Hey, it's me, Teresa! If we haven't met yet, you can read more about me here on the site.
In this Episode~
- Mistakes she (and many others) make when looking at the money coming into (and going out of) their business.
- The difference between profit & revenue
- 3 ways to increase your revenue
- A free guide to find and stop the leaks in your business
- An upcoming webinar, Behind the Scenes of a Profitable Business
Click to Tweet
On January 19th, I'm going to pull back the curtain and show you what it really takes to get from where you are to where you want to be during my free webinar, Behind the Scenes of a Profitable Online Business. ~@TeresaCleveland Click To Tweet
A lot of new and even veteran business owners fall into the trap of charging too little for our products and services. We don't even realize that at first because we're not taking the expenses into account. ~@TeresaCleveland Click To Tweet
You've put a lot of time, energy, resources and heart into your business. I want you to get the greatest return on everything that you've put into it and I know a good place to start. ~@TeresaCleveland Click To Tweet
Do you feel like what you're making in your business equals all the time and effort that you're putting into it? Let's figure out how much you're really making.
It's time for the Becoming a Profitable CEO podcast and it's all about providing you with the tools to succeed on this ever-evolving business-building journey. My mission is to make sure you know you are not alone, that it is possible and that you, yes YOU, CAN do this. You matter, the world is a better place for having you in it, and your voice is needed!
I’m Teresa Cleveland and I believe we can all make a difference and that having a successful online business is one of the best, most effective ways to do that.
Let's get to it!
Hey, how are you doing? Here we are at week three of 2021. How's it going? Let's just take care of the check-in. Are you doing everything that you need to be doing to help support your goals? We're coming up on the end of month one, and I trust that you're doing all the things necessary to support your goals.
If you're running into any trouble or you want to chat about it, you can reach out, send me a message, find me on Facebook. You can jump into the group and send me a DM or a message. And I'm happy to talk through it with you. A lot of times as we're setting our goals, it's not until we actually start implementing the things that need to happen to support those goals that we run into a wall or a few things that you're just like, oh, wow, I didn't think about that.
How am I supposed to get past this or what am I supposed to do next? Where do I find help for this? I'm always happy to refer you to friends or colleagues. If I can't help you or maybe there's a resource that I know about, that would be just the thing you're looking for. So feel free to reach out. I hope you're just remembering to check in each week when I come on the podcast and do these check ins trust and believe I'm doing them here in my office as well for me.
All right, then. Well, today, I want to ask you a question. How much money are you making, really? And I just want to break that down a little bit. What I'm really asking is how much of that is profit? And let me just side note, this is based on the way that many people look at their business finances, those who have not yet implemented the teachings in Profit First and those that are coming into business, I think this is a natural way where we start out. I want to look at profit versus revenue in a couple of other things. If you're anything like I was in the beginning and many others as well, I used to feel like I was the only one that did this, but I've come to find out that's not true. But I used to look at the month and I would say, oh, OK, I generated X amount of dollars, everything got paid, so I'm good. And I really didn't stop to look at profit. I knew that I was building my business. I knew that I needed to bring in enough income to continue investing back in my business. And anybody who's read Profit First knows again, it's not all that uncommon that we start out this way and you continue down that path where we are not looking at profit, is not looking at anything other than, OK, I made enough to pay the bills.
Sometimes, that's the number, right? That's the number goal. Like I need to generate $7,000 a month. I need to generate $26,000 dollars a month, whatever that number is. We look at that and we do everything we can to generate that. And you look at that number and you're like, oh, great, I'm able to pay the bills. I'm able to invest back in the business. I'm in good shape.
But that's really only half the story because we need to understand the difference between revenue and profits. And to do that, we have to be just as clear about our expenses as we are about the actual cash flow.
So when it comes to revenue vs. Profits, here's just a quick refresher. Our revenue is the total amount of money that your business brings in each month. And we're going to talk about this on a monthly basis. So it's what you bring in each month, your invoices, your sales, all of that, whatever that total is for the month.
And then profit is whatever you have left over after your operating expenses. And as I mentioned last week, of course, you've got to remember the taxman, so your taxes as well. So that's after you pay anyone who is helping to support your business, a VA, anything like that. The fees that we pay for, I use Convertkit for my email marketing program. So that's it. You have to look at that and your hosting and any other platforms or service that that it takes to run your business.
And then, of course, Facebook ads. Are you doing Facebook ads or ads anywhere? How much are you spending on all that and then anything else that you're reinvesting into the business? So for me, back then I was looking at how much I could put back into it. So it's like, OK, I didn't really look at the amount and total that up as I went through, but it was like, oh, OK, I need this in my business, I want that in my business. And if I and when I look back at it, of course, there were things that I didn't actually need back then, but there is no shortage online, as you well know, of products or services or you see somebody is using this service or that platform and you think, oh, I need that in my business. I want to look like that. I want to show up like that. And the truth is, especially in the beginning, a lot of that stuff really isn't necessary.
But again, I just looked at it, I was able to cover my cost each month and I was happy with that. I was able to cover the cost, pay my bills, and I was OK. But I want you to look at is how much are you paying yourself after you take what you've made and you deduct all the other things, how much are you actually making? And if you want to take it a little bit further, divide that amount that's left over by the number of hours you worked through the month.
How do you feel about that? I know it's I opening for a lot of people, and it might be really uncomfortable, but it's important because we can't improve what we don't measure. As I mentioned last week, look, you might be feeling really deflated right now. I know I certainly was the first time that I did that. And it's really sobering when you think about it. My friend Kelly tells me when you know you're making $2 an hour, you think, well, I can probably go to the beach and make $2 an hour.
Right? You can do that or you can increase your profit. So I want to share a few things that you can do to help raise that number. Obviously, there are many, many ways to do that. But I'm just going to share a couple today. So first up, audit your expenses. And of course, in order to do that, I want you to look at each and every one of them. So you put them in an Excel spreadsheet, you can put them on a piece of paper, whatever works for you, but jot them down and you can look at your bank account.
That is a good place to start. If you don't know all the things that you've purchased and that you have recurring fees for, go to your bank account. Your statement will tell you that. And then I want you to ask yourself, as you look at each one of those, do I actually need that expense? Or in the case of taxes, how can I reduce that expense?
Is that service that I'm using making me money, or does it just make me feel good because I'm using that program? You can also look at whether or not it's saving you a significant amount of time. If that's the case, then I would say that's a good expense because as we know, time is money also.
Are there any tax deductions that you might have overlooked? So I would reach out to your accountant about that one and make sure you're considering like your coffee shop visits. You know, back in the day when we used to do that. And in the future, of course, this pandemic has to go away, right? So keep in mind, when you go to the coffee shop, I know I did a lot of going to Panera and I would sometimes meet my friend Phyllis there and we would work together, we would have 'Get Shit Done' sessions, as we called it. And there were other times where I would meet someone there that wanted to know about my services or anything like that. And sometimes I just went there to work just to get out of the office. So if it's related to your business, I would consider those. And of course, again, run those past your accountant. The gas, your home office, if that's applicable, your internet bill, supplies, software that you buy for your business, even your phone bill. See if that's something that you are able to write off or at least a portion of.
And then next up, let's talk about raising your prices. A lot of new and even veteran business owners fall into the trap of charging too little for our products and services. We don't even realize that at first because we're not taking the expenses into account.
And the number that you looked at earlier, after whatever is left over, after everything is paid, If that is really small and you don't like it, it's probably an indication that it's time to raise your prices and not because you're spending too much money. It could be that these expenses that go into bringing your products or service to market weren't considered when you set your pricing. It may be that you set your pricing because you looked around the competitors and you thought, oh, well, that's what I'm going to charge for it, or what I see a lot of people do.
And I know I've done before, it's like, oh, well, you know, I'm just going to charge this amount because it seems like a fair amount to us. But we haven't taken into account these expenses and what it costs to bring it to market. So it's the cost of doing business.
Of course, this is a much bigger conversation, but with the time that we have here today, I just want you to look at that, think about your prices. And it's fine to look around at competitors, you know, where do your prices fall in the market? It may be that you're just charging too little because of your confidence or whatever reason you've priced it at where you're at. I rarely see new business owners basing that price on something other than their gut. I should charge this. Definitely, consider raising your prices. So I would encourage you to do that analysis, find out exactly what it's costing you to bring that product or service to market and consider again all the things, the ads, anything else that goes into you getting your product or service out there, add all of that up and then look at it on the product or service price and see if that's possibly why you're not bringing in as much as you could.
And the last thing I'm going to talk about today, is just make more money. Right? And that may seem really obvious, but if you want to bring in more profits, you need to think of ways to make more money. So we already talk about raising your prices, but there might be some other ways that you can make more money without actually working more.
So one thing you may want to do is consider hiring a VA or other professional. They can take tasks off your plate so that you can spend more time working with your clients, creating products or services that will benefit your audience because those activities actually make you money. So if you bring someone on who can do your blog post, who can help post things on social, who can take some of those those time consuming tasks off your plate, then you can go out with the hours that you get back to generate even more income or work with clients.
So this is a much deeper conversation, but what I want to say about this is let's say you start out with the VA, a general VA, a virtual assistant for everyone listening who doesn't understand that term. I apologize. I forget. But let's say that you start out with a virtual assistant for $25 an hour, 10 hours a month. That's $250. Is there something you can do? What can you do to generate that $250 that you earmarked specifically for bringing that person on to help you?
I cannot stress enough how important this is and the shift that you're going to feel as you begin to see the difference that it makes in your business. It is incredible. So think about that.
You can also take a closer look at how you're spending your time. So, track your business activities for a few days or take a few minutes to think about what you do every day and then connect those tasks with money. And which of those tasks are time wasters that make you feel busy and let's be real, allow us to stay safe and hide behind doing the things rather than getting out there with our audience and showing up.
So, for example, you might find that you get lots of new customers and your list is growing from your podcast. But maybe your Twitter account isn't getting much action or maybe just posting is bringing in lots of new business, but blogging every week doesn't really seem to increase your conversion rates. When you notice some of those activities are translating to more income than others, you can work to reduce or eliminate less profitable activities. So that way you could spend more time on the task that actually do make you money.
And to make it easier for you to go through this process and even if you want to take a full inventory of your business and find out where you're losing time and money, I've got my free guide find and stop the leaks in your business. You can pick that up at ThePurposefulCEO.com/business-leaks. And of course, I'll put the link in the show notes so you have easy access.
You've put a lot of time, energy, resources and heart into your business. I want you to get the greatest return on everything that you've put into it and I know this is a good place to start.
And on that note, I'd like to invite you to a free webinar that I'm doing tomorrow, January 19th, and I'm going to do it a couple more times this month. The dates will be on the registration page. It's called Behind the Scenes of a Profitable Online Business. And I'm going to pull back the curtain and show you what it really takes to get from where you are to where you want to be. Sometimes we're struggling in our business or get stuck because we just don't know what we don't know. You can get to it at ThePurposefulCEO.com/Profitable2021. I'd love to see you there.
Be sure to tune in this Thursday, January 21st, when Meredith Liepelt from Rising Star Publicity joins us and shares how you can become more visible and some of the best ways to reach out to the media.
Until then, let's go make a difference.
Thanks for tuning into this week's business building episode of the Becoming a Profitable CEO podcast. I'll be back next Monday with more strategies, practical applications and best practices. In the meantime, be sure to tune in on Thursdays when I interview other remarkable female business owners who share their insights gained on their path to becoming a profitable CEO. And you're always welcome to join us in our Facebook community to share your take on today's episode, get feedback and network with other female online business owners.
You can find us at ThePurposefulCEO.com/facebook, it will take you right to our community.
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