When I think back to my first 2-3 years in business, I struggled to make a decent wage for one main reason. - I was not focused on sales!
If a business does not make sales - it is not a business!
Secondly, I also was not aware of the amount I was earning per hour of my work, or the profit margin of my sales.
If you are new to business this may seem hard to understand, as it was for me initially, so let me break this down:
Point 1: If you do not make a profit, then you are making a loss.
Let's use an example of a sole trader hairdresser looking to make £3000 per month profit to take home as their wage.
[Throwback to when I used to dye
my hair the blackest black lol!]
You need to workout your expenses per different type of service you offer. Once you know this I would always slightly round up (overestimate expenses). So let's say for example it cost you £10.00-£15.00 of expenses per cut and colour depending on the length of hair.
Point 2: You need to make sure you are being a good paid wage or you can easily become burned out, and the rest of the business will follow.
Make sure you are taking home a good monthly wage which covers your expenses and leaves you feel happy from day to day.
Initially when I was not taking home a good wage, but working crazy hours, I was always feel down because I knew I was worth more! I also work with so many other business owners who cannot focus on growing and developing their company because they are struggling to live their life due to finances as they are taking home a wage they would never work for someone for.
Listen, I'm not saying that there is not a time for this, or that people can't learn from a time like this, I know I did. What I am saying is that this will begin to burn you out and you will get fed up of struggling through. When you pay yourself well, you can focus on your business and develop it from a place of strength!
Following on with our example, say our hairdresser wanted to be paid a minimum of £25.00 per hour.
Point 3: You need to make sales to survive in business!
Now we know a cut & colour costs £10.00 - £15.00 in expenses. We know we want to take home £25.00 per hour. Again as an example, let's say it takes on average 2 hours maximum to cut and colour a short hair do. We could then charge £60.00 (£25.00 x 2 + £10.00).
Then again for someone with long hair, say it takes 3 hours for this. We would then charge £90.00 (£25.00 x 3 + £15.00).
BUT - what about the business?
Your business itself still needs to make a profit. So we also add on a profit margin.
Let's say in this example 20% margin. The short hair would become £72.00 (£60.00 + 20%) and the long hair would become £108.00 (£90.00 + 20%).
So if we go back to our initial goal of £3000 per month.
We now know our hourly rate is £25.00 per hour, so therefore we need to work at least 30 hours per week / 120 hours per month to take home £3000 per month.
If we base our numbers on the short hair cut at a 2 hour job, then we need to serve 15 customers per week.
At this point, you may think how am I supposed to find 60 customers per month?
In my experience sales starts with making a list of the people in my network already.
List out all the people you know;
Think about who you have in your contacts in your phone,
Who you have on Facebook,
Who you went to school with,
Your current or previous work colleagues,
Think of all the ways you know people, even if you don't actually know them personally, such as friends of friends.
Then reach out to them, offer them a discount (within the business profit margin), and offer them a further benefit if people in their network choose to use your services too. Encourage them to spread the word for you!
This initially seems like a big mission, but once you get going it becomes easier.
Then you can start to learn and get involved in marketing etc to grow a professional audience. All I will say about that for now, is don't expect that because you have set up a business account and you post everyday that customers will come. You may as well stand in your house hoping a customer will walk by your house and notice you standing there with your scissors.
As always, if anything you have read resonated with you and I can help you please feel free to contact me! I would love to help.