Q: How do I know what my time is worth and how do I charge accordingly?
This is question I am often asked by new and aspiring business owners as they work their way through the writing of their business plan.
The matter of determining what to charge for your time is a personal one. Start-ups sometimes make one of two mistakes in this area: charging too much or not charging enough. The antidote for undercharging is to run a complete set of financial pro formas to ensure that your rates are sufficient to pay the operating expenses and be profitable. The way to ward off both under- and overcharging is to research your competition, with attention to the rates they charge for similar services. With this in mind, here are a few things to keep in mind when setting your hourly rates (list is adapted from the Online Business Planner’s RoadMap Step 44: Present Prices and Pricing Strategy).
How price sensitive are your customers? If price is a major purchasing consideration for your customers, you’ll have to toe the line. If price is less important than other factors (quality, speed of delivery, brand, etc.), you might have more latitude . . .Continue reading Setting Prices for Products and Services
By Dan Boudreau
The strongest resistance to business planning typically comes from diehard pessimists, who ask, “What good are my 3-year financial projections if I step off the curb tomorrow and get hit by a bus?”
That’s a great question that will stop anyone from ever doing a business plan. And it seems logical enough, until you consider that everything great that happens in the world comes about because somebody decided to make an impact on the future.
Truthfully, you might be the most unpredictable element of your business plan. Here are a few of the ways in which you can become the real wildcard in your business plan.
You might not believe you can succeed, which is the kiss of death for any business. Your lack of belief in your business assures its failure. You might hate managing people, which is impossible to know until you try. Business owners need to be skilled at managing several groups of people; employees, customers, suppliers, and creative teams. After going through all the effort of getting your business started, you might discover that you really want to work for someone else and not carry the responsibility of owning and running a business. . . .Continue reading Writing a Business Plan: The Dark Art of Predicting The Future
No matter how brilliant a business idea might be, no matter how eloquent the business plan, certain deal breakers will stop it in its tracks. Deal breakers are the secrets you would rather not share with your business analyst or banker, though you probably should.
If you are preparing your business plan in order to apply for a loan to start or grow a business, here are some common deal breakers you should know about:
1. Inadequate Equity. You have undoubtedly heard gripping stories about folks who wangle 100% financing without investing a dime of their own. Those tales make great fodder for talk shows and infomercials, but lack of equity is usually a deal breaker in the real business world. Unless you’re borrowing from love ones, business start-ups should plan to bring at least 20% equity to the deal.
2. Cards & Toys. This means ballooned credit card balances and a backyard bursting with toys, such as boats, bikes, and skidoos. There is nothing wrong with owning toys if you can afford them; it’s the high interest loans with outstanding balances and endless minimum payments that break the deal. It’s easy to fall into the “cards & toys” trap . . .Continue reading New Business Deal Breakers
There’s no doubt that forecasting or attempting to predict the future in any way, is considered by many to be a mild form of insanity.
Forecasting is one area of business planning that entrepreneurs tend to resist. There are many reasons for this.
Beyond spending, many people simply don’t like to deal with money matters. Unless you’ve previously owned a business, the entire business financial arena tends to be a vast, spooky mystery. Those who have weathered a financial black eye in their personal lives are inclined to be apprehensive about tackling the management of business finances.
Many people assume that forecasting is the same as accounting, and that it should be left to highly skilled professionals, such as bankers, accountants and MBA’s. And yet, the process of forecasting is sure to be a healthy learning experience for owners and anyone thinking about starting a business.
To dispel myths and misguided fears about forecasting, it is helpful to clarify what it is… and what it isn’t. One way to do this is to identify the ways that forecasting differs from accounting.
Forecasting is an educated guess at future scenarios, while accounting is a detailed compilation of . . .Continue reading Forecasting Isn’t the Same as Accounting