Let’s be clear. Most people hate math.
Let’s even be clearer. On top of that, most people despise people that love math.
But let’s also be clear – math is in everything.
Mental math is almost always wrong – because it is using a different part of the brain.
But for a business owner to be successful, they must set price and manage inventory.
Now, if you are a consultant, coach, providing a service that becomes a little more complicated than you would think.
Here are three common mistakes and ways to correct them
|Still thinking like an hourly or salaried employee||Stop it! You are not that anymore. You are an owner who may or may not be making enough money to pay themselves.|
|Undervaluing the amount of time it takes to get something finished||Track it! The more you know your productivity levels, the easier it will be to set proper rates and manage your inventory (time)|
|Acting like an employee of your new company||Shift to owner thinking! You will never be an employee of your own company. You are an owner. Think like one. Your focus should not be price. It must be margin – how much profit do you make? More profit = more resources = more choices = more freedoms = better instagram my life is better than yours moments (lol)|
You are going to have to do some math or hire someone to do some math for you.
However, note the assumptions we are making because your assumptions will change your math.
Here are the assumptions for the PDF
- A 30 hour work week
- 10 months of work (2 months off)
- No medical/other benefits/taxes included
Reasons behind the assumptions
If you are providing a service that will take up your time in two ways. Time with the client and Time prepping for the client. The time with the client is tangible to them and easy for them to feel comfortable paying you for. The time away from the client is not tangible to them and they will assume you are working less than you’re saying.
Thus, you have to stop this dynamic immediately – because you are not an employee of theirs. You are a vendor at worst and partner at best.
If they perceive you as an employee they will treat you as one.
If they see you as a vendor they will treat you as one.
If they feel you are a partner, they will treat you as one.
The easiest way to do this is to charge an hourly rate for services (time) you will spend directly with the client. That will achieve two things. It will get you some cash flow and it will build trust.
Once the trust is built you can explore project and monthly pricing with that client.
You are one person. You will burn out at 30 hours. Your productivity will start to decrease between 20 and 30 hours.
Why 10 months?
When you factor in holiday’s most people only work 10 months. So, you should do your math accordingly. It will also allow you to enjoy down time during the seasonality of your business. You won’t feel money stressed. You’ll relax and recharge.
Medical and taxes are different depending on where you live. You should factor these in, but we suggest that you do that with accountants, lawyers, and health professional vendors.
The PDF will help you with some baseline math.
Bonus for the math haters
For the first 25 of you, I will help you to do the math. Just send me an email with the heading MATH HELP email@example.com