3 Financial Steps to Take Now for a Successful Year
By this time of the year, most people have already dropped their resolutions and goals. So how are YOU doing?! If you set any resolutions to make more money in 2021 or to keep up with your finances more responsibly, you can STILL hit those goals! You really want to meet or exceed any financial goals you set because that means the success or the end of your business. To help you stay on track, here are 3 financial steps you can take NOW to make 2021 your best year!
1. Find the Profit
This one takes some time, but it is SOOO worth it. Sit down with a list of your services, a spreadsheet of all your projects in 2020, timesheets, and your profit & loss statements. The goal is to list each TYPE of service you provided and then understand all of the associate expenses and income for each of them. This will take time! But this can really be an eye-opener about what REALLY makes you the most money, and where you're spending more time and money than you're making. For example, if you're doing Designer Days or other consulting services, your profit margin can be as high as 95% because there are very few associated costs. But procurement - which is a serious focus for most design businesses - can have a very low profit margin for you. It takes a lot of time, and it's hard to raise your mark-ups as much as it used to be. So be sure you truly understand where you can make the most money in your business, and put your focus there.
2. Remember Time IS Money
Did you gulp when I asked you to pull out your timesheets for 2020?! FAR too many designers do not track their time, and that is a huge mistake. (Been there, done that!) Make a goal to carefully track every hour that you, or a team member, will spend on a project in 2021. If you charge hourly, you need to charge for every single bit of time that you are owed - no excuses! And if you use a flat fee approach, you need to CLEARLY understand if you're actually charging enough to cover a good hourly fee for you and for your staff. I can hear you say that you just don't have time to keep track of all of that, which is ironic! There are WAY too many apps out there that will make it easy for you, so drop your excuses. Time IS money in our business, and you should track this as carefully as anything else in your business.
3. Check Your Fees
Every single year you should ask yourself if it's time to raise your fees. Wait! I'm not saying you raise your fees EVERY year, but you should use the start of a new year to look back at how many projects you had, and where you may have left money on the table. If you had WAY too many jobs last year and you felt overwhelmed, you probably weren't charging enough. Having more work than you can handle is a good indicator that you need to check your fees because obviously everyone can afford you. Does that make sense? The more you charge, the fewer jobs you'll have, BUT you should still make more money! You'll have more time to give top customer service, to be more creative, to really WOW your clients. And that will lead to bigger and better jobs, too. Don't be afraid to bump up your pricing a bit to test the water. You may surprise yourself!
I know this is a lot to think about, but I'm going to give you a boost. Download my FREE Guide to Managing Analysis Paralysis. It will help you buckle down and analyze exactly where your business is today, AND where you want it to be in the future!