What makes a tiny business profitable?

By tara gentile on 12/06/2011

In solopreneurship or microbusiness, it’s easy to imagine that every dollar that comes in is “profit.”

Take out the meager fees we pay to web hosts, PayPal, and the odd tech service, there’s still plenty left over to play with. And play we do.

But what does it mean to truly become profitable as a microbusiness owner or solo service provider?

In my own business and those of my clients, this is one place where traditional business teaching falls short of our unique circumstances. What follows below is not something you’re going to find in business books but it’s of utmost importance for understanding the way your business functions:

Being profitable means earning enough money to cover all of your obligations, both personal & business, with some left over to invest as you please.

Click to tweet it, yo!

Becoming profitable should be the goal of every business but the numbers and percentages are always different.

The key to knowing when you are profitable is to understand your obligations.

Megan and I often join forces to talk about actually making money in a passion-driven business. I talk about the psychological and philosophical side of earning more. Then she swoops in with cold hard facts and a proven formula. I’ll let you guess which side of the presentation garners a bigger response.

Hint: numbers & formulas win. every. time.

Megan’s pricing formula is for a product based business, natch. She’s a jewelry designer. She has certain costs for materials & upkeep, much easier to quantify.

Megan’s formula also contains two pieces that often trip people up: labor & profit.

Yes, two different figures. One for labor. One for profit. Separate. Different. Got it?

The time she puts into each piece is not profit. That time is an obligation that must be accounted for with an hourly rate. The hourly rate she figures is often 8-12 times the hourly rate most people figure for themselves.

Hint: if you’re accounting for an hourly wage that is lower or equal to the minimum wage in your state, you’re doing it wrong.

Intellectually, you know this makes sense for Megan and the type of business she runs. But what about your business? If you create or design physical products, this model works for you as well (but keep reading – there’s more!). If you are a service provider, content marketer, or digital product creator, it is much more difficult use this type of pricing strategy to generate a known quantity of profit.

So then what is profit?

Profit comes after accounting for all of your obligations, both personal and business, and having money left over to invest as you please.

Oh crap, she said it again. It must be important! Click to tweet it, yo!

When you don’t have to use part of every sale to reinvest in materials to make new products to sell, it is easy to see every dollar as profit. To see every dollar as flexible.

Your dollars are not flexible. They are accounted for the moment they enter your PayPal account. But do you know where they’re going?

Those dollars might end up paying your web host, your email service provider, your teleconferencing service, your PayPal fees, or your assistant. Those dollars also pay your mortgage, your grocery bill, your taxes, and your electric utility – that’s your labor, essentially.

You also have obligations to your own charitable giving, education, self-care, and – yes – fun.

When considering your own financial obligations, I think it’s important to look at the big picture not just the bare bones. That’s when you really start to get an idea of abundance.

And when you can really start to develop a profit strategy.

How can you earn enough to cover your obligations and have money left over to invest as you please?

There are no easy answers to this question. But you can’t create a strategy until you know your obligations. You can’t understand or plan for profit until you know where the rest of the money is going.

Why consider profit only after meeting personal & business obligations?

Because it’s important that you have that surplus. It’s important that you have the freedom to decide what the very best use of extra money is outside of the obligations (no matter how pleasurable) you face on a daily basis.

Being a profitable business owner means having the freedom, control, and vision to use your surplus money as a tool for growth, be it personal, business, or societal.

***

Understanding profit and your ability to use it for good is all apart of making money beautifully, making earning an art. I’m hosting an intensive, intentional, and intimate workshop on creating a business that serves you. Click here to find out more & sign up for FREE exclusive pre-event training.

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What rabbit holes have you been avoiding?

By tara gentile on 12/01/2011

When you’re setting up a business or even working hard to keep one afloat, you’re bound to reduce distraction whenever possible. You need focus. You need clarity. You need direction.

But in reducing distraction, we often turn away potential sources of inspiration.

Afterall, there are shiny objects that have real value. Yes, ladies, I’m talking about diamonds. And gold. And platinum.

Okay, there are actually plenty of shiny objects that have real value. Click to tweet that little nugget.

And there are rabbit holes that transport you to strange new worlds.

I’m adding “Mixed Metaphor Generation” to my list of services.

A rabbit hole is something that sucks you in – maybe a new blog, a museum, a city, a new friend – and you come back out bleary eyed and not a little changed. Normally you spend much more time in that rabbit hole than you really “meant” to. It’s time well spent – but it’s time nonetheless.

I spent much of the startup phase of my business avoiding rabbit holes. Often these were topics of interest or people associated with those topics. I felt drawn to these little tunnels. But I didn’t let myself get sucked in.

As my business has grown and learned to take care of itself, I’ve allowed myself the pleasure of going down a few rabbit holes. I’ve talked to the people & engaged the ideas I’ve had my eye on for quite awhile.

I’ve had discussions with deep thinkers, attended academic events, and traveled aplenty. I’ve reengaged subjects from my past like religion, politics, and current events. I’ve learned lessons I had been far too focused to learn before.

I discovered that there was a strange new world all around me if only I would take the focus off of the business for a moment.

I’ve embraced potential distraction as inspiration.

Click to tweet it!

Will that work for you?

It depends.

Is your business starting to feel a bit stagnant? Need to add a splash of color and a hint of spice here and there? It might be time for a few rabbit holes. If not, examine whether you’re a master of keeping things interesting or a being pulled in too many directions to find your pivot point.

Is your business steady & supportive? Want to take a few risks and discover strange new worlds? It might be time for a few rabbit holes. If not, decide what systems you could put in place to make your business buzz along without you.

Is your business ripe for a challenge? Are your customers clamoring for new avenues to explore with you? It might be time for a few rabbit holes. If not, discover what needs you think you’re fulfilling but that your audience just isn’t feeling.

What rabbit holes have you been avoiding? Are you ready to dive in? Or do you need to stay focused for now?

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The Next Generation New Economy: A job interview for a new way of doing business

By tara gentile on 11/29/2011

I went to college for all the wrong reasons. You know, the reasons that lead some people to become basket weaving majors.

Or metalsmithing majors.

Or religion majors.

I went to college for a challenge, for the love of learning, for the exploration of mature relationships, for personal connection on a new level.

Doesn’t sound so bad, does it?

I didn’t go to find a job. Or even prepare for one.

As I student, I never went to the networking or career prep events that my college dutifully hosted. I never learned about proper interviewing etiquette or how to hold a glass and a plate in one hand whilst leaving your right hand open for handshaking.

If it wasn’t late night discussions and dog-earred philosophy texts, I wasn’t interested.

Oops.

Last week, I went back to school to attend my first how-to networking & professionalism event as a volunteer alumna.

I was expecting the culture shock: bunch of less-than-twentysomething college students, alumni from all different fields and industries… and then me.

But what I wasn’t expecting was the context of the event: GET A JOB.

Feel free to laugh at my out-of-touchness and naivete.

I’ve been to quite a few events this year. I’ve made a point of meeting and greeting. Flesh to flesh, palm to palm. Supporting my digital work with in-person smiles.

Each event had a different context and a different group of people.

But never was the focus of the event: GET A JOB.

It’s easy for me to forget, in fact, that there are people still looking for jobs.

Saying “still” really outs my “real world” seclusion.

Of the students I talked to, none had really considered creating their own job or starting their own business. They were at that event because they wanted to learn what the system expected of them, what it demanded of them, to be successful.

Even as I polished off my rusty interviewing skills, talking to three girls in three different fields of study, I was amazed at how they felt lost translating their experience & talents into ways to benefit society (or corporations, or organizations).

Square peg, meet round hole.

I wasn’t there to convince college students that entrepreneurship was the ticket to a bright & beautiful future. I was there to find out what I had to offer this new generation. The generation that will ultimately be shaping the world I mature & “retire” in.

What I discovered is that those students need the same thing that so many others do, the driving desire behind all of my work: we all need to know how our personal value translates into collective value.

Click to tweet that little nugget.

How our strengths create a strong whole.

How our great work makes this a greater place.

So I asked them questions:

  • Not, “What’s your major?” but “What are you passionate about?”
  • Not, “What do you want to do when you graduate?” but “What really turns you on?”
  • Not, “What’s is your experience?” but “How are you going to serve me, your friends here, and the world?”

Oh, sure. Those questions got a lot of blank stares. But they also got light bulbs, productive ramblings, and flashes of brilliance.

These students weren’t going to go out and start a company (although, who knows?!) but, at least for a brief bit of time, they were going to look at themselves just a little bit differently.

And that’s the heart of this work. That’s what pushes me. That’s what drives me.

I want you to look at yourself, your value, and what you have to offer differently – if just for a moment – because that’s the only way you can look at the system differently.

You can’t change the system until you’ve changed yourself. Click to tweet that little nugget.

The New Economy isn’t taking shape because of outside forces but because of internal awakenings.

Click to tweet that little nugget.

People – YOU – are waking up to the fact that they’re not automatons on the get-a-job superhighway. They’re not computers waiting to be programmed with operating systems for certain careers or job positions.

They – YOU – are unique, valuable, and irreplaceable. But not until they wake up and realize it.

Quick! Grab a pen & paper…

Got it? Good.

Give yourself a job interview.
  • Describe the last time you made a difficult decision. What was the outcome?
  • Describe a time you didn’t know the answer to a question your boss or a client posed to you. How did you handle the response?
  • What gets you excited about the task at hand?
  • What type of work environment helps you to thrive?
  • What is unique about & what you have to offer to this position?

What do you notice as you’re giving the answers?

Do the answers come fast & furious? Do you really need to pause and consider the stories influencing each answer? What do your answers tell you about your unique position in the New Economy?

Just like those college students I spoke with, you as a passion-driven business owner or aspiring business owner, have an obligation to truly understand what value you’re bringing to this New Economy. It’s your job to understand how your own internal awakenings are, even ever so slightly, shifting the system.

PS I’m going to be sharing some exclusive ideas, inspiration, and training with a special group of people. Want in? Want to know how your business can take better care of you? Register here.

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The Ups & Downs of Planning Well: Or Weathering a Storm that Just Isn’t There

By tara gentile on 11/15/2011

Sometimes, my business causes me anxiety.

It’s true! It’s easy to assume that the businesses you see humming along online or on main street are free & clear of worry and doubt. But anxiety, stress, and self-doubt creep in at the most unlikely of times.

True story.

And I’d say it’s true of any business mentor, coach, guru, authority figure you pay attention to. There are days when the ups & downs of normal business weigh on you. Even when you know better. Even when you’ve planned better.

Over the next few months, you’re going to hear quite a bit about what I’m calling “self-care for your business.”

At the heart of it, business self-care is setting up your business to take care of you.

Click to tweet that little nugget.

I have begrudgingly pulled all-nighters, I have worked for cheap, I have forced launches, and I have created content to serve something other than my higher purpose. It has never worked. It’s never “been worth it.”

Hard work is a necessity. But senseless work is not.

What is senseless work? It’s work for work’s sake. It’s working from your weaknesses instead of your strengths. It’s doing the same thing over & over again and expecting a different result.

One place senseless work has crept up on me – and always caused more problems than its worth – is when I’m worried about where the next dollar is coming from.

When I’ve been worried about discovering the next offer or attracting the next client, I take the focus off my real mission. I take the focus off of recreating our connection to the greater economy.

I take the focus off the organic process of discovery & attraction and I put the focus on acts of force.

Thanks to a framework from Alexis Neely and a language from Sinclair, I have crafted a system for always knowing where the next dollar is coming from. I know months & months in advance what my offer schedule is and, most importantly, why.

It’s not just about the money or sales but about what those sales mean for moving my mission forward – therefore serving myself while serving you and the world.

That said, there are still times I get a little antsy over money. After all, I’m fighting scarcity conditioning that has been in place for quite some time.

My revenue – while sustained – is not always constant. I’m getting used to a new pattern of money flow. Didn’t I just get used to the last pattern? About two weeks into every (planned) down period, I start to freak out.

I start to think about the quick buck. The easy out. The drastic measures I’ll need to take to keep myself afloat.

This isn’t survival mode – which has been known to motivate some pretty extraordinary behavior. This is self-defeating. It’s wasted energy. It’s just plain unnecessary. And it’s potentially very damaging.

Nope, I’m not immune to these bouts of panic.

But I do have a system, a practice to fall back on.

Just like others might fall back on yoga, a long walk, an exercise routine, a good cuddle, or knitting – perfect for taking care of yourself – I know that I have a point of focus and safe space to fall back on in my business.

I can whip out the calendar or jot out a fresh perspective on my planning in my notebook. And, while the panic may linger, the confidence comes right on back.

I can go right back to serving you, creating greatness, and discovering new ideas. I can do the work that matters and stop dwelling on the work that doesn’t.

I weather a storm that isn’t really there. And I still come out stronger & more focused on the other side.

Your next steps:
  1. Have a business self-care practice of your own? Share it by leaving a response below.
  2. If you want to learn more about self-care for the soul of your business, check out a little (big) something I’ve been working on for the last few months.
  3. If you want to discover more of my philosophies & practices for earning beautifully, pick up a name-your-own-price copy of The Art of Earning.

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always ask yourself…

By tara gentile on 11/09/2011

Am I trying to learn someone else’s system? Or am I creating my own?

The system of your mentor, your colleague, or your friend is hers for a reason: it works for her. What are you doing to discover what works for you?

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