How to Avoid Underselling Yourself

A few years ago, I had the chance to speak with a group of businesswomen about their biggest financial mistakes. One that came up almost immediately was pricing products or services too low initially. Women especially struggle with worth and conceptualizing the value of their own labor, whether we’re working for an employer or ourselves.

Actually, I’d argue it can be even easier to get stuck in a cycle of chronically undervaluing yourself when you’re a solopreneur. One woman I spoke with shared about struggling with this. She priced her services too low initially. After realizing this, she found it difficult to raise her rates, because her first clients expected her low prices. She struggled between raising her prices and earning a wage that was too low for her needs. 

Whether you’re in a similar position, or just starting out and not struggling with this, there are actions you can take to avoid this pitfall of solopreneurship.

Establish a Plan and a Purpose for Your Income

First, establish your money why – your purpose and plan for the money you earn though your business. Where will it go? What will it do? An important part of this process is looking through your expenses and determining how much your business will support you with them. Once you’ve established your money why, you’ll be able to set income goals based off this information, so that your income is truly able to cover your living expenses. Once you know how much money you need to make, it’s easy to figure out how high your prices need to be.

Consider Materials and Costs

Ask yourself a few more questions: What products or services are you planning to produce and sell most often? How much time, labor, and supplies will go into production? Account for those costs in your pricing formula, and make sure the answers are what you want them to be. If you’re planning to make most of your money from custom embroidered portraits, but you actually hate embroidery, maybe you’ll want to tinker with your profit model a bit. After this inquiry, you’re well on your way to pricing yourself well. For more resources, check out this article I wrote about my interview with Megan Auman.

Work on Your Mindset

If you’ve already priced your products and wound up in a similar situation to the woman above, you can still double back and figure out your true income targets and prices. The real challenge comes in actually implementing a rate change. Before you do this, it can be helpful to do some mindset work. Raising your rates can be a scary prospect that brings up all kinds of emotional baggage, but if you work on it, you can get to a point where you feel settled. Then, go ahead and raise your prices! You deserve to be comfortable and make a living wage. After all, isn’t that why you went into business for yourself?

 

 

 

I hope you found this helpful! If this is the type of work you’d like to do with an expert guide, check out my Profitability Coaching Services and schedule a free Financial Self Care Consultation!

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Angela

Image Source: Magnet.me


This blog post is a tweaked and re-published version of the original, published in 2019 as part of a series on financial mistakes made by women solopreneurs. You can read the full series here

The 4 Components of a Restorative Money System

The purpose of your money system is to help you meet your financial needs and keep things organized. A good money system is financially and emotionally restorative. It helps you keep your money going where it needs to go, and it keeps you from stressing. It helps you integrate your personal and business finances seamlessly and without worry. There are many different mechanisms to a money system that help us achieve these objectives. Today, let’s talk about the 4 key ones:

A Spending Plan Aligned with Your Values

Having a clear spending plan that helps you align your expenses with what you care about most is an essential part of a restorative money system. Take the time to assess what you value most in your life, what feels best to spend money on. Oftentimes, there are things we’re paying for regularly that we don’t really value, or that don’t add value to our lives. Discerning the underlying desire beneath your expenses can help you better define your values. For more thoughts on this concept, I recommend reading
The Soul of Money by Lynn Twist.

Once you’ve assessed your values, it becomes easy to cull what doesn’t truly align with you from your spending. From there, you can make the moves to create a spending plan that will keep you on track financially, and in alignment emotionally.

Clear Income Target

Another wonderful thing about creating a spending plan is that going through the process means you get a good idea of what your monthly cost of living is. This means that you have what you need to create a clear income target for your business that corresponds to your tangible needs. Having an income target grounded in your financial needs and goals is a restorative element of your money system because it keeps you in touch with your reasons for putting in the work to take care of yourself financially and run your business. It’s much more powerful than the grand-but-vague “have a 10K month!” approach, because it’s personalized. Your income target reflects the amount of money you need and the amount of work you need to do to live a life aligned with your values.

Your Money Why

Absolutely key to a money system that seeks to restore and enrich your life, your money why is the purpose of your income. This is especially important for business owners, because whether your business is your side-hustle or your full-time income, your income needs a purpose. Vague goals like, “make extra money” tend to have vague outcomes. Your money why is a clear goal or intention you plan on using your income for. After thinking about your values and desires, identifying your money why is simple. For example, maybe you value adventure above all else, and you want your business to make enough to support you and pay for a grand cross-country trip. One of my values is family, and I started my business to support my daughters as they went through college.

Your money why is connected to your values, but it’s goal-based. It ensures that you have a goal connected to your money system that will lead to fulfillment and financial growth. It could be paying off debt, a big purchase, or supporting your family. Whatever it is, your money why keeps you focused and helps you create a good life for yourself.

All Needs Met – Especially Yours

A restorative money system helps you stay organized and save to meet needs – yours and your business’s. This means having a system that helps you save for taxes, pay operating expenses for your business, and pay periodic expenses in both your business and personal life. A restorative money system also prioritizes its creator – you. Your money system should not only account for those important expenses, it should also provide a regular paycheck for you as the owner of your business, even if you have fluctuating income. My ideas around this aspect of a money system are based on Profit First. This system also calls for a way to collect a portion of your income as profit, and distribute it to you, the owner, as a reward for your hard work every financial quarter.

If you enjoyed these ideas about a restorative money system, you will probably also like my series on money-mapping. Here’s part 1, part 2, and part 3 of that series. If setting up a system sounds like the thing to do right now, but you’d like to work with an expert accountability partner, check out my offering, 4 Week Refresh, which is designed to help business owners review 2020 and plan for 2021 from a systems perspective. I’m offering this through the end of January and I invite you to join me!

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Angela

The Key to Reducing Money Stress in Your Business

As a business owner, you are responsible for the finances of your business. That responsibility can come with a lot of stress. However, with proper management, the financial side of a business can become a seamless system that sustains you and your passion. The key here? Get organized.

What does getting organized look like when it comes to your business finances? It looks like solid record-keeping and the ability to look back at financial data easily. It looks like a good awareness of the money coming in and out of your business. It looks like knowing you have enough to pay yourself, pay your taxes, and run your business.

All of this can be done without the chaos, by implementing a few changes to how you do your business finances. What you need will vary depending on the type of business you run and its current financial conditions. Today, I’d like to share a couple tips on getting your business finances organized that seem to come up most often in my work with clients.

Create a Supportive Money System

Last year, I wrote a full series devoted to money-mapping, a practice you can use to visualize the flow of money in your business. Creating a money system, and a visual way to understand it, can help you recognize where the income you receive through your business is needed most, and how your personal and business finances integrate. By creating a money system that tracks every dollar (including cash) of income that you receive, you set yourself up for success. A good money system gives you an idea of the profitability of your business, so that you’re not guessing at how much you’re really making.

My work around money mapping integrates the Profit First system’s allocations idea, to help business owners set aside money for various uses in their business. These include the important things, like paying your operating expenses, getting paid, paying taxes, and saving a portion of that money in a profit account. You can read the series on money mapping here: Part I, Part II, Part III, and a follow-up article on keeping your money systems simple.

Get Prepped for Taxes

One of the big themes in my guide to getting prepped for tax time is just simply keeping your documents organized in one place. Keeping all your paper documents in one physical spot, and saving all your digital documents to a designated folder, can save you from a lot of digging and stress when March rolls around. Creating a simple organizational system for tracking these things is a great preparation step for tax season, and a definite stress-reducer.

Show Up

They say that 90% of success is showing up, and this rings true when it comes to keeping your business organized and stress-free. If you’ve been reading this blog for a bit, you’ll know I’m a proponent of having weekly “money time,” which is for you to review your financial situation and do any financial admin work that needs to get done. This time is extremely important for financial self care. Perhaps even more important than what you do during this time, is simply scheduling it in and doing it. When you make a regular habit of revisiting your finances, you will naturally start to shape them to be more organized.

Use Helpful Tools

These days, we are lucky to have many tools available that can help us stay organized in our businesses. Here are a couple that I frequently help clients integrate into their finances:

  • MoneyGrit is a great tool for either personal or business use.
  • Mint has fewer features, but can be really helpful for solopreneurs with few transactions, or personal use.
  • Quickbooks is a classic and excellent for business use.
  • YNAB is a tool I personally have less experience with, but a few other coaches I know use it often and recommend it.

I am planning on doing a more in-depth post on money tracking softwares, and the why and how to use them for business and personal finances later this month. Stay tuned for that!

I hope these tips on organization encourage you to decrease the financial stress in your business. A lot of this work can be accelerated when done with an accountability partner. I’m currently offering a 4 Week Refresh package through the end of January for people who’d like to work with an expert to gain control of their business finances. This package of four private sessions is designed to help you review 2020 and create a clear roadmap to your financial goals in 2021. We’ll also construct a money map personalized to your business, so you can effortlessly visualize your money system. If you’re interested in this package, you can learn more and sign up for a free consultation here.

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Angela

Image by  Arnel Hasanovic

My #1 Tip for Keeping Your Financial Self Care Sustainable

Self-care is important, but if you never actually do it, it’s not that valuable. The key to reaping the rewards from a financial self care routine is making sure it’s something you can actually do on a regular basis. So far this month, we’ve talked about the importance of financial self care. We’ve also touched on why regular “money time” makes a difference. Finally, last week, we focused on three simple steps you can take to infuse financial self care into your work routine. To wrap up this month’s series, let’s focus on how we can make sure you are able to keep that routine going sustainably.

Celebration

Yep, my number one tip for keeping your financial self care routine is celebration. Specifically, celebrating your financial wins. A financial win is any instance where you get a little bit closer to a goal you’ve set for yourself. So even if it’s just saving an extra $5, resisting the urge to spend on something small, paying down your debt just a bit, or making the first appointment with a bookkeeper or coach, these are big steps, and they deserve to be celebrated.

In my series on how to do a mid-year business review, I wrote this passage on celebrating your financial wins:

…[T]ake stock again of all you’ve done this year, including this review process. Chances are, you will find you’ve done quite a bit of work towards your goals, no matter how close you might be to completing them! Take some time to celebrate all the work you’ve done. Treat yourself to an afternoon off, a fun or inspiring event, or whatever you’d like to do to celebrate your achievements so far! Being a self-starting solopreneur is hard work. If you’ve done the work, you deserve to cheer yourself on once in a while.

I whole-heartedly believe this is true, and especially with the challenges this year has faced us with, we definitely need a moment to look at all our accomplishments and congratulate ourselves. Doing this is important to sustaining our financial self care routine, because it encourages to keep moving forward on our goals.

I invite you to find whatever feels like it would be the most meaningful way to celebrate these things. It might be sharing them with other people, like a money buddy or a mentor. It could be rewarding yourself with a purchase or some time off. If you use the Profit First system, it’s time for your quarterly profit distribution! Think about what you’d like to use it for. If you need some help thinking about the most meaningful way to celebrate, check out The Soul of Money by Lynne Twist.

Marking Time and Progress

Over the years, running your business may often feel like a blur. In order to get the fulfillment and satisfaction you want from it, it’s important to take time to mark time and progress. Notice how long you’ve been running your business. Make a practice of keeping track how you’ve grown and progressed as a business owner. Celebrating your financial wins is one excellent way to keep up with that practice.

9 Secrets to Financial Self Care Book CoverMarking time and progress also helps you create a sense of momentum and purpose. This helps you keep coming back to your financial goals. When you notice how your actions are bringing you closer to certain achievements, it gets easier to show up every day and do the work you need to do.

So, celebrate yourself today! If you’d like more thoughts on celebrating your financial wins and other topics in the realm of financial self care, download my free e-Book, 9 Secrets to Financial Self Care

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Angela

Photo by Aaron Burden

The Best Thing You Can Do For Your Business

Today I am excited to bring you a client success story. With the tax deadline coming up swiftly, tax preparations have been on my desktop and my mind. But they haven’t been weighing down my clients, because of the tools we use to prep for tax season.

The Story

I have one client that I’ve worked with for several years now. In the beginning of my time working with them, taxes were a huge, stressful burden. By using a money mapping system that relies on Profit First principles, we were able to start setting aside money to pay taxes. In 2019, the client had an excellent year and made a lot of money. In ordinary times, this would be great. However, because we faced lower income this year due to the pandemic, if we hadn’t saved ahead of time, we would have found ourselves in disaster come tax season. Thanks to the money system we instituted, we had our tax payments completely covered, even with lower revenue this year.

The Success

Now my client and I are happily relishing in a worry-free tax season. Saving for taxes is one of the best things we’ve done for this business. It’s helped us avoid a lot of sticky financial problems and kept things running smoothly.

Our success is all thanks to the money mapping system we use. I’ve written a series on money mapping that you can read through to get a sense of how to put this tool to work. Aside from tax season, it has a lot of other benefits, like reminding you to save and making your work in your business feel meaningful. This process of creating a money system is a big part of what I do with my clients. You can book a curiosity call with me if you want to know more about how the process might apply to you.

A Little Reminder

Just in case you don’t get my newsletter, here’s a PSA: By July 15th, your 2019 taxes are due to be filed and paid, if you owe. You are also required to turn in your first and second quarter estimated taxes for this year. Please read my article on 5 Steps to Get Ready for Tax Time to get prepped. I’m also happy to offer my services – please don’t hesitate to reach out

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Angela

Image by Javier Sierra 

By |2020-07-10T13:20:06-07:00July 10th, 2020|Categories: Profit First, Taxes|Tags: , , , , , |0 Comments

The In-Depth Guide to Mapping Your Money, and How It Can Fortify Your Business, Part II

Last week, I talked about money-mapping, why it’s helpful, and how you can get started. Today, we’re going to dive into more money-mapping using the Profit First methodology. Profit First posits its own money system, pictured in the above map. Its goal is to ensure that you as the business owner get paid.

Solopreneur Paycheck

In order to ensure that you actually get paid by your business, you need to portion off a certain percentage of your income, and then designate that for your personal finances. This portioning off is exactly what the Owner’s Pay account is for in the Profit First system. The Profit First system advocates for creating separate accounts for all your different pots of money associated with your business. If you can’t do that or don’t want to, I advise using a spreadsheet. You can use this to keep track of how much money is designated for Profit, Owner’s Pay, Taxes, and Operating Expenses.

So, back to that Owner’s Pay Account. Once you put a percentage of income in it, you then transfer some portion of that to your personal account, which serves as your solopreneur paycheck. When I work with clients, we work to figure out what portion should go into this account. That amount depends on how much the business makes in revenue, and what portion of their personal expenses they want to cover using income from their business. If income in their business varies month to month, we decide on an amount that they transfer to their personal account, leaving the leftovers to act as their cushion during slow months. This way, the business owner receives a steady stream of income, even if their business varies from month to month. This is the solopreneur paycheck.

The Function of Profit

Cordoning off funds for operating expenses and taxes may seem practical enough, but the Profit account is what makes the Profit First system unique. The profit account accumulates and then is distributed quarterly. Business owners are encouraged to use their Profit Distributions to reward themselves for their hard work. This keeps the owner excited about and invested in the business. It also discourages any tendency to reinvest everything back into the business, or over-save.  Rewards can range from a day out to charitable giving, to really anything you want!

In part three of this series, I’ll discuss what applying this model to your business can look like, and integrate all the info we’ve gone over so far. If you’re enjoying this and would like more, check out part one! You can also head to my services page and schedule a call with me. Money mapping is one of my favorite subjects. Come talk about it with me!

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Angela

The In-Depth Guide to Mapping Your Money, and How It Can Fortify Your Business, Part I

Keeping track of your money and where it needs to go may feel like a difficult task. That’s why visually mapping it can be especially helpful. When I work with clients, I help them create a visual flow chart to show where every dollar goes. Today, I want to walk through why I do this, and how you can get started on your own money map.

Simplify Decision-Making

The goal of money mapping is creating a clear visual guide of what to do with every incoming dollar. If you’re confused about where to put incoming money, your systems can quickly get out of whack. By drawing out the paths your money can take, you make it clear to yourself where everything needs to go. You also simplify the decisions you need to make, because you have everything spelled out right in front of you! This way you’re able to take action to put your money in the right place quickly and easily.

For extra points, you can automate some of these transfers each month, so that you don’t have to move everything manually. If that sounds interesting, you might like to read “Pick One of These 5 Tips to Automate Your Wealth”.

How Much Do You Need?

In order to create that map and streamline your decision making, you need to do the math up front. It’s important to think about how much you need for your own pay, business taxes, and operating expenses. When I work with clients, I help them determine these numbers in the process of creating their map. If you want a DIY version, you can check out my articles on financial self-care, which will help you determine your personal expenses and understand how they relate to your business finances. Going through your records and averaging your operating expenses can help you get a good idea of what that percentage might be.

The above image is an example map from Hadassah Damien at Ride Free Fearless Money. In this example, you can see that she’s fleshed out the necessary percentages of income that need to be set aside for savings, taxes, business expenses, and personal expenses. In part 2 of our discussion of money mapping, I’ll talk about Profit First and what these percentages are according to their theory.

From Income to Final Destination

Above all, the goal of money mapping is to know where your money is going every step of the way. From the moment you receive income, to the moment that money is saved for taxes, invested for retirement, or put away for a savings goal – you’ve got a plan. Consequently, this is an opportunity to define those final destinations. Creating a tax savings account and an operating expenses account come in handy here. You can also think about creating savings goals for yourself, and making a plan to contribute regularly to those.

If you found this article interesting and helpful, I invite you to download the first 5 chapters of Profit First! The book has its own suggested money map that I’ll also talk about in part 2 of this series. If you’re into this kind of thing, I’m sure you’ll enjoy the book.

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Angela

All About Oversaving, And Why Overcoming It Can Strengthen Your Business

Often issues with money stem from not having enough – so when you hear the word “oversaving,” it might not sound bad. However, oversaving can be a serious issue that may be blocking the potential of your business. It may also point to anxieties that need to be resolved. Let’s take a look at what oversaving is and what you can do to overcome it.

What Is It?

If you experience anxiety or guilt over spending money, even on basic necessities, you may have oversaving tendencies. You might struggle to spend money on your business or operating expenses. Alternatively, it might be hard for you to spend on something other than reinvesting in your business. Or, you might have a hard time parting with any money know you could save it for retirement or business emergencies.

Oversaving both stems from and enhances anxiety, stress, and burnout. It often comes from a fear of scarcity. While saving money is an important skill, if it’s taken to an extreme, it can keep you from spending money to solve urgent problems in your business and your personal life.

What Can You Do About It?

Saving money is a great habit, but the key to overcoming the oversaving habit is to get strategic about your saving. Rather than living in this panicked feeling of “I have to save every dime I possibly can,” create some money systems! Coming up with savings goals, establishing a spending plan, and automating your money are all great ways to introduce strategy and systems. 

Savings goals can be especially helpful, because they can lend purpose to all that saving, but they also create an end point you’ll eventually meet. Limiting and directing your savings in this way can help curb the habit and assuage your anxieties. When you use the Profit First system, you put aside money to pay yourself first, but you also save for taxes, put aside money for operating expenses, and also distribute profits every quarter, which are meant to be spent by YOU so you can reward yourself for your hard work. If you’re interested in learning more about the Profit First System, check out the first 5 chapters of the book here.

Doing some emotional work around money can also really help you clear up your oversaving. I recommend reading Bari Tessler’s The Art of Money for more ideas about this. She helps you unpack your feelings around money and combining the practical with the emotional. If you’re interested, check out my book review.


Oversaving can be a sneaky habit, difficult to catch and overcome, but I believe in you – you can do it! And anyway, saving is so much more effective when it’s done in order to meet a goal. If you enjoyed this article, I suggest looking into Profit First. If you want to chat more about these ideas and take a look at your money, you can take a look at my service packages and book a call. You have a few more days left to set up a Quickbooks 2020 Reboot, which you can schedule here. Doing a year-end review could help you identify a couple goals to save for!

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Angela

Photo by Sharon McCutcheon

How to Invest in Your Business At Exactly The Right Time

Once you’ve gotten the ball rolling with your business, it can be difficult to chart a clear path forward. Running a business is full of constant decision making, and often it can be tempting to just stick with what works, without trying to expand. However, with a few strategic moves, your business can meet the income goals you want it to reach. But what are they? The thought of spending the money for a certain marketing plan, or hiring a coach only to find little return on your investment, often plagues business owners. How do you know when the time is right to invest in your business?

As part of my series on financial mistakes business owners have made early on in their businesses, today I’m exploring when to take the leap and spend for business success. For other posts in this series, check out the articles on tax prep, pricing, and hiring a bookkeeper. Let’s jump in:

The Mistake

When should you invest in your business? Doing so at the wrong time and not doing so at all can be equally debilitating for your business. I’ve noticed this in the business journeys of quite a few of my clients.

The Solution

Knowing when to take the leap to invest in your business, to spend on marketing or hire an employee, can be tough.  These decisions can become clearer through working with an advisor to review the costs and benefits and also by using the Profit First system for guidelines around spending for operational expenses or for expansion. You can read more about the Profit First system by downloading the first 5 chapters of the book, or by exploring my page on the theory, and the allocations calculator. 

I hope these thoughts have been useful! If you’re interested in investing in your business but don’t know where to start, check out my Service Packages. I offer guidance on exactly these sorts of things. I’m also offering an accounting reboot session for anyone using Quickbooks Online as an end-of-year special. It can make a huge difference and help you identify trends in your business finances.

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Angela

Don’t Let Your Taxes Sneak Up On You, Do This Instead

Taxes don’t come out of nowhere, yet somehow it’s easy for us as business owners to get caught unprepared. As both a bookkeeper and financial coach, I see this often, but it has a simple fix. This month I’m reviewing mistakes women told me they learned from early on in their solopreneur careers. Let’s unpack this one:

The Mistake

One woman I spoke with told me she regretted not setting aside money for taxes. Some women also told me they were initially surprised by the additional self employment tax. Clients often come to me after they’ve been hit with the tax bill. At this point, we have to pay off the tax debt and save for this year’s taxes. Doing both is tough, and can make a real financial mess for new business owners. 

The Solution

To solve this problem, I recommend two things. First, work with a tax preparer or bookkeeper who will help estimate a percentage to be held out for taxes. You can read more of my advice about working with a bookkeeper here. Putting money aside will help avoid that nasty surprise.  This can also be a precursor to implementing the Profit First system, which is designed to keep your business prepared to pay its expenses, and pay you a fair wage. If you want to go the extra mile, you can also read my article 5 Steps to Prepare for Tax Time. 

Although recovery from this type of situation needs to be thorough, it’s a chance to implement new and better systems and get your business organized. I hope you appreciated these insights, stay tuned for next week’s article!

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Angela

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