According to the U.S. Bureau of Labor Statistics, about 20% of small businesses survive beyond their first year, 50% beyond their fifth year and only a third are still active at the 10-year mark. How does this happen—and how do you avoid this in your own business pursuits?
The simple answer is money. I am sure this could sound a little avaricious, but money is what makes the world go ‘round. If money is not your primary focus in the business world, then you may need to re-evaluate your goals and the setting you operate in.
There is plenty of room within the world for charity and philanthropy, but within the business arena, your focus needs to be on financial sustainment and gain. How do you do that? Make these three main concepts a cornerstone of your business foundation: Set Your Price So You Can Thrive, Accept Your Whole Value & Set Your True Price, and “Why Not You?”
Set Your Price So You Can Thrive
How much money do you want to make? In the past, I may have answered, “enough to live off of.” This was a mindset that I didn’t realize could have been the end of my business before it even began. What I failed to realize early on was that the cost of doing business was going to rise regardless of my intention.
When I opened my first clinic in the front room of my apartment building, I intended to bring great service to as many clients as possible. I wanted them to feel catered to and leave feeling relaxed and pain-free.
My intention was admirable; however, I quickly realized that as my client base grew, so did my expenditure line.
I needed to purchase supplies that could help the client relax, equipment that would help me perform my profession, and décor that would set the ambiance of a high-end clinic. That is where most of my money went in the early stages of business.
As my business became more popular, I began to develop such marketing tools as business cards and a social media presence. Soon I found that I needed to continue to provide more services and longer hours of operation to match the client tempo.
This was great growth, but I failed to make a necessary adaptation to my business model to compensate: I never raised my prices!
Even though I had completed a budget and a cost analysis prior to setting down this path, I never considered how my prices would need to adjust according to the demand for my products and services.
If your pricing only matches your expenditures and does not consider inflation, demand and natural business growth, it is a very real possibility that you could end up in the 80% of businesses that close within the first year.
When planning your pricing, consider what you want your business to grow into. You should have a vision about what your one-, five- and 10-year business looks like. How many clients total do you want to have? How many locations? Do you want employees or contractors? These are all questions essential to developing an initial price listing. Armed with this vision, you will be able to understand where and how evolving your prices need to be for the future.
Accept Your Whole Value & Set Your True Price
One of the main pros of working in entrepreneurship is freedom of choice. You can choose your clientele, hours of operation, and what products and services you sell. However, what does not fall into the category of freedom of choice is a dedicated time commitment outside of normal operating hours. In fact, we sometimes forget that we need to take that into consideration when setting our prices.
All entrepreneurs are going to be working in their off-hours time. Regardless of the profession, you will be spending hours dedicated to networking, marketing, budgeting, training and logistics. When are you going to get paid for this overtime—and who is going to pay you?
Answer: Your price is.
Once you consider all this extra time and then add in the cost of your products and services, you will find yourself developing your true price and in turn, understanding your whole value. Your true price is the cost of everything, material or immaterial, that you have put into your product. Your whole value is the acknowledgment of the itemized list of work you engage in to make your product functional. Knowing the whole value of your product leads you to develop and accept your true price.
Why Not You?
Accepting your price is not going to be easy. It may seem like you are overvaluing and possibly overpricing yourself out of business. On safer terms, you could set your limit on product, clientele, and expansion of business operations and not waver or adjust. This could possibly lead to a standard flow of income
On the other hand, you could set your prices according to your true value and own your worth. Confidence in your product or ability is one thing—and you need to have confidence that you are worth your price as well. Believe me, someone in your market will have that confidence and set that price. Why not you?
There is nothing worse in business than missed opportunities. How many times have you sat and wondered what if? You most likely have passed on opportunities that you could have capitalized on simply because you felt that you weren’t ready or deserving. As a businessperson, you need to accept that there is money to be made and you could be the one to make it. Don’t get left wondering what if. Set your price and stand by it.
You have chosen to be an entrepreneur. You need to own that title and wear it like a badge of honor. Set your goals high and pursue them with vigor and tenacity while knowing that the sky is the limit. Hold on to the value of your hard work and dedication by delivering the best possible product.
Know now that if you don’t capitalize on opportunities, someone else will. In business, your price is a part of you and should never be sacrificed. Value yourself!
About the Author
Jeanette Falu-Bishop owns Massage Business Education & Branding LLC, through which she teaches how to start or improve an already-established massage business through prerecorded online courses, live trainings and business conferences. Visit her site for information about her 2023 The Massage Conference Live, a virtual business conference.