Are you living hand to mouth? Because you’re not alone; this is not a strong economy, and many people are struggling. And though I’m very fortunate to no longer be in that situation, I lived just that way for more years than I care to remember. Here are my suggestions to help you out of this terrifying position. Yes, some of them seem obvious, but looks can be deceiving and things that seem obvious are often the hardest to remember. Keep these tips in mind, and I promise you’ll start living better.
1. Do your very best to build a financial nest egg. What does this mean exactly? It means having a savings account worth 30% of your annual income or as close to that as you can manage.
2. Every three months, sit down and evaluate your financial situation. Yes, I know, this is not fun, and it can be extremely hard to face the reality of your finances. But ignore them, and you’ll eventually be forced to face the consequences. Trust me, that hurts A LOT MORE. Once you have a clear understanding of your current finances, make a projection. What jobs do you have? What jobs do you think you have a good chance of getting? Do you need to start increasing your sales’ efforts? Answer these questions honestly. Now is not the time to kid yourself. Use this new-found awareness to keep you grounded and help you make smart money decisions in the coming months.
3. When clients give you a deposit NEVER use that money for anything other than their project. Otherwise, you might find yourself in a game of stealing from Peter to pay Paul.
4. Be consistent with your profit margin. If you’re not making the proper profit, which is 50%, then you’ll mostly likely always be cash poor. You must learn to charge what you’re worth, because there are lot of expenses and lot of people you to need pay at the end of every job.
5. Don’t forget Uncle Sam! You work for yourself, which means no one is taking money out of your paycheck to cover taxes. You must set aside money for taxes in a separate account. Never, and I mean never, use this money for anything other than taxes.
I live for wedding and event planning and designing. What I don’t live for is dealing with money, but I do need money to live! So, I have learned the very hard way that I must pay close attention to my finances and that doing so is just as much a part of my job as planning and designing. Being cash poor and not making the proper margin is not fun, and it severely limited my ability to do all that planning and designing that I love so much. Please learn from my mistakes. Be financially savvy, and you’ll get to keep doing what you love for decades to come.
Now a few questions for you: Do you find it difficult to make a 50% profit in this economy? Do you think that the competitors who are outbidding you are making a 50% profit? Have you ever accepted a job even though you knew you weren’t going to make the necessary profit? Was it worth it?
Up Ahead: Next week I’ll address the pluses and minuses of offering a discount.
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George Bernard Shaw once said: “You see things and say, ‘Why?’ But I dream things that never were and say, ‘Why not?’” That quote embodies how Preston Bailey approaches every event.
Leslie Palme
May 26, 2011
Wise advice Preston. I am restructuring my business after basically being on hiatus since the death of my husband. I have been in that position and it is scary at best and as I reconstruct I have to work smarter. The epiphany at 56.
Leslie
BRENDA MANZANO
May 26, 2011
Good advise. Ive done some jobs that I didnt make a good profit from, just covering the operation expenses but I used them to get pictures of my work to build a portfolio, some of the people invited to those events hired me and started to get other jobs recommendations.
I always find myself “stealing from Peter to pay Paul”, it has not been a problem yet.. how can I stop doing that? I really dont know how to separate the deposits i merge them in a single account :/
Regards
Zyan
May 26, 2011
Just happened to me last weekend when one of my vendors who gives me great discounts had a problem the day of the event and I had to hire someone else but much more expensive, therefore my profit went down =(
How much of your profit do you use for re-investment??
Nicole Goodyer
May 27, 2011
How do you charge for your labour and creative input? “Chicken or egg” question what comes first
Often we divide the profit by the number of creative hours and the hourly rate is minimal! but always thanksful there is a + sign and haven’t thus far worked for free, but it is very hard.
HILENI DAVID
May 27, 2011
Thanks you Preston for the very good saving advice, will definitely start to put it into practice. Much appreciated
yardley Claude
May 31, 2011
I have been creating pet collars and leashes for over 5 years and sometimes it seems like I cannot get my pricing right or really find that switch that gets me the steadily increasing positive exposure that I want. It is almost like I am afraid to charge for my time and ideas because I want folks to purchase from me or have me design that “collar†for their Westminster moment.
I have the dilemma of “how to expose?†my business for sales. Should I continue to pay and participate in dog shows, craft shows, and/or trade shows versus marketing via print and online. What to do?!
I know that the time has come to take a good hard look at what I do, advertising, pricing/price points (I know that I under price just to be competitive), and what path I really want to follow when it comes to my dream of having a successful business.
Thank you so much for this wonderful blog and the advice.
Linda Gordon
luisa selman
May 31, 2011
Boy this Hits close to HOME!!! Yes in this economy sometimes I find it hard to charge what I’m worth! and Yes I have taken jobs where they where next to zero profit margin and still waiting to see a return from it! It’s not worth it many times to due favors or to cut yourself short!
Sara Shaw
July 11, 2011
Please Preston & Theo,
Have the most wonderful party & ceremony to celebrate your love for each other !
You are like Salt & Pepper ! Many years of only the best blessings to you both.
LL
October 25, 2011
I have listed “average” prices on my website for quite some time. I hear from past clients that its helpful for them to see the prices. However, I wonder if its wise on my part to have them listed on my site.