You can also tell it like it is!

This part of a business plan is huge, so it has four key subdivisions. It starts by rooting into the context, or market, your business exists within. This is called (1) Market Research. Then it describes the customer for this product or service, e.g., who you’re trying to sell to. In a traditional business plan, this section is often labeled “Customers” or “Niche.” For self-employed businesses, we're even more focused and it's your (2) Ideal Client. Given the groundwork of the first two sections, you propose a strategy for reaching these customers that’s within a defined budget. In short, a (3) Marketing Strategy. And finally, you estimate the projected results of this marketing and present those to the reader. This is the (4) Sales Forecast.

This marketing section is A LOT. Thankfully, I’ve already written so much about marketing! During this explanation I’m going to link to all the stuff I’ve already written about. This way you can find your answer, no matter what part of marketing you’re stuck on!

1. Know Your Market (Market Research)

Last month’s article (Beat Your Weaknesses: How to Win as a Unique Self-Employed Business Owner) made a case for why competition is a red herring. If you follow my advice to boldly celebrate your weaknesses, do you really need to know what other folks are offering? Everything in that article is true, and also, knowledge is power. It is a worthwhile endeavor to understand if you’re pricing yourself as a luxury good or a discount item. Market research how you identify how consumers will view you in comparison to others. This doesn’t mean you have to change anything about what you’re doing. And it is helpful to understand how you compare as we’re crafting a marketing strategy.

I cover how to do market research in the Launch Pad: Market Price Research section of the Is My Business Financially Feasible? Page. For those concerned about changing market trends, also check out: From Big Picture to Small Scale: How to Be Self-Employed And Master Market Trends.

2. Your Ideal Client (Customers or Niche)

In a traditional business plan, you’d reframe things discussed in other sections in light of your customer. So you’d go over your price, offering, and business identity, and how they appeal to your customer. You’d also describe what you know about your potential customers, which is called your target market.

I like to trim out the double work involved in all that reframing, and just get straight to it. Also, target markets are woefully insufficient for self-employed businesses. I get into why you don't want a target market in: Casting a Wide Net Could Tank Your Business: Don't Appeal to Everyone! For self-employed folks, we need to know a singular ideal client, rather than a market segment. Your ideal client is not a broad sweep of people. It’s a singular person. If you find yourself selling leggings to “anyone who has legs” (or the parallel for your industry), then you need to understand your customer better. It’s not true, it’s not realistic, and it’s going to waste your time and money.

You need to know who you’re selling to and why they want to buy from you. You need to get in their head and understand them. But if you’re just getting started, you might not have had any clients yet. So what is there to do? Most self-employed businesses base it on an amalgam of at least a few different people, if not an entirely fictitious person. If you have experience with crafting fictional characters, then fully lean on those skills! And, this is a key part of the work I do with my clients. We get to the bottom of who you’re trying to sell to and what makes them tick. For support around understanding your ideal client, please feel free to reach out and book a free initial session.

Once you know your ideal client, you’ll refer back to them when constructing a marketing message and for all your future marketing decisions.

3. Marketing Strategy

Now we get to the part where we make a plan to connect with that Ideal Client. This would need to be a fully written-out plan for a lender or investor. But for us, it can be more informal and rightsized for self-employed businesses.

Your website encapsulates the foundation of your marketing. For self-employed businesses, this is where clients get exposed to your “brand”. I put that in quotes because a brand is a concept that was invented to make a business feel more like a person. We’re self-employed, so we could think of it as we’re a person who’s a business who’s trying to feel like a person. Or we can cut out that middle step and just be a person. So, pick a business name you like (How Do I Pick the Best Name for My Business?) and get a logo solution that works for now (How to Get an Excellent Logo). I give you instructions on how to write some solid marketing copy in the Launch Pad: Clarifying Your Message and Writing Website Content. Make sure your offering is really clear (Do People Really Know How to Understand Your Offering?) and that you’re leveraging some basic SEO on your website (SEO for the Self-Employed Non-techie).

With that foundation in place, you’re ready to look at your active marketing strategy. As self-employed businesses, this cannot be too laborious because we need to spend most of our time on client-facing work! For this reason, I advise using my “team of horses” approach. You can learn about it in my article: Don't Worry About Marketing Because You've Got a Team of Horses. For more in-depth support of possible “horses” see the Marketing Tactics heading below. I even lay out your first marketing project for you in How to Conquer Your First Foolproof Marketing Project. And if this doesn’t seem hard or complex enough, take a chill pill and read Want to Feel Calmer? Learn How to Trust Your Marketing Inertia!

Marketing Tactics

You cannot employ all these tactics. It is too many. You are one person. And there are a finite number of hours in the day! Once you have a specific marketing tactic in mind, it's a lot easier to dive into learning about that tactic. I’ve written articles on a lot of different marketing tactics over the years. Below, you’ll find links to past articles grouped by the type of marketing tactic being discussed. I’m also writing more about marketing all the time. For the most up-to-date list, here's a link straight to the Marketing category within my blog, and another to all articles tagged with marketing.

• Content Marketing

  • How to Get Strangers on the Internet to Hire You

  • The Unexpected Secret of Content Creation: Why You Should Give Everything Away Free

  • 5 Things that Help Others Promote Your Blog on Social Media

• Social Media Marketing

  • Social Media for Solo Entrepreneurs

• Networking / Network-based Marketing

  • The Basics of Successful Networking

  • Networking Events for Introverts

  • How to Get Quality When What You Have is Quantity: Networking for Extroverts

  • How to Master One-on-One Networking

  • The Most Frequently Missed Opportunities When Networking

  • Knock Networking Out of the Park

  • Stop Forcing That Sale! 5 Principles to Unleash Your Audience

  • How to Commit to a Networking Group: 3 Reliable Criteria

  • How to Craft an Effective Elevator Speech for Your Business

• Selling Technique & Skill Building

  • Salesmanship: the Good, the Bad, and the Absent

  • 4 Skills You Already Have That You Could be Using to Land Clients

  • Don't Be a Slimy Salesman: Utilize Modern Sales Tactics

  • The Story of the Good Used Car Salesman

  • Seize Your Process! 3 Steps to Improve Your Conversion Rate

  • How to Conquer Simple Strong Website Analytics

• What NOT To Do

  • Exploit Your Own Desire: the Insider's Reason to Ditch that MLM

  • The Competition Insider: How to Win Against the Siren Song of the Marketplace

  • Caution and Grit: How to persevere through the hard times of self-employment

  • Lessons from Poor TV Choices

4. Sales Forecast

This is where we talk about the expected results of all the marketing you’re planning on doing. If you’re trying to secure a loan or investment, then that third party wants to know how fast you’ll make their money back. For us self-employed folks, we’re smaller and able to be more agile. But there are two key limits on our success.

The first we'll get into in next month’s installment, the Financial Plan section of a Business Plan. The marketing part of this is finding a balance point between two things. First, the volume of clients we need to be successful. And, second, the number of clients we can bring into our business. Hold tight till next time when we'll get deep into it.

The other piece of this is the timeline. In a traditional business plan, this is a month-by-month projection of sales numbers based on assumptions. For self-employed businesses, the assumptions are doing a lot of heavy lifting. Plus, they always result in the same kind of graph. It's just like the one below:

For the sake of the above example, I used a coaching business like mine. I assumed I can land 3 new clients per month and that clients work with me for a minimum of 3 months, but an average of 6 months. You'll see that my client count climbs for the first few months, then slows since I lose some to attrition. The client count eventually levels off at 27 clients. If my practice is full at 20 clients, I hit that point around 8 months.

There are two major weak points of this projection. First is the accuracy of my assumptions, especially the number of clients I can land per month. Second is a question of whether the client count will level off before or after I'm "full."

The accuracy of your assumptions is fundamentally a guess. You've never operated a business before, so there's no data to pull from. If you have previous sales or marketing experience, then that provides you with some data points. Working with a business coach could also help you be more grounded in reality. But at the end of the day, what is reasonable can surprise us. Make your best guess, and then adjust with time.

The second weak point is whether the red line will level off without crossing the blue line. This is dependent on if you can get clients faster than you lose them, and at what rate. This question is frequently overlooked by self-employed business owners to some degree. Some folks never identify that blue line. They don't set a target volume of clients that feels comfortable and will result in success. Others have a sense for that, but don’t consider that clients will drop off at some rate. We’re going to get into defining the parameters for these next month, so put a pin in this thought process.

Keep in mind that as solo-entities, we can have a plan and then change plans mid-course if it seems not to be working! For some right-now insight on your business’s trajectory, check out my business runway calculator. You'll find it in the article How can I be Confident That my Business is Possible?

Your Business’ Marketing Plan

Your business’ marketing plan is going to be entirely unique to you and your business. Your plan can be written down, or just solidly thought out. It’s up to you. Hopefully the information contained here helps you to cover all your bases. If you have more questions or want individualized help, that’s what I’m all about! Feel free to reach out or book a free initial session.

I want to talk about some scary stuff. Today, we're talking about a nugget of insecurities that most people have in at least some shape or form. Yes, it is hard to face your fears and insecurities. But I have faith in you! You are reading this in a (hopefully) safe space, and you need not take any action until you are ready! Insecurities will come up as you are launching a business, so it's good to get familiar with them now. When you know about them, it's less likely that they'll derail you. And it's never too late to face them.

When launching a business, we're putting ourselves out there in a way that most people never do. We're putting ourselves in a situation laden with competition. The stakes might feel higher than any other situation we've found ourselves in. And yet we must persist. Comparing ourselves to others is literally part of business planning. So, while you can avoid it, it's not recommended. Insecurities are difficult to face, and they are surmountable challenges. I'm going to get into some key reframes.

This is the third in my series on Self-Employed Business Plans. No, traditional business plans don't ask you to face your insecurities. (Maybe they'd be more helpful if they did.) As a self-employed business owner you are your business. And a key "weakness" in the business is your personal weaknesses: insecurities. All business plans understand that we can't eliminate weaknesses. Business plans ask that we are aware of our weaknesses and have a plan to mitigate them. For personal insecurities, acknowledging that they exist is a huge first step. Next, we can mitigate these insecurities by using the re-frames I offer in this article. But first, a nod to the traditional business plan. The third section is usually the "Products and Services" section.

Traditional Business Plan: Products and Services

The third section of a business plan focuses on the business's products and/or services. In a traditional business plan, the writer must assume the reader is unfamiliar with the product, service, and industry. This section needs to cover all the basics of your business's offer. What it is, how much it costs, and any fee or leasing structures you may offer. It also needs to speak to the goals of an investor or lender. Namely, what sets your product/service apart from the competition. It's tempting to only highlight the positive, but everything comes with a trade-off. This is also the section to be frank about the disadvantages of your offering. If the reader is only told the good stuff, they might feel it's too good to be true and, hence, trust you less.

Self-Employed Business Plan: Products and Services

For self-employed businesses, it's also important to know what you're offering. But we focus on what it means to the customer rather than a lender. The customer-facing information is in the Marketing Section of a traditional business plan. You'll also want to know what you're pricing things at. Though you won't be offering any complicated leasing or financing around it. I'm going to discuss how to price when we get to the fifth section of the business plan. (That's the Financial Section.)

The thing we're going to focus on is the competitive advantages and disadvantages. It's easy for insecurity to tell us we have no significant competitive advantages. Self-employed businesses rarely innovate on their offering. This means there are a bunch of other people offering very similar things in the same industry. For example, I'm a business coach. I'm in the same industry as Alexis Fedor, Tony Robbins, Allison Dunn, Babs Smith, and Dan Sullivan. These folks do much the same thing I do, and I'm in competition with them, right? Let's look at this a bit closer.

Competitive

I could look at the offerings of one or many other coaches and believe that they've got it covered. I have nothing to add to the conversation and I couldn't do anything they're not already doing. And in some ways, that would be true. However, none of them are me. They'll never frame things the way I do. They'll never say it just the way I do. That means you, dear reader, will connect to the same information differently. You are consuming my content despite (or maybe because of) what those big names offer.

This is likely true for you in your own industry. You're not the only person offering what you offer. And you're the only YOU. No matter how much you look up to your teachers or prominent figures in your industry, they cannot be you. Your products are similar to others, but they cannot be identical to what you produce. Customers will connect with your service or your products because its all unique to you.

Your service or product will connect with your clients differently. Plus, your marketing will also connect with them differently. I'm not in competition with Tony Robbins because my marketing speaks in a different way. (If it's even speaking to the same people at all!) There is no one solution that's going to work for everyone. This was the Prego pasta sauce innovation by Howard Moskowitz, immortalized in a Malcolm Gladwell TED Talk. In this story, we realize that not everyone is going to like the same singular pasta sauce the best. In the same way different people are going to connect differently with different business owners. You don't need to contrive a differentiator, you just need to be you. In the words of Dolly Parton, "Find out who you are and do it on purpose."

Competition is also a wild notion in super small-scale businesses like ours. You don't need to capture a market segment. You can't. There aren't enough hours in the day! Don't believe me? Think it through. If you're making a product, how long does it take to make a batch of your product? Imagine the full capacity of that process; about how much would you produce? For consultants, how many contracts can you manage at once, and how many billable hours are you willing to commit to in a typical week? For service providers, how many clients can you serve in a week?

I'll use myself as an example again: I can hold a maximum of 20 sessions in a week. If every single slot is full with a large small group, that's 120 people per week or 1,560 per year. (This is a max capacity I don't hope to experience. I'm very pleased with the couple dozen new clients each year.) But even if every one of those group sessions was one-and-done, that's a max of 6,240 people in a year. We're talking about less than the population of a city block. That's the number of people a shopping center wants to see during their peak hours on one day. And that's the upper limit of how many people I could serve in a year. The scale of our businesses is SO much smaller than the rest of the business world. You're not Coca-Cola and Pepsi battling it out. You need a postage stamp-sized portion of the market. You do not need to be "competitive" that is silly. You just need to take up the space you need to take up.

To recap: You're not in competition with anyone else because only you can be you. Only you are going after your precise market segment in the precise way that you're doing it. And competition is really not a big deal because you actually don't need that many clients!

Advantages and Disadvantages

As we examine competitive advantages and disadvantages, let's not throw the baby out with the bathwater. The notion of competition might be laughable in self-employment but not the rest of that. Understanding the advantages and disadvantages of your offering is emotionally heavy work. And it's super valuable to do this work! Every choice we make in crafting your business has a trade-off. There's not a right and wrong answer, there are pros and cons, advantages and disadvantages.

I often notice people trying to sweeten the deal with affordable rates or discounts. They try to be immediately available to clients. Or they promise fast turnaround times. These are things we see many businesses engage in, so clearly, this is how things are done, right?

No one can be the fastest, the cheapest, and the best all at once. Most consumers can identify that as a scam from a mile away. Consumers expect there will be tradeoffs, so claiming there are none sounds like a lie. When it comes down to it, a business can only optimize around one of three things: price, convenience, or quality. You need to be clear about what you're optimizing around. If you're not, your customer's con artist alarm will start blaring.

Nearly ALL self-employed businesses optimize around the same thing. Do you know what it is? I tipped my hand in the earlier part of this article... Self-employed businesses optimize around quality. e.g., the unique thing about you. Quality doesn't have to be the "best," but it is something unique. Your customers will appreciate the unique stuff about you. This is your key advantage.

The disadvantage of this is that we cannot optimize around price or convenience. We will never be the cheapest option. (So, do we even need to bother with discounts?) We will never be the most convenient, immediate solution. If we lead with that, then we're setting unreasonable expectations for our clients. We need to celebrate our quality, and that might come with delays or longer timelines. Present your offerings with honesty and integrity. Clients will appreciate you for it.

Boldly Celebrate Your Weaknesses

Understanding your product or service is all about being laser-focused. It's having boldness. The boldness to celebrate your strengths and the boldness to celebrate your weaknesses. The impulse to hide our vulnerability is natural, especially in a competitive environment. The wise among us understand that vulnerability is a strength and competition is a lie. We have abundance, not scarcity. Our transparency and camaraderie is one of our biggest assets. Approaching self-employment in this way makes the journey more easeful and joyous.

A business plan starts with a clear understanding of what the business does. When you're just conceiving of a business, this probably isn't clear. There are many directions you can go with any idea. Furthermore, there are different ways to spin your marketing that can make the true business model unclear. Let's get clear on what's at the heart of your business.

This is the second installment in my series on self-employed business plans. Last month I gave you a high-level overview of all the parts of a business plan. This month we're diving into the first two sections of a business plan: the Executive Summary and the Company Description. I'm going to focus more on what of these headings apply to self-employed people. For us we need clarity on what we're doing, how we're presenting that, and a way to keep hold of this clarity.

In a traditional business plan, the Executive Summary comes first followed by the Company Description. I'm going to switch the order. Why? Because we're self-employed - we get to do it our way! ...And because you're still getting clear on what your business is. We're going to start broad, before distilling it down.

A Business Overview

The first question I ask any prospective client is: What's your business idea? The answer to this question takes many different forms. I don't expect a new client to have a polished answer to this question. I chat with my clients on a weekly basis and we get to the bottom of it. However you get there, you're going to need to know 3 key aspects of your business: (1) Why you're launching/running this business. (2) What your business does. (3) Your legal formation. But before we get into that, my nod to the traditional business plan.

The (Traditional) Company Description

In traditional business plans, this section includes a few things. First the mission statement, company goals, and objectives. Also a simple description of your industry and who you're selling to. For companies greater than one, these documents keep people in step with one another. Later in the business plan, you'll explore these in more depth. In the company description, we're only looking to orient the reader. Remember, the reader of a business plan is a lender or investor. They don't know anything about you and your business. You need to tell them all the basics, including who the owner is, how you're structuring ownership, and why. For larger companies, these can be complex. For example, Corporations can have shareholders and complex ownership structures.

The (Self-Employed) Company Description

For self-employed businesses, having all that stuff written down can be superfluous. But there are parts of this that are vital. I want you to know what you're doing and why. I want you to understand you have a choice in how you deliver your skill or talent to your customers. You also have a choice in who your customers are. You have a choice in how you position your offering in the market. You have a choice if you're a sole proprietorship or an LLC. There are no right and wrong answers to these choices. But not making a choice is disempowering yourself.

What your business does is different from how your business markets it. I notice many solopreneur's descriptions of their business tie in how they plan to market. Let me explain by using the example of a bookstore/cafe business. Does this business:

• provide a place where people can gather and celebrate their love of books?

• provide a cozy, studious, and attractive ambiance for people to study, work, or meet with friends?

• sell coffee and books?

• rent out the space as a venue?

All these purposes can co-exist in the same business. But notice how those first two are all vibes. Those are the marketing carrots that bring customers in. It's not the business part of the business. The latter two are business ventures; money changes hands. The last two bullet points are not in perfect harmony with the first two bullet points. If someone's rented the space, a customer might not be able to just show up and study when they want. This is precisely why we need to get clear on what the business's primary purpose actually is.

For self-employed businesses, the business purpose is simpler. You are your business. The business's reason to exist is inextricable from your personal life goals and purpose. We can't talk about the business' purpose without talking about yours. From there we need to get functional: What good or service do you exchange for money? We need to be clear on which side your bread is buttered on vs. what's marketing. Your business will also need to operate in a legally recognized fashion. Your goals and what the business does inform the legal structure.

1. Why You're Doing This

There are a lot of reasons to start a business. In capitalism, some reasons are deemed more valuable than others. Bigger profits and broader reach are understood as more important than smaller-scale businesses. That's just not true. There's so much value in an individual having control of their own work. Self-employed businesses blend the status of a business with the conscience of a person. These things tied together can do so much for the well-being of our society. Self-employment can also be a path toward survival. Traditional employment often doesn't suit the needs or humanity of marginalized individuals. Plenty of folks still have a lot they can contribute to their communities. Self-employment turns this into survival and thriving.

Your dream for your business doesn't have to be traditionally understood as a "successful" business. You get to define success. Want an abundant livelihood? Want to maximize time spent doing enjoyable things and minimize the crappy stuff? You're in good company because that's what I and most of my clients want! These are valid reasons to launch a business. You can be successful at this!

Don't get distracted by grandiose business advice. Remember that their definition of success and yours are very different. It can be helpful for you to get clear on what matters to you and why. If that takes the format of a mission statement or goals or a vision board - there are no wrong answers. And none of that is required. If you know and you stay true to it, then you're going to end up with a business that supports your thriving.

2. What Your Business Does

In my bookstore/cafe example, the business did a lot of things, but only some made money. Even the things that make money needed to be prioritized since they didn't fully work with each other. How do you identify these things for your own business ideas? Exploring your business model can help.

Previously I've written about and provided a business model worksheet. Consider each of your business ideas or service offerings in a separate row of the business model worksheet. The first four columns of this worksheet ask you to clarify what you're selling, who consumes it, who pays for it, and how they buy and receive it. Thinking these through for each offering achieves a few objectives.

First, this makes you write down all your ideas. For many folks, this turns the feeling like you have a million ideas into the reality of a finite number. A million is intimidating. A dozen is tangible.

Second, you'll notice which ideas are not really businesses. In the image above, you can see the first two bookstore/cafe services don't have anyone paying for the service. There are many possible solutions to this. Everything from charging an entrance fee to shifting which idea your business prioritizes. The solution you choose needs to fit in with why you're launching a business.

For example, an entrance fee could fix the business problem. It might also conflict with the business owner's values surrounding access to a book-loving space. In this case, the owner needs to prioritize the needs of a service that brings in revenue over one that doesn't. Any of the business ideas can still play a role, the key is to balance your goals and definition of success.

Third, you'll notice similarities between services, and areas of conflict. In the example worksheet, you can clearly see that selling coffee and selling books has a very similar model. The payer for each is the same as the consumer. The way the service is bought/received has many similarities and some differences. These services might be easy to launch simultaneously since they share so many commonalities. Or you might prioritize the purchase/delivery tools of one over the other to start.

Conflicting services, like renting the space out as a venue, start to stand apart. The consumer and payer for renting out the space are different from each other and from the other offerings. The way this service is bought/received is also completely different than the others. This might be a more difficult offering to work into your business, especially from the get-go. But your goals for the business still play a key role! If offering the space is vital to your purpose, then you can deprioritize the others to focus on this one. When conflict between ideas occurs we can be clear on who's needs to prioritize. We'll center the needs of event space renters and the needs they perceive of their attendees. The needs of coffee lovers and bookworms get met only if they don't take away from the needs of the renters.

Understanding your business model will lead to clarity on which business ideas to prioritize. But this will only happen if you're examining it in light of your own definition of success. You need at least one business idea, but it absolutely has to integrate with your purpose and goals. You can use the percentage column in the business model to clarify your priorities. When the business is fully up and running, how much revenue would you anticipate from each idea? A higher revenue expectation is a stronger business idea. If you have more than one business idea, these percentages are a guide to growing/developing the business. You'll start with the highest percentage offering(s). Expand to new offerings only once you've gotten traction with the top-priority items.

3. Legal Formation

Self-employed business owners can get caught up on this part unnecessarily. There are finite forms of legal ownership: sole proprietor, limited liability corporation (LLC or PLLC), partnership, and corporation (C, S, etc). The latter two of these are inapplicable for self-employed businesses. As one person you cannot be a partnership. If you're not doing fancy stuff with investors, selling shares, then you're not going to be a corporation. PLLCs are only available to designated professions. They're the required version of an LLC for those professions. They are functionally very similar so I use "LLC" and "PLLC" interchangeably. (Consult your state website or a lawyer to get into the fine details between the two.)

Bam! We've now whittled this down to an either/or choice: sole proprietor or LLC. The decision between these two asks you to consider your legal, tax, and financial circumstances. I am not a lawyer nor an accountant and cannot give legal, tax, or financial advice. I definitely can't tell you, a stranger on the internet, which is the right choice for you! But you can make this decision for yourself without consulting a lawyer.

I go into this more in-depth in the article Want a Risk-Free Business? but here's a super simple breakdown of the pros and cons.

Sole proprietorship:

• pros

  • simplest, easiest, and cheapest to form.

  • adds one relatively simple form to how you file your taxes.

• cons

  • offers no liability protection beyond what good behavior, clear contracts, and insurance allows.

    • Risk can never be zero. When assessing your risk consider the volume of customers and the level of distance/anonymity you have with them. The greater of either increases your risk. Fewer customers and the more closely you know them, the less risky.

LLC:

• pros

  • creates a dividing line between your personal assets and your business.

    • This means a lawsuit against your business wouldn't automatically include your personal assets. If you have retirement accounts or own real estate, strongly consider this option.

  • earning above a certain amount may be able to get some federal tax filing benefits.

• cons

  • takes more paperwork and fees to maintain, especially to get those tax benefits.

Don’t stress about making this choice. It's simple enough to start as one type of business and then change to a different structure. Choose what's right for you now, and if your circumstances change, then make a change.

That's the Company Description!

Are you clear on why you're doing this, what your business does, and your legal formation? If so then you've got a defined business idea fit for a company description!

The Executive Summary

Rewinding back to the part where this lines up with a traditional business plan, let's talk about your Executive Summary. In a traditional business plan, this is the first part of your plan that the reader encounters. It summarizes the high points of your business plan. As a persuasive document, this distills your business down to the top selling points for the lender or investor reading it.

For self-employed businesses, there's no need to write a document like this. Think of this as the part where you summarize and remember. It still holds true that you might not start here. You need to do at least a little planning before you construct a reminder for yourself. But it also might not be the last thing you do. At this juncture do something to keep the key parts of your business in mind. Two key aspects to keep track of are (1) why you're working on this, and (2) what's most important about your business. Write it down. Post it somewhere visible. Use a method that works for you to keep focused on what really matters in your business!

Now What?

As you've read through this article you've thought about these aspects of your business. If you're pleased with where your thought process is, then that might be all you need to do! Journaling or doing something else to process or document your thoughts might also be helpful. You're not trying to inspire an investor, so this doesn't need to fill dozens of pages of Word document.

If you want to investigate deeper in any of these areas you can do that! Part of my role as a business coach is to be a thought partner as you develop your business idea. As well as offering instruction on any skills you want to develop to help your business thrive. This is just a starting place for learning! Check out The Launch Pad's many resources. The Making Your Business Legit section will walk you step by step through the legal formation and licensing of your business. Or leave a comment below letting me know what else you’d like to learn!

So, you want to start a business, or maybe you've been operating a business but never really had a plan. You've heard a good business has a business plan. Maybe you've even done a quick Google search. But then you were utterly overwhelmed by the complexity of what goes in a business plan. You don't even know where to start with it! You're in the right place! I thrive in explaining things like this to folks like us. People operating on the self-employed or freelancer scale of businesses.

This is also a queer anti-capitalist and anti-ableist bent on business plans. The tl;dr version of this article is: if you don't have a business plan, and your business is doing fine... keep doing what you're doing! A business plan IS OPTIONAL. Business plans come from and reinforce so many systems of oppression. And we're trying to evolve beyond colonizer patriarchy white-supremacy bull crap, right? RIGHT! This article strives to demystify what a business plan is, and show you the parts that are most relevant to us.

What is a Business Plan?

A business plan is just a standardized format for a document. Similar to how a resume takes a common form, a business plan has some common areas and features. A resume tells the reader about an individual's skills. A resume seeks to persuade the reader to believe the individual is a perfect fit for the job. A business plan serves a parallel function for a business or business idea. The business plan demonstrates that the author has thoroughly thought through their idea. It seeks to persuade the reader that the author's business is a sure bet. The reader of a business plan is typically an investor or lender. The reader is looking for the author to "show their work" on why they think their business will be successful. A successful business means the reader will get their money back. If they're an investor, their investment will grow in value. If they're a lender, then their loan will be repaid in full with interest.

What is a Self-Employed Business Plan?

It's important to think through all the facets of your business. You need to know what you’re doing and have confidence in your plan. But self-employed businesses don’t really need to explain it to anyone else. It's not that useful to craft a formal 20-something-page document where you explain every facet of your business to an outsider. Solopreneurs have to wear so many hats. There's so much to do and only YOU to do it. It's a far better use of your time to execute on things rather than defend them to a non-existent lender or investor!

That's where this series of articles comes in. This article gives you an overview and generally demystifies things. We're going to walk through all the parts of a business plan. You'll understand each standard part of a business plan. By understanding the behemoth that is a "Business Plan", it will become less monolithic. The subsequent articles will go more in-depth in each area. Reading more about each part of a business plan will let you get clearer. You'll understand what areas you’ve already got covered, and what areas you need to learn more about. This will illuminate the things you didn't know you needed, and offer avenues to learn more. So let's get started!

The Parts of a Business Plan

(1) Executive Summary & (2) Company Description

These 1 to 2 sections are an overview of topics that you’ll go in more depth into later on in the Business Plan. Many people find it easiest to write these parts last. Start by figuring out all the details in all the other parts. Then just summarize it all.

(3) Products & Services

Here you'll describe what you sell. This includes going into the competitive advantages and disadvantages of it. You'll also share your pricing. This might be very straightforward for your business idea. But for plenty of self-employed businesses, it is not. Either way, you've got to explain it so random-dude-at-the-bank can understand.

(4) Marketing Plan

This section covers everything you know about your market. Plus, your strategy and tactics for positioning and launching your business into that market. This means you'll describe your market, industry, customer, and competition. Then outline a robust marketing strategy responsive to all those things. Followed by a sales forecast that you expect that marketing to result in. In a traditional business plan, this needs to be thorough and detailed. This is key to how the reader will believe they'll get their money back. For self-employed folks, you are your only investor. Your thought process should leave you feeling that the money you're risking will be worth it. If all you're risking is time and lost wages, you might be comfortable with trial and error. Definitely more comfortable with it than an investor!

(5) Financial Plan

This is what you have and what you hope to have. You document the resources you have in a personal financial statement. Then you make projections on how your business' finances will go in the format of some standard reports. A reader will examine the numbers you're coming up with and the assumptions you're making to get to those numbers. The reports include a budget of your startup expenses, a break-even analysis, projections for a 12-month Profit and Loss Statement, cash flow, and 4-year profits. Those formal reports might not be helpful for self-employed businesses. But the thought process definitely is! Know what resources you're drawing on, and have a sense of how long they will last. Know that when your business is up and running you'll be well paid and not overworked.

(6) Operational Plan

This section describes the daily operation of the business. This includes its location, equipment, people, processes, and surrounding environment. That "surrounding environment" includes the legal environment. Most of this is straightforward for self-employed businesses. The biggest area to pay attention to is the "legal environment" (e.g. what licenses you need and things like that.)

(7) Management Plan

This is where you talk about the people in the business. You provide an org chart and position descriptions for key positions. The key part of this for every business is the person managing the day-to-day. A traditional business plan goes in-depth into the experience the business owner-manager brings. Self-employed businesses usually got this part in the bag. Though if you will need staff, you need to have a plan for their roles, etc.

What's Not in a Business Plan

Now that you've read through what is in a business plan, let's talk about what's not in it. Our society is very short-sighted on its goals. Nothing in a business plan asks how goods are disposed of when they're at end of life. Resources that you own need not be stewarded to any particular standard. There's also no discussion of social good. A business plan is not required to address how the business will support people, communities, and natural resources. There's a place to talk about meeting environmental laws, but nothing about going above and beyond what's regulated. Taking advantage of people, communities, or natural resources can even be described as "good business practices." A business plan serves a very specific purpose within a specific societal norm. I think we can do better. I hope when you're making your plan, you're considering what ripples your business makes. How your business impacts people beyond your customers and workers. And that your business' impact is contributing to our collective liberation.

Think it Through

As a self-employed business, you do need to think through what you’re doing. You need to have a plan. You don't need that plan to fill dozens of pages. You can write it on the back of an envelope or save it as a note on your phone. The plan doesn't need to inspire an investor. It does need to be grounded in the reality of your bank account. And any area you lack skills in you can learn and find others to help.

More articles are forthcoming, but tell me: What areas do you want more info on? This is just a starting place for learning! Leave me a comment and let me know what else you’d like to learn.

Operating a business opens you up to risks different from those of being employed. Not all people consider this when they're launching their business. You're interfacing with the public at large without a manager to blame! If your business were to face legal action, you're going to be the one dealing with it. You are both the C-suite executives and the "legal department" after all! A hit to your brand reputation (or even just your confidence) can put your revenue stream in jeopardy.

So what do we do? Not launch our dream business? Hell no! We approach risk in a careful and methodical way. First, assess your risk before a bad thing happens. Keep reading, that's exactly what we're here to do! Second, understand the chances of it happening. And finally, put protections in place. Ideally, this means you're considering your risk exposure from the beginning of your business. But in lieu of that, how about now!? Let's explore your risk and what protections you can put in place!

What is Your Risk?

I think of risk as a series of worst-case scenarios. As a business, you're providing products or services to your customers. Disgruntled or unsatisfied customers could sue you. Businesses also create and distribute marketing materials. You could be sued by non-customers who object to something you've produced. Any physical location could see a stranger sue because of an injury on your property. (Even if they inflicted it on themself!)

Our country is a very sue-happy one. You could experience most of these suits even when you're not in business. It's highly unlikely that dinner party guest will sue you for twisting their ankle on your lawn. It's similarly unlikely for businesses, with two key differences. First off, businesses are exposed to more people and you know them less intimately. (Unless you're in the habit of having daily dinner parties for strangers. In which case: my mistake!) Secondly, businesses are perceived to have deeper pockets than individuals. Those not in the know might see a business with a million-dollar budget and think the owner is rolling in dough. But we know that the bulk of that budget is going to operating expenses and payroll. Malicious people looking for a million-dollar payday are more likely to target a business than an individual.

Protection

In your personal life, you probably don't think much about the risks you're exposed to, and you do just fine by it. Like how you avoid getting in a bar brawl by not picking fights in bars, your rational behavior goes a long way! In your personal life, you're also protected by a myriad of insurances. Car insurance, and home or renter's insurance all provide an element of legal protection from frivolous lawsuits. Similar protections exist for business, plus one special one: the LLC. Let's look at these three layers of protection individually.

1. First Line of Business Protection

Your first line of defense as a business owner is similar to what you do as an individual. Don't pick fights. Do good work. De-escalate disgruntled customers as much as possible. I know it sounds like the obvious. But if you've ever heard of Amy's Baking Company, then you know it's not. So protect yourself by being a reasonable person. You'll also save yourself money and stress. Take this line of defense seriously, and give yourself credit even if it feels easy!

2. Second Line of Defense: Insurance

Your second layer of protection is also similar to in your personal life: have insurance! There are two major types of coverage for businesses: general business liability insurance and professional liability insurance. You can have both, but first, let's understand what these do.

General business liability insurance covers your business's existence and basic operation issues. This means it generally includes injury or damage at your location. (This is regardless of whether you were involved.) It can include issues of your digital presence or marketing. For example, copyright or libel suits. It also can include protection against claims by employees or contractors. This type of insurance is usually required by commercial landlords and tends to be the cheaper of these two. But check with your insurance company to be sure about the terms of your specific policy.

Professional Liability Insurance is different and goes by several names. Malpractice, and Errors and Omissions (E&O) insurance are both versions of professional liability coverage. These types of coverage protect from suits stemming from advice or consultation provided. You need to have the right version of this insurance for your situation. E.g. Medical malpractice insurance wouldn't do me a lick of good! For many of us solopreneurs, the risk of these is pretty low, and hence the rates are similarly quite low. I think of my insurance as an investment in an army of lawyers who are highly motivated to not have our side pay!

3. The Ultimate Protection: an LLC

The idea of what an LLC is and what it does has a lot of facets. We're going to dive into the legal protection aspects, but there are also tax implications. Do you need an LLC? That's a better question for a lawyer than myself. Here I will share some background knowledge that will help you better understand why you might want one.

An LLC creates a legal entity that is separate from you as a person. Remember how the Supreme Court decided corporations are people? Yeah, it's kinda like that. Besides the fact that the LLC can't go to jail, legally and financially it's separate from you the person. It can feel like you're the Wizard of Oz when you're a person with a single-owner LLC. The Wizard is the LLC, but it's really just little old you behind the curtain! The thing is that our legal system doesn't treat this as the charade it seems. The Wizard can be sued, and suing the Wizard doesn't mean the man behind the curtain gets sued. (Though he too could get sued.) (Have I mentioned we're a sue-happy country?) Having an LLC also gives you access to a worst-case scenario solution. If it all goes bad, the LLC could file for bankruptcy or close. But your personal finances would remain intact.

Something that throws people off is that at the Federal level, they don't acknowledge LLCs. This can seem confusing because your single-owner LLC - that I just said is its own person - doesn't get its own taxes. Its income and expenses show up on your income taxes. With the IRS you can elect for your LLC to be treated as an S-corp. Then your LLC does get its own taxes. Unfortunately, this does not make your LLC any more or less of a separate "person." It just means more paperwork. (If you use a tax preparer, then you'll have double the fee.) There are reasons to do this, but not legal protection reasons. It's all the same on that front.

The other REALLY important thing to know about LLCs is that their "personhood" comes with a BIG caveat. If you don't treat it like an entity separate from yourself, then it might not count. And you'll discover this during one of those worst-case scenarios is happening. In lawyer speak what's happening is that if you pierce the "corporate veil" too much your LLC might get "disregarded." Let me unpack that for us non-lawyers.

The law determines an entity is separate if the financial assets are separate. For the types of businesses I work with, this means the business needs its own bank account(s) in its name. The money the business earns needs to go into the business account(s). The money the business spends needs to come from the business account(s). You can take money from the LLC, but it needs to go into your personal account and get spent from there. Don't use the company debit card when you're doing your grocery shopping!

Separate finances also mean your bookkeeping needs to be more... well, it needs to exist. A shoebox of receipts and your bank statements isn't good enough. If you're using Quickbooks or Wave App then you're golden.

Layers of Protection from Risk

I love a good visual, so I made us one. I see these layers of protection like layers of blankets. Having an LLC puts a blanket between you and the business. Having insurance is like adding a blanket of lawyers. One on top of you, and one on top of the business. All together, they make you more safe and cozy in a rough and risky world. Here's a visual that sums it up:

Today I'm launching my war against the contact form! Yeah, who am I kidding? I'm not waging any wars here! But also, if folks have to submit a contact form or email you in order to get on your calendar... there's a better way. And it's not a "nice to have." It is a MUST-have! (And this is coming from someone who does not believe in "must haves!")

One thing often overlooked by first-time business owners is how important ease is for consumers. They'll rarely say this to you, but it is a huge factor. Consider the last time you were shopping on the internet. If you couldn't find the price or weren't sure the company was reputable, would you purchase? At minimum it'd give you pause, right? If you're really interested you might hunt for this info. Or you might take a leap and proceed without this information. But those both mean that the not-completely-dedicated customers won't buy. As a business owner, you need customers regardless of how much effort they put into their purchasing process.

This is why I advocate for having plenty of information on your website in a well-organized structure. (I go into this in detail in my Launch Pad lesson Clarifying Your Message and Writing Website Content.) This is key for allowing the customer to take the next step toward their purchase. To proceed they need to be comfortable with the information they've received so far. They also need to feel confident that a solution is likely if they take more action.

Once the customer has all the information they need, clearing a path to an instant purchase drives all of online commerce. It's a large part of what drove PayPal's growth. It's also what underpins Amazon's "Buy Now" button. Once the customer has decided to buy, get that transaction paid for ASAP. Give them that instant gratification dopamine hit.

For those of us providing services, there is no "buy now" button. The closest we can get is a "book now" button. Sure it doesn't mean the widget is going to show up tomorrow, but it can mean the meeting will happen tomorrow!

But does this really make a difference? I've always been a huge advocate for making a business that suits you and celebrating those choices. I can think of a few outlier situations, but it's far more common for business owners to benefit from online scheduling. Let me explain by way of a story.

When I was first starting out I didn't have online scheduling. Mostly I couldn't justify the expense. I told myself a story that I was delivering better service by having folks email me to schedule. It was more bespoke or concierge-like. It wasn't. I trialed a scheduling system during an overseas vacation. The pace at which clients came in my "door" easily doubled. It was clear that I'd undammed a river and there was no going back. So yes, make a business that suits you, and online scheduling tends to suit you and your customers VERY well!

I've heard all the reasons why you probably don't have online scheduling yet. Here are the top 5 and why they really shouldn't hold you back.

1. The Price

How does "free" sound as a price? Cause Cal.com offers a free version with all the bells and whistles. (this is not sponsored!) Price was my number one issue with scheduling back in the day. Then (and now) Calendly has a free version that doesn't sync with your main calendar. The lack of that feature froze me in fear, but it shouldn't have. I'll unpack that next.

2. Fear of Double Booking

Cross-referencing with your digital calendar is a key feature for online scheduling systems. Back in the day, this was a paid-only feature, and my Big Hangup (tm) with using a scheduling system. It's now clear to me how much that feature shouldn't have been my requirement. Nowadays we have the amazing free resource that is Cal.com which includes this feature. But if you can't use that tool let's think through the necessity of this feature:

Without calendar sync, you have to manually enter or block off time. So you block off big chunks of time and/or weekly recurring appointments. You decide to leave it blocked off even if appointments cancel or reschedule. This minimizes the chance you'll have to ask a prospective client to reschedule. It does increase the chance that a prospective client will not be able to find a time on your schedule. Some clients might give up, but it's the same amount of effort for them to book further out or send a contact form. ...guess what, that's what they were doing in the old system!

Asking a prospective client to reschedule was one of my biggest fears. But it is not the worst thing. Things come up from time to time. A prospective client has no point of reference for if it's a common occurrence or a first-time fluke. More importantly, they've made their decision to have an initial session with you. This means they're likely to take the steps necessary to reschedule. And they're likely to offer you grace for having to reschedule. The bottom line is that having an online scheduler is a great experience for most and an ok experience for a few. This is so much better than an ok experience for all!

3. Control Over Your Schedule

All scheduling systems let you block off chunks of time. You can prevent people from scheduling at night and outside your work hours. You can also block of chunks of time for less regular things. For example: when you're planning to do admin work, or even if you just have a doctor's appointment! The sync with your main calendar usually makes it as easy as adding an event to that calendar.

There are a slew of other features that allow you to shape your schedule. You can block off time before or after a meeting to ensure clients don't schedule themselves back to back. There's usually a setting that locks your schedule a certain amount of time in advance. This prevents clients from scheduling but you can still make changes. Some systems can even limit the number of sessions in a day. Others offer a "make me look busy" feature that limits the amount of times that seem available. All this to say, there are a lot of ways you do have control over your schedule.

Online scheduling also minimizes no-shows by sending out email (or text) reminders. And while I've had a handful of no-shows over the years, I've had zero problems being flooded with fraudulent bookings.

4. Which System is Right for My Business?

A common paralysis point is when you're faced with choosing a system. Which is the best for you? Will it do what you need? Will it keep your data secure? Cal.com ticks all these boxes. I can tell you about other systems but why would I waste both our time?

Ok, ok, I promise I'm not receiving money or any other type of benefits from Cal.com. So out of fairness here's an overview of cal.com and three other solid options:

• Cal.com:

  Their free plan comes with unlimited event types, it syncs with your existing digital calendars, and it can accept payments.

• Calendly:

  Their free plan cannot accept payments and is limited to one event type (e.g. you can offer a 30 min session, but not a 30 min session and/or a 60 min session.) The free plan does sync with one calendar.

• Square Appointments:

  Their free plan cannot sync with your existing digital calendar. It does offer unlimited event types and accepts payment. It also has integrated quoting and contracting tools.

• Acuity Scheduling:

  There is no free option. Their most basic plan does have the same bells and whistles as Cal.com. This is what I use. I appreciate the client-management components. I've also made use of complex payment features like packages and subscriptions.

A note for my folks who need to stay HIPAA compliant: Cal.com has the security level you need, but getting a BAA from them will be cost-prohibitive. Use Cal.com to schedule initial inquiries. But keep appointments with active clients on your EHR system!

5. Ugh but I Have to Learn a New System!

With any new tool, there will be a learning curve. Adopting a new piece of tech will present some initial complications. But we can keep it simple to start. Consider starting with a discrete group. For example, new client inquiries or your 3 most long-term clients. Here's a step-by-step that'll get you up and running:

1. When you sign up they'll walk you through connecting your calendar and setting your basic availability. If you're just dipping your toe in, try setting your availability as a chunk of time a couple of days a week. You can always change it later!

2. Set up a new event type that's appropriate for the group you selected. Consider "discovery call" or "regular weekly session." Review the setting options and make some choices. Once you've saved the event, sign yourself up for it as a test client.

3. Make the calendar accessible. For new client inquiries, you'll publish your public page link where folks reach out to you. For existing clients, share the link with them at your next session and prompt them to schedule their next appointment.

With these steps, you'll get the benefits of scheduling even without the payment features. And once you're ready, install the Stripe app and really flex your scheduling muscle!

The Only Proven Method to Increase Leads: Online Scheduling

I hope you see now that online scheduling is accessible to you and will save you time! Plus, it's VITAL for your business to use this better way! A contact form is a bare minimum, and as soon as is reasonable, let clients book themselves.

Recently I had an inquiring client leave me a comment that further reinforced my point. When booking, I ask them to fill out a brief form including the question "Is there anyone I can thank for sending you my way?" Their response to that question was "Your user friendly and easy process to book a consultation." (I know I said clients never tell you this, but never say never!)

Moral of the story: Make the process as easy as possible for clients. Your business will be more successful. And they might even thank you for it!

Let's talk about your offerings and how your income-generation methods relate to each other. People just starting a business often struggle to identify an offering that's likely to be successful. They often also struggle to balance a day job or part-time work with their fledgling business. Later on in business, we might get stuck in an offer that we want to branch out from. Though others might find their offers have spiraled out and need to be condensed. Regardless of where you find yourself, all your income generation efforts relate to one another. You get to make structural decisions about how they relate. These decisions are full of questions like "Do I tell my day job about my side hustle? What about the reverse?" and "How do I tell people I do both A and B?".

Regardless of what you do, an ideal constellation of activities is perfectly suited to you. Your interests and endeavors are all part of a singular whole. (That whole is YOU!) There needs to be balance among those parts, for your health and the health of your business. Throughout the rest of this article, we're going to talk about two things. First generating ideas for offerings. Then the characteristics that allow you to prioritize those offering ideas.

Ideas for Offerings

I notice folks have one of two tendencies: some have a lot of irons on the fire and it's hard to keep up with them all. At the other extreme folks stagnate on a single offering or very few revenue sources that limits their ability to thrive. So when it comes to generating ideas for offerings, you might tend towards having too few ideas or too many.

For those that have singular or minimal business offerings, this is your opportunity to dream about some expansion! Diversifying offerings increases resilience. While you may have launched with one or two offerings, that might need to change. Brainstorm how to diversify your offerings and weave in passive income sources. Think about different levels of the thing you do. For example, a baker might bake and sell pastries to the masses. Or bake highly niche coveted items for select clients only. Or write a cookbook and sell that. Or teach cooking classes to home chefs. Or consult with professional chefs to refine their skills. Or consult with other teaching chefs to be better teachers. All of these leverage the baker's skills but are very different offerings.

Similarly, think about what your ideal client might want at different levels of readiness. Someone who might want your services one day, might be excited to follow you on social media. Someone who wants individualized attention might try a freebie before committing to a paid service. If someone has already bought a service from you, what else might they need? Could they go deeper if you offered what you do in a different format?

For those of you already with a billion ideas, I bet you just generated more over the last two paragraphs! Ideas are great, and you can't do all of them all at once from the beginning. Even more importantly, we need to identify which ideas appeal to a common Ideal Client. This means that the client who wants Offering A would likely also benefit from Offering B. For example, the person who purchases your cookbook would enjoy social media posts of single recipes. Or, members of your group training would also gain value from similar information delivered in a retreat format. Your marketing will be more streamlined if all the offerings appeal to essentially the same Ideal Client.

The reverse - a client who wants Offering B would also benefit from Offering A - might or might not be true. There maybe a developmental element where Offering A would be irrelevant to folks already partaking in Offering B. For example, a landscape designer may have two offerings: a design only or a design and install. Once the customer has a design and install for their yard, they're unlikely to need another design and install, much less just a design. We're less worried about if this is the case. We're trying to ensure your offerings all appeal to the same Ideal Client, even if their budget is different or they can only choose one offering.

To start we need to focus on a single idea, keeping in mind that there will always be room to expand. Even once we're expanding, we need to identify which one to do next. And once we've got a bunch of offerings, we need clarity on what to promote and when so that clients don't get overwhelmed with too many options.

Analyzing Your Offerings

You've got ideas for offerings, but how do you know what's a good one? Frankly, they're all probably good ideas. What you actually need to know is where to start or what offering to try next. Businesses are successful most quickly if they focus on an offering that balances four key factors: the owner/operator's time, the level of individualized attention, the price, and the number of clients served.

Your Time

A key factor of any offering is the amount of your time that goes into delivering the service. At one end of the spectrum are things like custom presentations. These take many hours to prepare and involve real-time interaction with a single client at a time. Less time intensive are direct services. Things like meeting one-on-one with a client that requires minimal preparation. Even less time-intensive are things that don't require your immediate participation or have an economy of scale. For example, synchronous group classes or asynchronous consultation via text or email. The epitome of minimal time is when you can develop something once, but it can be provided to infinite clients without your intervention. Asynchronous online classes are a great example of this.

Personalized

The second key factor in an offering is the level of personalization and individual attention a client receives. At the highest level of personalization, the client gets a lot of direct interaction and tailored customization. Other offerings provide only some personalization. The client would get a mix of pre-prepared materials and customized service. Still, other offerings might provide only minimal customization. This could be achieved with a larger portion of pre-existing materials. Alternatively, a service offered in a group setting limits the customization available to the participants. Finally, it's possible to have no customization at all. In this case, the client receives no personal attention at all. Their experience is self-guided. Their only connection to you is through pre-recorded videos or written content you created beforehand.

Price

The third key factor is how much the client pays for a given offering. At the highest end is a big-ticket item that not everyone can afford or will decide to invest in. This is your most wildly priced offering! Just below that are robustly priced services; those that are still substantial but possibly more accessible. Think of a high-end product: quality, but not affordable to everyone.

You'll also want at least one moderately priced offering. Something more affordable and accessible to a wider audience. It shouldn't be "dirt cheap" but it's an attainable price for the average potential client. Having a minimally priced offering means there's an option for folks who aren't ready for anything more than a low-risk investment. A minimally priced offering is NOT your "discount" version of another offering! It's something that delivers a commensurate amount of value, but if they don't like what they receive they'll be unlikely to be angry.

Don't overlook the "price" of an email address or social media follower. At this price level, the client pays nothing monetarily but provides an avenue for ongoing communication. You can even include truly free things in your understanding of your offerings. A truly free offering allows the client to access your awesomeness without anything in exchange. These are things like public blog articles or social media posts that reach out beyond followers.

Client Capacity

This final factor asks you to consider how many clients can take part in an offering at the same time. This isn't how many you actually have enrolled. Rather, it's how many you could (or would want to) have enrolled at the same time. Consider the offering of an intensive year-long program where you hold the clients' hands every step of the way. You can't take on more than a few clients for that offering. But that might be too intense for some. You could diversify into an offering that shines best with a few dozen clients involved at any one time.

You can further diversify by looking at bulk or systematized offerings. These would allow us to take on many more clients at the same time. We still need to understand the limiting factors. For example, group coaching serves more than one client per hour. But the service delivered to a group of 100 people or a group of 12 people is likely to be very different. You might also have preferences in how you spend your time. For a coach who prefers providing one-on-one coaching over group coaching. They'll be most happy and productive if they limit the number of clients who can avail themselves of the group coaching offering.

Truly bulk offerings are not dependent on your time and really can serve an unlimited number of clients. This typically means the offering runs through an automated digital system. Things like asynchronous online courses.

Pyramid of Offerings

Translate those four factors into a numerical score. Then put them in order based on that score. This would be a stellar guide! Both for where to start your business as well as goals for where to go from there. Wish that existed? I got you boo! I've made a free little quiz thing that scores and ranks your offerings.

A brand new business starts at an offering in the mid-range. As the business evolves, it expands to higher-scoring offerings. The ones that are minimally time-intensive and able to serve many people. These are the offerings that introduce people to your business and open the door for them to participate in your other offerings. Once there's capacity, the business can open up offerings that are the lowest scoring. These are more time-intensive, limited access, and are highly customized. These are ways to go deeper with existing clients or invitations to participate in new ways.

I love a good visual, so I think of these scores as organized into a pyramid. The ground your business stands on is your free content on social media, newsletters, freebies, etc. From there your offerings stack. At the top of the pyramid, are your exclusive and highly customized offerings. In fact, I made a free download of a pyramid graphic just for this!

This takes the shape of a pyramid because the long-term goal is to have the number of people involved match the pyramid shape. E.g. the most number of people are involved at the bottom, and the number decreases at each level until there are the fewest at the top. That being said, most business success is found by starting at the middle level and gaining the most people there before expanding to other offerings. Once your participant count is shaped like a pyramid, your revenue will be doing the opposite. Your revenue from each level forms an upside-down pyramid. The top level brings in the most money and the bottom level brings in the least.

The levels of the pyramid offer a guide for how the offerings relate to one another. Not just what offering to expand to, but how do we streamline the offerings we're presenting to our followers and existing clients? If you focus on offering the members of one pyramid level only the next level higher, then this invites them to connect with you further while not overwhelming them with too many options. In fact, the public may not be aware of every level!

We design for this upward flow in how the levels relate to one another, but individuals can become clients by engaging in any level of the pyramid. This doesn't limit your earning potential. Rather, you can engineer consistency in your business by gaining participants towards the bottom of the pyramid. These are folks who might get more involved later on.

Design Your Offerings

I hope this has helped you understand your offering(s) in a new way. Take this information and design your offerings to have a strong and healthy relationship with each other. Remember, there's no such thing as a bad offering, it's just a matter of where to start and how you pitch it!

Don’t forget to download my free PDF and Spreadsheet that helps you organize your offerings into a pyramid!

There comes a time in most business's life when they have to raise prices. Over time inflation and changes to the cost of living tend to increase. If you've been in business long enough, these changes reduce the buying power of your revenue. This in turn will drive the need to raise your rates. So congratulations on being in business so long! Alternatively, maybe you underestimated your value when you started your business. Now the writing's on the wall that you need to raise your rates. Regardless of your story, I'm going to give you the solution. I'm going to talk about the three big questions you have when it comes to raising your rates: How do you know it's time? How much to increase? and How to tell people?

How Do You Know It's Time?

The easiest way to know if it's time to raise your rates is to ask that question on a regular cadence. Once a year is about the most frequent which makes sense. It can be easily grouped with other annual financial habits like paying taxes. But it doesn't have to be annually. For my business, I've fallen into an every-five-year cadence.

When this time marker comes by, assess. Look at the amount of time/energy you're devoting to work. Compare this to your income expectations and personal financial goals. If you're working your butt off and not bringing in the bacon, it's definitely time to raise your rates! Having more clients than you can work with is another good indicator you could raise your rates. At the bare minimum do a calculation for changes in inflation or cost of living increase. This ensures you're not accidentally giving yourself a pay cut as you keep your rate the same!

How Much to Increase?

We're going to start with that increase in cost of living. The government provides multiple stats to understand inflation. I find it easiest to tie this to the Social Security Administration's (SSA) Cost-Of-Living Adjustment (COLA) calculation. This is probably the most conservative number. If your city or region has outpaced the nation in some regard, there might be better numbers. For example, in the Consumer Price Index (CPI) for your area. Or just think of COLA as the starting point

In the COLA table, find the year of your last price increase. Add the COLA value for that year to each year through to the most recent year provided. I'll use myself as an example: I last raised my prices in 2019. The COLA for 2019 was 1.6. I'm writing this in 2024, so the values for the years since 2019 are 1.3, 5.9, 8.7, and 3.2. Combine these values and you get a COLA of 20.7%.

Once you have your COLA for the given time period, increase your current rate by that percentage. My standard rate is $150. I can multiply that by .207 and add that back into $150 or simply multiply it by 1.207. This results in a new price of $181.05.

Other Factors

The COLA calculation is only one data point about what a fair market rate might be. When you first set your price, you likely took into account what the market would bear. You probably talked to friends or colleagues to settle on an appropriate price. Time has passed and people's expectations have too. Also, during this time you've gained experience which ought to be more valuable.

Take a moment to do some super basic market research. Ask a couple of colleagues about their rates. Or do what I did and check their websites for their rates. Or ask Google "How much does [your industry] cost in [current year]." The search results will be full of companies trying to provide services to people like you. Take their free perspectives, and leave their services. The answers you get from friends or Google will vary widely. They are data points that you get to make sense of.

But Think of the Children... er... Clients!

When I did my market research I found a Bark article that put coaching at $90 per session. Big scoff! I also found a Paperbell article with a free download that shared anonymized rates from other coaches. There was no guarantee of the veracity of that report, and it was far from a significant sample size. Plus, there’s no evidence that the disclosed rates resulted in a successful business. But that report put the price at $200-$500. But now I've got some data points: $90, $200-$500, and (from my COLA calculation) $181.05. Now how do I convert this into a new price?

I notice at this juncture business owners often get concerned if their clients can afford it. So here's a reminder: If they cannot afford you, by definition they are not your ideal client. For your current clients, we can soften the transition and I'll get into that in the next section.

More important than what your clients think of the number, is if you can work with it easily! $181.05 is a stupid number that I'll never remember. Even worse, my group rate and sliding scale are half my regular rate. Half that, $90.525, is an even more impossible number. Clients also often want to know the total rate for a month or the initial 3-month commitment. I cannot multiply $181.05 in my head. There's no way I'm using that number.

Maybe you're better at math or never need to verbally quote a price. Regardless, pick a number that works for YOU. Round numbers are often popular, or it could be a number you've always been fond of. Remember how you have to communicate your price and make sure the price you're choosing will work for you. It might not feel as comfortable as your old price, but growth is uncomfortable. So lean into that.

How to tell people?

You've decided to raise your rates and you know how much. Now comes the hard part: you have to tell people the new rates. This isn't technically challenging, but it does seem to bring up a lot of feelings. Some folks might worry that their clients might flee due to the price increase. Others might be concerned that their current clients could experience resentment. Some worry that new clients will feel they're charging an indefensiblely large amount. Others worry the new price doesn't reflect how much they enjoy working with their clients.

Whatever you're feeling, start by grounding yourself. You've thought this through. You know that in order to respect yourself, you need to increase your rate. Your clients do not get the best you unless you're taking care of yourself. It's rare to get paid more than you're asking, so it's important to ask for a sufficient amount. You are ok. You will continue to be ok. This is a good change!

You are going to make this change in a way that honors everyone involved. That means it honors you AND the relationships you have with your clients. To do this you're going to clearly communicate this change. You'll give people time to understand and shift their financial expectations accordingly. What that looks like could be many different things. You could provide advanced notice of a week, a month, 3 months, or longer. Perhaps you start by taking on new clients at the higher rate and bump up existing clients later. Or you could offer existing clients to stay at their legacy rate for a time or for forever.

You're going to be clear that this change has nothing to do with the work you're doing with that one client. That you enjoy working with them and want to see that continue. You're going to set an expectation of how soon the next rate evaluation will come. e.g. "I make this change only once per year" or "these prices will remain for a minimum of 2 years."

Not sure how to do all those things in one email? I've made a template you can download for free to get you off the ground!

Now What?

See, raising your rates isn't actually that hard! You've read this whole article and answered the three big questions. You know if you need to raise them, how much to raise them, and how to do so. Now all you need to do is take action! Here's your 4 step super easy action plan:

1. how much - your "final answer" on your new price

2. when - pick a date the new rates take effect

3. template - edit the email template to suit your business

4. GO! - email current clients and update your systems with the new rate

At the start of this article, you weren't sure if you needed to raise your rates. And if you did, you weren't confident with how to make this decision. Now you understand all the factors and have a clear path towards increased rates. (Or clarity that you don't need to raise them!) Take action now and bookmark this article for all your future rate increase needs!

We've all experienced the allure of convenient marketplace sites. Everything from friends suggesting we list our crafts on Etsy, to listing a spare room as an AirBnB, to earning extra cash driving for Uber. We've all received the message that we could make easy money on sites like these.

As business owners, you might have considered listing your services on Upwork, Fiverr, or Angi (formerly Angie's List). Or maybe you've considered one of the many other sites/apps trying to provide a marketplace as a service. Over my ten years in business, I've had many clients see these sites as a source of easy business. (Including my own early dalliance with the Rover dog care app.) I've also seen how rarely that comes to fruition. Today we'll dive into how I see these types of sites. Be warned, you might find yourself rethinking your assumptions about competition in business!

Assumptions About Competition

We're told competition in the marketplace results in better products and lower prices. When the alternative to competition is a monopoly, this is definitely true. For those of us self-employed, we provide unique boutique services. We're in no danger of becoming a monopoly. Without the risk of a monopoly, what’s the value of competition?

Even corporations don't need to doggedly pursue competition. For example, take the book: Blue Ocean Strategy. The authors advocate for large corporations to shrug off the notion of high-competition sectors (red oceans). They recommend innovating untapped sectors (blue oceans) where competition is low or non-existent. This is a provocative suggestion for corporations, but a vital one for self-employed businesses! We cannot compete with the big dogs, so don't. You're never going to be the fastest or the cheapest or the one available at all hours of day or night. Leave those solutions for corporations. For solo ventures, you've got the most valuable differentiator: YOU.

Furthermore, you don't really need to compete with other little guys. Again, you're you, and they are them. You might be providing the same service, but is it done precisely the way you do it? Customers can only get that from you.

Put this all together and maybe you don't need to be in competition. In fact, maybe you should not seek competition!

Low-Hanging Fruit vs Competition

Let's return to those marketplace websites and apps. Yes, marketplaces are great because they advertise and attract many clients, but that's not the only factor. There are real weaknesses and threats to your business built into those marketplaces. These include elements of direct competition, unique nuances to the platform, and a system that operates with its own goals. I'm going to dig into these and you'll see why you shouldn't set your eyes on those as the solution to all your problems.

In Your Face Competition

Every marketplace serves to attract customers. This means they also attract everyone else who provides a similar service. This gives the other businesses the opportunity to see what you're doing and copy it. Could they do this on the wider internet? Yes. But it sure is easy when you're in the same marketplace! Copying isn't as big a concern as the fact that the customer can see you and your competitors side by side. This comparison shopping often boils down to price. Many customers would prefer the best quality or the provider who's the best fit for them. But these are harder to quantify than price. With all the options in the marketplace, they have to narrow it down somehow. And price is an easy way to do this.

This incentivizes businesses to race to the lowest price. The marketplace and consumers don't care if it’s sustainable. This also lends itself to a common getting-started strategy for these marketplaces. Businesses start by pricing their service absurdly low (think $1.) This attracts the first few clients and gets good in-system reviews and a track record. Once established, you can raise your rates. Clients who are comfortable with bargain basement pricing are often a headache. Not to mention, all that work you did for $1? You won't get a direct return on that. It's a sunk cost that doesn't exist outside these marketplaces.

Unique Rules to the Game

Each marketplace sets its own system of how to be most attractive to the consumer. They decide what text boxes and images you're able to use and where those go on your listing page. More importantly, they decide how you show up in search results. The analog in real-world marketplaces would be a farmer's market with one point of entry. This would mean that the prime location is the booths closest to the entrance. Booths at the front will do the most business because folks don't have to look too hard or walk too far. People are likely to leave without scouring the whole marketplace, so you want to be at the front. In a digital context, being at the top of search results is like being near the entrance of the farmer's market. If you're in the back/bottom of the search results few folks are going to make it to your listing.

There's always a way to get to the top of a search result. And the method to do so is different for each searching system. For example, if you search the same term on Google and within Etsy you will get different results. Here’s what I got when I searched for “attractive notebooks” on each site:

It's an investment of your time and energy to learn how to get to the top of any search system. This limits the amount of marketplaces you can realistically put effort into. Navigating these systems robs your time and energy from other priorities, like how to serve your clients the best. It also means you're sinking your promotional energy into a Sisyphean project. (I’ll get more into that below!) There are more intrinsically fulfilling promotional options out there.

Every marketplace makes it easy to craft your listing. How to get to the top of search results they make much more opaque since they'd like you to pay to be at the top. They make a significant amount of their money from advertising. There are ways to organically (e.g. without paying for ads) show up higher in search results. For every marketplace, there are plenty of 3rd parties who blog tips and tricks. They'll tell you about how they've gotten to the top of search results. These blogs can be a rich resource for your learning. And your mileage will vary. A lot of the most successful folks got in early and had success when they were one of few in their field on the platform. With more vendors and more people using their advice, it's likely to be less effective.

A Shakey Foundation

Let's say you figured out their search engine and get at the top of the results. You manage to cut through the comparison shopping enough to make sales. Things are going well! ...what happens when the marketplace changes its terms or its search algorithm?

Your business is dependent on how the marketplace runs its business. A business can't operate without being dependent on others. Even other companies. For example, every business is similarly dependent on its website platform. Squarespace hosts my website, so if they raise their rates, I have a choice. I can accept those rates or I can switch to a new website platform. I don't want to pay the increased fee. I don't want to recreate my website with a new company. But I'm going to have to do one of these due to a decision I didn't make.

Similar to switching websites, you could switch to a different marketplace. But websites are different than marketplaces. The value in the marketplace is that it brings in many customers who are looking for your service. It's possible that you could find a marketplace that better serves your niche. But you also might not. Your customers might stay with the marketplace. The only protection against this is to cultivate your own following. And this is what you'd be doing if you didn't pursue a marketplace.

There are also indirect or invisible changes. Marketplaces make frequent changes to their search algorithm. All search engines try to return better results. The revisions are reasonable in attempting to achieve this goal. But how are we defining "better" results?

General search engines like Google want to get the searcher the best answer they can. And, if possible, get a paid click if they can. Google doesn't always know if your click resulted in a purchase, and they don't really care. They got the ad revenue and returned a result that landed a successful click. Their mission is accomplished.

Search engines in marketplaces seek to drive the most revenue for the marketplace. Marketplaces make money when you sell, but that's not the main or major source of revenue. Many have a monthly service fee they charge you, and they make money off of ads. Getting the consumer to click on an ad and buy makes them the most money. If the consumer clicks on an organic listing, you don't pay much, and the marketplace doesn't get paid much. All the transactions have hard data behind them since they all happen within their marketplace. The marketplace sees what's working, what's not, and what makes them the most money for them. They have better data than they even show you. The marketplace doesn't exist to help you. In fact, they have no real motivation to show organic listings. But they do because it matters to how they're perceived by the consumer. At the end of the day, you're dependent on the marketplace to bring you clients and the marketplace does not care about it. This is far from a fruitful relationship in my book!

What's Competition Good For?

Marketplaces are just one place where competition runs high. Business is often conceived of as adversarial, as if competition must occur. While you can approach it that way, I find it more fruitful if viewed as community building. When small businesses band together towards a common goal we can succeed. We can provide better services and a better society than the status quo. Large corporations aren’t designed or incentivized to do this. So free yourself from competition and dependency on large corporations. Join us in creating a more liberated society!

My business' tenth anniversary is approximately now. I'm marking June 1st, 2014 as my "official" start date. "Official" is in quotes because I'd secured a business license and domain name a few months prior. June 1st was the first day I was both free of my full-time job and had my own office. This is how businesses get started. It's a million little baby steps. And then you get to year 10 and you're surprised at how much time has passed.

I work primarily with folks who are just getting started in business. These steps of "what comes first when launching a business?" might be front and center in your mind right now, or might be recent history for you. For my business, they now reside in a proverbial scrapbook. The statistical odds that you're afraid of are no longer relevant to my business. Don't get me wrong, 10 years in doesn't mean I'm free of challenges, it's just that they've changed. The challenges of a mature business are different than those of a beginning business.

Also, those statistics we've been afraid of... they don't even apply to us! I'm referring to the statistic that 20% of businesses fail in the first year, and half fail within 5 years. These statistics come from the Bureau of Labor Statistics' Quarterly Census of Employment and Wages (QCEW.) This defines a business' birth date by employment which excludes all self-employed workers! (And there are over 9 million of us!) To the best that I can tell, we're not well-studied. Regardless, we need to stop letting this statistic hold us back!

From day one I had faith that I'd reach this point. I knew I'd beat the odds not because I was confident in my future success. Rather, I knew I was doggedly determined and would keep at this until I got to where I was going. For the most part, the journey was about what I expected. Along the way, I've gotten the inside perspective on over 160 businesses. Not all of those are on track to join me at the 10-year mark, but all of them have gained something by trying.

It's clear to me now the value that comes from trying to start a business even if you end up going back to having a "normal" job. Your relationship with work is forever changed for the better by self-employment. It's as if the process of shaking those golden handcuffs results in them never fitting again. Yes, you can choose employment again, but your relationship to it will be improved. Here are three facets of this that I've seen over and over again during the last 10 years.

1. Hashtag-no-regrets

If you think your life would be better if self-employed then you gotta try it. The alternative is to reach old age and never know. Is self-employment worth it? Judge by the rest of the items in this list. But whatever you do, don't wait. There's no right time to take that leap. If now looks kinda ok, then do it.

2. The Magic You May Find

It was never a life goal of mine to start a business; it was born out of necessity. Now that I've done it, I don't know if I could ever work in a traditional office ever again. I didn't even acknowledge the effort I put in at the office because it was necessary. Work requires that you arrive at the office and stay there for specific windows of time. You've got to commute there and deal with the traffic. You've got to navigate social relations with coworkers - you didn't specifically choose to work with these people! And you've got to work with your superiors to convince them to prioritize the projects you want to work on. But now I can avoid most of those energy sinks. It's utterly magical to discover that, while I can do all those things, I enjoy so much more to not have to do them!

Who knows what you'll find out if you try self-employment? Maybe you'll love it for completely different reasons. Maybe you'll hate it, or just find the perks to be very "meh." Regardless, you'll never know unless you try. And you can't know until you try.

3. The Lessons that Persist

The most relentless lesson of self-employment is your understanding of your own value. All business owners have tripped over themselves at one point or another. This stems from a lack of valuing themselves, their employees, or their energy. Your understanding of your value must be positive and reflect your fee. You project that value every day in a million little ways. It's in every social media post, every email, and every client interaction (even the positive ones!) All of these you don't have to bother with when you're employed. It is hands down the most consistent challenge for my clients.

It's also the source of the most lasting, most valuable lesson. Over the years I've worked with so many folks embarking on launching their self-employed business. For a few of them, an attractive job opportunity emerges out of nowhere. It's a conundrum: to stick with self-employment or take the job.

But here's what happens when you have an alternative to employed work: you're critical of that opportunity. It's not a question of if you can get it, it's a question of if you really want it. Your understanding of your value has shifted. You're in a powerful negotiating position. There's also a clarity that comes. The red flags you may have downplayed into only yellows are a lot more clear. You're clear within yourself that you're not afraid of hard work (cause self-employment is plenty hard!) It's only a question of if this is the work you really want to take on. And you're not dependent on it to make your livelihood because self-employment is an option.

I've had clients take the job and not take the job. Regardless, I find they have a great deal of peace with that decision. And those that take the job have a better position than they did before self-employment.

Do it! Try it!

As I reflect on all the lessons I (and my clients) have learned it's all really quite clear. Go be self-employed. Try it out. What's the worst that could happen? ...you could go get a job you actually like. I'm preaching to the choir for the most part. But if you're still sitting on the fence, consider this your sign to take action. It would be the best 10-year business birthday present you could give me! ;-)

In business, one way to get ahead of change is to monitor market trends. When your business is your livelihood it might seem vital to anticipate change. ...Or is that just the anxiety talking? Let's unpack this and find out.

What Are the Trends in Your Market?

This is an immense question. Larger companies employ teams of analysts to keep abreast of changing market trends. Saas products that offer similar information cost hundreds of dollars per month. Both these solutions are well outside the range of feasible for self-employed businesses. So what are we little guys supposed to do?

Micro and Macro Market Trends

First, let's address scope. For large businesses staying in front of trends can make or break their business. Let's say their dominant market position means one-eighth of Americans buy their product. That means they have over 41 million customers. Let's say every customer nets the business $1 and trends shift so they lose 1% of those customers. That means the business has taken a $410,000 loss. That's the cumulative salary of many people! Large businesses must anticipate trends because the ripple effect is large. A slight misjudgment impacts the lives of many people.

But this is not the scope you and I operate at. We're epically small businesses. Our businesses need less than 100 clients each. Gaining and losing clients is built into our business model and the natural ebb and flow we come to expect. Losing a single client is not evidence of a global trend. The reverse is also true: a global change doesn't mean clients will leave your business. We are operating on just too small a scale for it to work like that.

As self-employed businesses, we need to think about market analysis on our scale. We're not the boat on the ocean that needs to know the weather forecast. We're a wee fish in the water, removed from the weather patterns. Yes, if the storm gets rough enough, it might affect us, but not at all the way the storm affects the boat. We can spend some energy staying aware of large-scale trends. Most of our time should focus on our microcosm - the community surrounding our business. The community made up of clients (past and present) and colleagues.

Step 1: Understand Your Customers

Large companies hold focus groups and conduct research to understand their customers. This is necessary at their scale. You meet with your clients regularly. You hear from the horse's mouth what's going on for them. Separate research is unnecessary when you're the hub of communication with your clients. When it comes to market analysis, you're seeking to understand what motivated your client. What inspired them to seek out your business? Were there global, regional, or local contexts that influenced their finding your business? Probably. There were also a bunch of deeply personal influences.

Let's take my business as a case study. Many of my clients have always wanted to start a business. Others see starting a business as the one surefire way to escape toxic work environments. These things are personal to them and not at all influenced by recent trends.

Where larger trends come into play is with the timing of it. If the economy seems unpredictable many find it an inopportune time to take a risk and launch a business. Others see the same trend as a sign their workplace isn't going to get better. And if it's only going to get worse, they might as well jump ship now while they can! My clients run the gamut of extremes in these cases. I work with folks laid off from their day job who take it as a sign to break out of the 9 to 5. I also work with folks whose life circumstances have brought them financial stability. These clients now feel safe enough to finally do their own thing. Prosperity or hardship are both predictive of a swell of new clients.

Knowing these things about my clients, I watch national trends with calm aplomb. If the unemployment rate increases, that could be good for my business. If more lucrative jobs move to my area, that could also be good for my business. I hypothesize how those trends might show up in my clients, and then see what clients actually say.

Ask Yourself:

• What reasons inspire someone to seek out your business? Consider global, regional, or local influences, but also personal influences.

• What evidence indicates changes in these influences? Is your ideal client motivated by news headlines, economic statistics, or trending topics on social media? Or what about life milestones, holidays, or a change in the weather?

• Do I need to change my marketing or business strategy, or am I on the right track? Noticing a change doesn't mean you have to change.

Step 2: Seek Trend Coattails

Being a small-fry business means you don't need to jump on every market trend and you don't need to be the first to know. Make your changes slow and deliberate. Notice what larger organizations are doing in your market. You don't have to try to match them, but it can help sales to be able to explain why you're better than that new fad. Let the big companies chase the fads and adopt them yourself only if you want to or if you see it being a lasting thing.

Investigate:

• Who are the largest companies in your market or adjacent markets? Can you sign up for their newsletters or follow their social media channels?

• Who are the influencers in your market? (On social media or traditional media.)

• What industry publications or substacks exist? Can they help you stay informed about relevant trends?

• Would search engine data help? Play around with trends.google.com to find trends in search engine queries over time.

Step 3: Listen To People Not Headlines

The microclimate around your small business is much more important than national trends. Your microclimate includes your past and current clients, colleagues, and referral partners. These are the people you want to be listening to. And to listen, you've got to talk with them.

When you talk to your clients notice what's on their minds. Can you draw connections between their concerns and larger trends you're aware of? One client's preoccupation is not statistically significant. But micro businesses don't operate in the world of statistically significant. It could be significant for your business. Or it could not. Take into account if clients with these concerns are likely to be your ideal clients.

For example, pretend you're running a local brick-and-mortar business in the early 2010s. You learn of Groupon. You think you need to jump on that bandwagon! But then you check in with your existing clients. They tell you that they value your business. They are planning to keep frequenting your business regardless of a coupon. Groupon caters to bargain hunters. Bargain hunters are not good long-term clients for small businesses. The Groupon trend is one you can let pass you by.

Also, check in with colleagues. What trends are they seeing in their own business and with their own clients? Colleagues can be a far better source of trends than national or even local news headlines. Focus on the colleagues who share your values and a similar market. Remember, it's all about the community surrounding you. Community is defined not just by geography but also by interests and values!

A Few Questions to Ask Clients:

• Why is now the time you chose to reach out to me?

• What else is going on for you?

• How is [recent news event] impacting your world?

A Few Questions to Ask Colleagues:

• What trends are you noticing?

• How has your flow of clients been recently? What do you attribute that to?

• I'm seeing [this] trend right now, is that congruent with your experience?

Trend Action Plan

You've taken all the previous things into account. But there's something to this trend. Your competitors are bringing it into what they do. The trend resonates with what you know about your customers. The opportunity outweighs the risks for your business. What does it look like to move forward? Scrap everything and start over from scratch? Woah, no! You're going to dip your toe in. Start with trying to spin it.

Spin It

In business, the lowest risk change you can make is to shift your messaging. Start with a series of social media posts, a new page on your website, or a short-term ad campaign. Choose a marketing method that's worked for you in the past. Shift the message to incorporate this new trend. Then see what happens. Avoid big changes to your business offerings or model until you have to.

Try It

Some changes have to be more than a marketing spin. Sometimes you've got to test drive a whole new offering. Again, we're looking for the smallest possible change. Don't get rid of your current offerings. Craft and market your new offering in addition to current offerings. Let market demand navigate the shift away from an out-of-date offering. Only after a shift in offerings and marketing takes hold, do you make significant changes. The last changes would be to brand identity or business model.

Ready for Change

Navigating the ever-changing landscape of business trends requires a balanced approach. The ideal approach considers both the macro and micro perspectives. Self-employed individuals operate within a more intimate sphere than large businesses. Direct client interactions and community engagement play pivotal roles for self-employed businesses. You can discern relevant trends from your customer base, and industry influencers. This knowledge allows you to make decisions about when and how to adapt your strategies. Rather than hastily chasing every fleeting trend, you can explore opportunities. By testing new approaches, and pivoting gradually, you ensure alignment with your values. This is how you can embrace the inevitability of change and harness its potential. While also shaping the future of your business with confidence and purpose.

It's this time of year that I find myself wading into the icky sea that is our tax code. I'm in no way an expert at taxes, but every year I learn a smidge more. And with every smidge of learning I stop and go "wow, capitalism is f'ed up." So today I bring you my latest installment. Please do not construe this as tax advice; this is for educational purposes only. Your situation may be different so consult with your tax professional.

The fundamental fact I'm diving into today is that if your labor makes money, it's taxed through the nose. But, if your money makes money, it's taxed more mildly. Taxes do serve a function, yet billionaires often get $0 tax bills which is pretty unfair. Our tax code benefits the ones who wrote it: old white guys. I'm a huge proponent of working collectively to change our laws. And in the meantime, if we understand how it works we can leverage it to our own benefit to the extent that we're able.

When Labor Makes Money

Everyone who's ever been employed is familiar with the taxes applied to labor. In employed work, you know that your salary and your take-home pay are two different things. The gap between these consistently includes payroll taxes and withholding for income taxes. It can also include your contribution to any benefits provided by your employer, if applicable. You can count on a steady paycheck that is 20% less than what your employment contract states.

In self-employment, there is a similar gap with two key differences. First of all, those taxes, bennies, and withholdings are not taken out with each paycheck. (At least until you elect to be an S-corp.) The closest you come to this is making quarterly prepayments. But sending Uncle Sam thousands of dollars every few months feels bigger and harder to keep track of. Also, it's proportional to the amount you paid in taxes last year. This means the year after a really good year might find you scrambling to make those prepayments. (Even though you'll likely get a refund come tax time!) There are ways to mitigate these challenges, but it'll always be a lot less consistent.

The second difference is that you'll be responsible for covering employer taxes. In employed work, the employer pays 7.5% of payroll tax and the worker also pays 7.5%. In self-employment, there is no payroll, so you're subject to self-employment tax. This is typically quoted as a 15% tax. But this is only 7.5% more than the payroll tax you've been paying with each of your paychecks. When employed you pay half and your employer pays half. Now that you're self-employed you pay both halves. That gap between "salary" and "take-home" is a bit wider. But this isn't what leads to the biggest impact.

Earning Your Whole Salary

The bigger change is that you have to work to secure your whole salary. That means you can't target that take-home number. Your goal needs to be that whole, before-tax salary. Oh, and, you've got to earn the business' overhead too. So, actually, it's more than your salary. Below is a graphic representation of this. I also worked up this free spreadsheet to do your math for you!

Most of us are aware that there are overhead expenses related to operating a business. Conceptually this is pretty straightforward. As I've described it so far it seems daunting. In practice, I notice folks vacillating between two extremes. On the one end are austerity measures. Business owners try to sharply minimize their overhead. It's as if every dollar brought in should be their take-home pay. On the other end of the spectrum, folks try to minimize how much gets taxed. They make everything a business expense or go on a spending spree. These reactions - daunting, restricting, and binging - are signs of overwhelm. To combat overwhelm we need clarity. What's the fundamental distinction between what's "your money" vs. "your business' money?"

Your money is the money that you live your life on. It's after all taxes and after business overhead. Your business' money is inclusive of your money, all taxes, and overhead. When employed your money is just your money. You can’t influence taxes, withholding, and benefits.

Self-employed people get to make choices on money-earning and taxation. You get control over how you make your "sausage." If you think of every dollar spent on taxes or overhead as your money, it's like seeing your flesh going into the sausage. It's reasonable to freak out at that! But it doesn't help you make the best sausage. If you can think of those dollars as business dollars it's a lot easier to be calm and strategic. This allows you to make decisions that best nourish you and your business.

So, how do we reinforce the delineation between your money and business money? First off: have dedicated bank accounts for your business! This is a must if you have an LLC but good practice all around. Have all your business revenue go into business accounts. Make sure all your business expenses come out of business accounts. Even credit cards need to be in your business's name and only business purchases go on them.

Secondly, count on not taking home every dollar you earn. If you charge your client $200 for something, it doesn't mean you pocket all $200 of that. You'll pocket closer to half of it, maybe two-thirds if you provide a service and run a tight ship. From the get-go plan on your take-home being about 50% - 60% of your business' revenue. Below is a simplified version of my previous graphic. In this representation, the three layers are condensed into two for simpler calculations.

The Concrete Solution

You've got the conceptual part down, now how do we put this into practice? A simple method is to have your revenue go into one business account and make purchases from a separate business account. This keeps your revenue and expenditures nice and tidy. On a regular schedule clean out your revenue-accumluating account. I like to call this payday. On this day you use your percentages to put your earnings to work. Typically that's 20% aside for taxes, 60% to your personal account, and the last 20% into the business account you make purchases from. This allows you to manage your personal funds in the same way you've been used to. Similarly, business decisions can be made with a glance at your business purchases account. All the while giving you the perspective you need to see business and personal expenses as separate.

Note that these percentages are not hard and fast rules. You'll want to shift those percentages to best serve your situation. Especially if you're at the very beginning and business revenue is more of a hope than a reality. As long as you're setting aside your effective tax rate, the remaining split can be whatever works best for you!

Once you've got consistent revenue, of course, it is wise to optimize how your business spends money. But you can go too far with this. That's why setting aside a set percentage can provide some clarity. For example, it illustrates that your credit card processing fee isn't a big deal. Yes, it's a consistent 2.5-3% of your gross revenue, but you have 17% more of your revenue dedicated to overhead. Or if your web platform stings each month because the monthly fee rivals your hourly rate. You might come to realize that's as little as 1% of your gross revenue. Your business can afford that.

You cannot starve your business into profitability! Every business needs to spend at least a little money in order to operate. In the second tab of my free spreadsheet, I made a math-saver for you! It will calculate how much to set aside based on how much you brought in for a given period.

When Money Makes Money

I want to come back around to when money makes money. Capitalism shines here. It was designed to help money make money, not labor make money. (Is it class warfare? ...not technically the topic of this article...) Getting beyond subsistence levels of money is what allows you to not pay the government as much in taxes. If you have some extra money make sure it's working for you. Invest it in some way that generates returns or at least in a high-yield savings account.

The traditional message for how to get the money that makes money is to save save save! But heaven knows I've never had this be successful personally. If your take-home pay is high enough this is a solid strategy. But this isn't the only strategy available to you when self-employed. Self-employment gives you access to some money-making-money features. In reality, it's all the same work you've been doing but some of it is taxed differently. You can think of it as you're taxed less for the work you do managing the anxiety caused by running a business.

To get access to these money-making-money features your business needs to be grown-up. E.g. when you're comfortably, consistently making your whole living from your business. When you hit that point talk to your tax professional about electing to file your taxes as an S-corp. This election allows you to pay payroll tax on only some of your earnings. There are some expenses to it so you have to be bringing in enough for it to matter. For example, you'll use a payroll system so that you-the-worker and you-the-business-owner can each pay your 7.5% share of payroll tax. A fun mind-puzzle but you'll also have to pay the payroll company to run it. If you're earning enough, you can save in taxes more than the added expenses. Consult your tax professional to make sure it's the best choice for your unique situation.

Are Taxes More Painful in Self-Employment?

Sure, taxes are a different experience when you're self-employed. But it doesn't have to be more painful and you don't have to pay the IRS that much more. However, it is vital to plan ahead. You'll need to set business revenue goals that will take you where you want to go. Then, when your business is up and running, you'll be able to reap the rewards of being a capitalist instead of a laborer. (Giving you more resources to reimagine the whole system!)