How to achieve financial steadiness in order to focus on growth
You don’t need a lot of money to start a business. There are many free tools that you can use to set yourself up to sell your first offering. However, as you enter the growth phase and make more, you’re going to need to spend more.
During this phase and onward, financial steadiness will become key in allowing you to perform at your best. Today, I am going to discuss how you can achieve financial steadiness in your business.
What is financial steadiness?
When we hear the term financial steadiness, we often think about making enough to cover our expenses. However, when we limit ourselves to only making what we spend, we prevent ourselves from growing into the lifestyle that we want.
There’s no set magical number. I hear often I want a “6-figure business” or a million-dollar business. Whatever your financial goals are, make sure they’re right for YOU and not just what you think they should be because some influencer online told you that’s what you should be striving for.
At its core Financial steadiness is having enough money to cover your needs AND allow room for growth. (there’s nothing magical about $100k)
Covering your needs
The amount you need to make to cover your needs is called your baseline revenue. Your baseline revenue should cover AT LEAST both your operational and living costs. While in the early stages of your business, you may have had to “spend more to earn more,” once your business starts becoming profitable, the minimum amount that you make should always cover what you’re going to spend to keep the business running.
Operational costs include, but are not limited to:
- Tools that you pay for (e.g. your CRM, your social media scheduler, etc.)
- People that you hire (e.g. team members, contractors, etc.)
- Equipment that you need (e.g. a laptop, office supplies, etc.)
Living costs refer to your basic living costs like food and housing. What do you need to bring in so that you can keep your household running and be healthy as you grow your business?
Allowing room for growth
After you’ve achieved your baseline revenue, anything after that falls under “allowing room for growth.”
This additional income can be saved or invested in both your business and personal life. In your business, you may want money for hiring a copywriter, working with a coach, joining a masterclass, or upgrading your tools. In your personal life, you may want money for larger expenses like buying a new house/car, taking a vacation, or retirement (something we forget about often as entrepreneurs).
Achieving your baseline revenue
To achieve your baseline revenue, you need to design a profit plan that close-to-guarantees you make the minimum amount every single month. I have a whole framework that I walk my clients through that involves setting good, better, and best goals and building our profit plan around the “better” goals allowing for some wiggle room (and reducing anxiety over the possibility of not hitting a particular financial goal).
The right price
Finding the “right” price is easier said than done. For one, the “right” price today could change in the future as you gain more experience. For another, the “right” price needs to take into account what you want to charge AND what your clients are willing to pay.
The biggest trap that people fall into when trying to determine the right price is comparing themselves to similar services at a DIFFERENT stage of growth. A team with multiple members may be able to offer lower prices because they can take on a higher volume of work. Someone who has been in the game for decades will be able to charge higher because of their portfolio of experiences. Make sure that when you’re pricing yourself competitively, you’re looking at businesses at the same stage of growth or you won’t be attracting the right clients.
Or like my mom used to say to me as a kid, make sure you’re not “comparing apples to oranges”.
The key to repeatable income is figuring out how many clients and/or projects you need to achieve your baseline revenue. Once you have this number, if you’re able to implement a retainer, then you will be able to achieve the income you desire without any extra work. Even if not all of them continue using your services every month, it is unlikely that you will need to find a whole new set of clients at once.
There are many ways to have repeatable income in your business, it’s up to you to find the right one for your business.
Having repeatable income will be KEY in saving you time, resources, and energy in order to focus on growth and impact.
If you need help setting up the foundations of your business to achieve a baseline revenue, consider downloading my Focus Framework.