Budget. Cost price. Price. These “money” topics are raised in my consultations one way or another on a regular basis. And regularly I advise you to address these questions to a financial coach. That is, to a person who knows exactly where the money comes from and where it goes. For example, to Natalia Rudovskaya my guest today.
Natalia, of course, today we will talk about money. For example, how to define new price to your product.
Great, but before answering questions, I want to clarify the meaning of the word "money" in the context in which I will talk about them. Money is the result of the actions that a person produces. Not a form of exchange, not an equivalent, as economists say, but the result of actions.
That is, we need to a certain amount of actions, spend a certain amount of energy to get a result. It is reflected not only in emotional components, but also in a certain amount of money. Money is the result that we get from our activities.
Then my question can be slightly reformulated. How to get new financial results? Or, what is asked much more often, how to decide on a new price?
First, you need to calculate everything and draw up what I call the “project budget”. This budget can be roughly divided into three components. Fixed costs, order fulfillment costs, and finally the profit we expect to make plus reserve funds. All these components form the budget of the activity.
Fixed costs are costs that we incur regardless of whether there are orders. This includes mandatory items, such as office rent. Very often they tell me “I don’t rent an office, I work at home or I sit on someone’s head or in a cafe, in a coworking space.” But it's still a cost. Let's say if I need to work in seclusion, I look for secluded places. Even a cup of coffee in a cafe or coworking space costs money - and this must be taken into account. Plus, I always recommend putting in the average rent you'll need if you start working on a regular basis. How much will I have to spend on an office where I will have to sit down myself and put one or two people that I will have when I leave the level of an artisan to the level of an artel worker or workshop.
- That is, when will hired employees appear?
Yes exactly. I want to note that at the moment when the owner himself is hired to work for himself, there is one trap that is important to get around. The owner can be an administrator, director, manager, engage in sales or expertise. But in all these cases, he must receive his salary. Simply because sooner or later, when the business moves to another stage, responsibilities will have to be delegated. Otherwise, he will not be able to develop. To perform the former duties of the owner, you will need to hire a person, and you need to understand how much he will receive for such work.
All fixed costs, including fixed taxes and wages, must be accounted for. This is the level of survival of any business, business, work.
When I calculate this indicator for any client, I tell him: here is your point, below which you should not fall. And if you stay close to this level all the time, then your business starts to sink.
- So, we figured out how to keep the business afloat. But I would like it to be profitable as well.
Of course. To do this, you need to calculate two more budget categories. The first of these is the costs associated with the execution of the order. Here, too, as a rule, items of expenditure are prescribed, the fund wages people who are involved in the performance of this service, bonuses, if they are paid.
We also include the costs associated directly with the execution of the order. Purchase Supplies, courier, transport costs. They must be calculated, those articles that appear directly with the order. When there is no order, these costs are also absent.
The third level of the budget is the net profit of the owner and reserve funds. Net profit- this is what I want to get by doing this business. Many don’t bet on this, thinking in the spirit of “I like it, I’ll try how much they pay.” At first everything is great, but then the business collapses, when the flow of orders increases, the time is busy, but there is still no money. The price was incorrectly calculated, it has to be changed. And this is not always convenient, especially if you have already promised customers to provide a service or provide a product at a certain price. But if this is not done, it may turn out that you work without profit, or even at a loss.
- That is, the profit that you want to get should be included in the budget at the start?
Yes, definitely. If these are permanently implemented services, then on a monthly basis, if one-time - then upon the fact of the provision of a service or the delivery of a project. If I am doing a project, I calculate that I will be doing it for, say, two months. I put there fixed costs for 2 months, the costs that will be associated with the implementation of the project, and add the profit that I would like to receive.
When these three components are assembled, a spending plan or budget appears. From this expense plan, an income plan is formed, a price is formed. If my expenses per month are a thousand dollars, I need a thousand dollars to place an order, and I want to get a profit of a thousand dollars too, the price will be 3 thousand dollars. Having sold the service and received 3 thousand, I am left with an income of a thousand.
How accurate are these forecasts?
There is such an unspoken rule according to forecasts: where profit is planned, it is always divided by two, where taxes are planned, it is always multiplied by three. For other expenses, you need to wind up somewhere around 50%. And then the forecast will most likely come true, and the business will grow and develop normally, which I sincerely wish everyone.
Six Reasons Your Business Isn't Making Money
When your business does not bring you money, it happens for the following reasons:
1. You do not have enough incoming calls from new customers,
2. You make few deals from the incoming flow,
3. You make little money on every purchase,
4. Customers buy once and do not return, the percentage of recommendations is minimal,
5. You do not have time to fulfill orders, and some customers who are not ready to wait go to competitors,
From the book by Steve Jobs. Leadership Lessons author Simon William L From the book Business without rules. How to break stereotypes and get super profits authorBusiness is hard work. Damn it, at least let him enjoy it! When interacting with people, you can often hear advice to never mix pleasure and business. There is work - and there is rest and pleasure. And those are two big differences. Have you heard anything similar?
From the book Doubling Sales in an Online Store author Parabellum Andrey Alekseevich From the book How to ruin own business. Bad advice to Russian entrepreneurs author From the book Breakthrough in Business! 14 Best Master Classes for Executives author Parabellum Andrey AlekseevichLaw No. 1. Business dances from money and sales Question: "Where is the money?" should be your first concern. A business is just there to make money. This is not discussed. If you decide to create a business to make the world a better place, do something else:
From the book Rules to Break author Templar RichardSuccess is good job, which brings a lot of money People are always ready to explain to you that you will never be able to achieve success if you do not do this and that. “You won’t achieve anything in life if you don’t bite the bullet and work harder /
From the book Influence and Power. Win-win techniques author Parabellum Andrey AlekseevichWhat hobby brings income As a child, you repeatedly had to deal with productive activities. It is the activity that results in a product - be it a drawing, a glued-on model of a helicopter, an appliqué or building a sandcastle.
From the book How to make your brand stand out from the crowd author Horn Sam From the book 100 business technologies: how to raise a company to new level author Cherepanov Roman10. Who brings the meat to the cave It is known that the results of the work of the staff are most effective if personal goals are achieved through the achievement of corporate goals. These are not necessarily material goals, although they should not be excluded. Any employee values his own
From the book Key Account Management. Effective collaboration, strategic partnerships and sales growth author Shiffman Stefan From the book How to ruin your own business. Bad advice for entrepreneurs author Baksht Konstantin AlexandrovichStarting a Business to Make Lots of Money The next popular misconception is "Now I'm going to own a business and make a lot of money." Indeed, many business owners are very wealthy people. The only nuance is that wealthy people become
From the book Million Dollar Mistakes author Annenkov Pavel AlexandrovichError 6 Does not set a limit on investing time and money in a business project. If the danger can be foreseen, then it does not need to be feared. Arthur Conan Doyle When you create new business in any area, then you are taking risks. The most obvious risk is the loss of invested
From the book Great Team. What you need to know, do and say to build a great team by Miller Douglas From the book Effective offer. Comprehensive guide author Kaplunov Denis Alexandrovich50 Reasons People Buy Now you're going through a helpful list that I always have on hand. Before writing each new text, I always look into it. So, the top 50 reasons why people shop. What is the value
From the book Business Process Improvement Guide author Team of authors From the book It won't be easy [How to build a business when there are more questions than answers] author Horowitz BenOf course, you know the situation when you invest and invest in advertising, renting premises, rearranging equipment in the store, and sales did not grow, and do not grow. You good product(or service), adequate prices, but customers do not understand this and prefer a cheaper and lower quality product. Where's the justice?
No sales, which means no profit, and your business may soon turn into a hobby that you do at your own expense. What to do? To improve something, you first need to find out what exactly and what problems exist in your business.
Another important problem of small and medium-sized businesses is when network company, with its multi-million dollar advertising and marketing budget, and starts offering products and services at a lower price. Such companies have huge discounts on bulk purchases, they can afford to hire the best specialists in all areas. Your business is like a drop in the ocean for them, and they can even afford to work for a very long time at zero or even minus, waiting for local firms like you to fail and leave the market.
How to counter network godzillas? What will keep you afloat?
There is only one answer here - a well-built sales and marketing system will not only allow you to survive in the market, but also ensure good sales growth for your company.
In this case, there is a very apt saying: Opportunities to earn big income - a whole ocean. The problem is that most people approach this ocean with a teaspoon.
Most small businesses don't pay attention to marketing at all. This is the biggest mistake that is made.
So that you know what is preventing your business from growing, here are 10 key problems inherent in any business, solving which, you will get an amazing result!
1. Businessmen don't know their numbers.
Check yourself - do you know what revenue and profit you have for the past month? How much did you keep for yourself, and how much did you put back into the business? Believe me, these are not the numbers that affect the increase in sales! The vast majority of entrepreneurs have no idea how much each client costs them, how much they earn on each client, on each product, on each group of goods. And what material result does each advertising company? There are no reports, no systems to track the effectiveness of advertising. As a result, huge funds are thrown away on unnecessary advertising.
Without knowing the numbers, it is very difficult to make decisions. As a result, the decision is not made on the basis of how much advertising has earned, but simply "how much we have earned in total." But this is completely wrong! Knowing the numbers, how much profit this or that advertisement has brought, you can decide which advertisement to invest in next time.
2. Trying to compete based on price.
This is another problem for small and medium-sized businesses - an attempt to compete on the basis of price. What does an entrepreneur do when he sees a similar product from competitors? That's right, he lowers the price of his product and thereby spoils the market for himself and his competitors. Endless dumping does not lead to anything good.
Few people understand that sometimes selling more is easier, and if you use two or three step sales, it turns out to be even better.
Selling expensive is much easier and more profitable. Let there be fewer customers, but there will be fewer problems, costs will be reduced, as a result there will be more money. Build your sales in such a way that customers appreciate you not for low price but valued for the value you give them.
3. Lack of work with existing base customers, with a constant desire to increase it.
This problem lies in the fact that the entrepreneur already has a decent base - 500-1000-1500 customers, but he does not know what to do with it. A client came, bought something, he was entered into the database and he left. Everything, on this contact with the client ends.
What to do next? The base actually does not bring money, but, as you know, its own customer base is actually a “golden asset” for any business. It has been proven that selling to an existing customer is 5-7 times cheaper than acquiring a new one! Everyone wants to sell to new clients, but few work with old ones, although with the right approach they can earn many times more.
4. The system for converting potential customers into real customers is like a leaky bucket.
The essence of the problem is that no one really deals with the clients who applied - the client came, looked and left, the money was lost. If you focus on closing every customer who comes or calls to buy, you will immediately get extra money for your business!
Remember, if a client made an effort and called you or came, he is actually ready to make a purchase, you just need to push him to do it with the right actions.
5. The entrepreneur's lack of desire to change anything in his business.
It is human nature to be lazy. Few people are ready to “move mountains” today in order to get results only tomorrow. Everyone wants results now and immediately! And strategies to increase sales work gradually and not immediately. Therefore, many are limited to the status quo and available income. People just wallow in the swamp of their business and do not understand how to take the business to the next level.
6. Many businessmen, instead of working "on" their business, work "in" their business.
Entrepreneurs are spinning like a squirrel in a wheel and the more they spin, the more clients come to them, the volume of work is growing, it requires more and more extra time, and there are only 24 hours in a day. The result is a vicious circle.
It turns out that a person simply hired himself to work, but he believes that he has a “business”.
You need to understand that business for the sake of business is the wrong approach. Business must be done to achieve your goals!
The problem can be solved by building new management systems and “distance” from the business of its owner.
7. Selling "on the forehead" has practically ceased to work.
Everyone starts by trying to sell directly, but now this method no longer works. If you use only this method in your business, alas, you are doomed. Real sales are where the two-step sales system is used. For example, you can not just sell, but first train customers, then next time they will come to you and buy.
8. Your site does not sell.
This problem is especially relevant for small businesses. The entrepreneur either does not have his own website, or this website formally exists, but in fact it does not contribute to sales. A website is a fairly powerful resource for business in our time. Having a good "selling" site can attract enough customers, even in a small town.
By the way, in the West they already say that if you are not on the Internet, then you are not in business either!
9. Perfectionism.
This problem lies in the fact that you are trying to make all the processes ideal at first, and then just start them, and then everything will be fine. Making ideal can be done endlessly and you will never start the process. You need to make some kind of prototype and run it, and then you can improve it. Remember how they are released software products- at first a beta version, after that they already begin to release new and new versions, finalizing the shortcomings, while simultaneously carrying out the sales process.
10. "I know it won't work for me."
There are entrepreneurs who are initially sure of the ineffectiveness of a particular strategy. Often, they didn't even try to do something. They just think so. In fact, everything works, you just need to take and do, take and do. The effect depends on the number of attempts.
For those who do not want to test new strategies, there is only one answer - if you want to get like everyone else, do like everyone else! If you want to be like others, do it differently!
So, now you know what is preventing your business from growing. The point is small - to implement strategies to increase sales and solve problems, one by one, systematically and persistently.
If business is not going...
Often, when people are faced with a difficult task, they give up too quickly. Especially if the task is new, and there are no specific steps to solve it. In this case, you need to invest a large number of time and energy into experimenting with solutions. Creative problem solving requires extensive study of the problem as well as time to nurture creative ideas.
Business Leader Strategies:
imagination - at the opening of the first Disneyland, one of the organizers said: "What a pity that Walt does not see this." In response, the expression followed: "Disneyland was built precisely because Walt saw how it would be";
investments - Ray Kroc acquired McDonalds from the McDonald brothers and made this restaurant an international franchise;
improvement - when Kawashima took over the management of Honda, the company was on the verge of bankruptcy. But Kawashima said, “As long as I am the head of the company, we will not surrender to anyone. The Kawashima team made 113 changes, but they managed to survive the crisis”;
incubation - solution method challenging tasks through team interaction and focus groups. For example, the 12 Steps to Recovery from Alcohol Addiction program was invented through gatherings of like-minded people.
In a company, various people:
generate ideas. The marketing department generates ideas for bringing new products to market. Polaroid: "Why can't I see the stasis photo after it's been taken?";
develop a concept. iPhone and iPad were not created immediately. During the development of the concept, dozens, perhaps even hundreds of prototypes were tested before the final version was accepted. The development of the concept is created by the joint efforts of the departments of marketing and R
optimize. Optimization of the financial aspects of production, selection of optimal suppliers to maximize profits from the product. When completing Dell laptops, components are purchased from hundreds of different manufacturers in order to assemble laptops that are optimal in terms of quality and value;
implement. Once a product is developed, it must be marketed. Operational and tactical tasks are performed by employees from the logistics and sales departments.
The leader must know the preferred style of work of his employees. Who is a particular employee: an idea generator, a concept developer, an optimizer or a person who implements the idea?
Long Term Strategies for Creative Thinking:
give yourself time to rest. No wonder they say that the morning is wiser than the evening;
discuss your ideas with other people. However, do it in free time, do not distract colleagues from work for the sake of discussions;
ask people for advice on solving your problems. For developing creative ideas, there is little substitute for good brainstorming;
find a place where you can think without outside interference;
read a lot of books on different topics, it is useful for creativity personality;
protect yourself from limited people. You should not communicate with people who cut all your ideas in the bud and do not see beyond their own noses.
After the Internet appeared in almost every home, many people began to use it as a source of income and become entrepreneurs.
Thanks to the World Wide Web, you can start from scratch trading, providing services, and much more that is actively used in our time.
Creating a business is not as difficult as making it work and bring profit to its owner, because not everyone can achieve success, if only because they do not have a sufficient level of information. ?
Business and profit
Anything can be an explanation for this phenomenon, let's look at the most common reasons:
one . Many people are so tolerant and accustomed to treating other people with respect that they sacrifice their own prospects.
You should never forget that you are cooperating with people, you are promoting your own business, and using someone else's services, you should get the proper result.
I am well aware that there are various situations in which it is simply impossible to resolve cases quickly, and the people you work with cite personal problems.
Everyone who belongs to your business should be a responsible person, and if he simply cannot cope with his work, you should not feel sorry for him, but it is better to refuse cooperation and not sacrifice the development of your business.
2. The second reason, which is also quite common, is the psychological preparation of the entrepreneur himself. Entering into business and finance, you need to be prepared for different situations, "falls" and "ups".
If you can’t mentally overcome difficulties or decide at the first profit that you can “slow down”, you are unlikely to succeed.
Promising businessmen they constantly calculate their own actions and psychologically prepare for various conditions in order to take the right actions to solve a difficult situation.
3 . Last reason, which again is very common, is influencing the wrong audience. For example, if you are promoting a banner network, it makes no sense to use blogs about earning money for beginners, because. visitors to such projects do not have their own website and cannot become your clients.
Selection target audience, this is a very important action that you should take seriously, calculating all the subtleties.
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