The #1 Money Mistake New Women Entrepreneurs Make

Successful women entrepreneurs start with the end in mind

Chances are if you are reading this you have recently launched a business or you’re thinking about starting one. Congratulations! I’m glad you are reading this now as it may solve a few financial headaches for you down the road by avoiding the #1 money mistake women enterpreneurs make.

For most new women entrepreneurs – and I’m speaking mostly about those in the services sector, e.g. coaches, trainers, consultants, and others who deliver a specific service – you are trading your time for dollars.

Every week I speak with dozens of frustrated new women business owners who are not making nearly what they had hoped and they are stuck in this bootstrap trap of trading time for dollars.

Your formula looks something like this:

H (number of hours worked) x R (your hourly rate) = I (your income)

The problem with this model is that time is finite and there is a natural cap to your hourly rate, so this is a “no-growth” business strategy. Eventually – and likely sooner rather than later – you’ll tap out.

Here is how to make your yearly income goal

…without running out of time or money.

First, start with the end in mind and flip your success equation on its head. Do a simple calculation now with your annual income goal and let’s do some quick math:

$ GOAL / $ Average Sale = Number of client engagements

Your income goal divided by the value of your average sale, equals the number of engagements you need to close each year. If you have just fainted at that number… get up off the floor and let’s create a better plan.

First, it’s imperative that you understand how many client engagements you need to secure in order to meet that goal. Ask yourself, Is this a realistic number? Do I have that many hours to give?

Remember you need time to work ON your business as well as IN your business. Your time needs to be divided up into planning, sales/marketing, service delivery, customer service. You may outsource some of these activities and buy yourself more time, but watch your margins early on.

Let me give you an example: Last week I had a conversation with a very accomplished executive who has recently launched her own financial advisory practice for solopreneurs. She charges by the hour and visits her clients on site. When I asked her, “Your skills are so needed in this market, how do I refer to you?” She said, “I can’t take anymore clients – in fact, I can’t keep up with the referrals I have.” “

So, you are already making you income goal?” I asked. “No, far from it,” she replied.

As long as you are in the services sector, you can’t escape trading time for dollars, but you can affect the economy of your trade. Here’s a woman who will never meet her income goal given her current business model.

There are two problems with her scenario:

1. She is trading time for an hourly rate of compensation
2. She has only one offering

What should she do? (and what should you do if you are in this same boat?)

Switch from selling time to selling value.

If you are selling services to a specific target customer, you are helping them solve a problem that is worth them investing in.

When you shift your sales posture from selling a deliverable based on your hourly rate to solving a client’s problem with a packaged service offering, you have immediately elevated your stature among other service providers and you have solved your client’s problem, created loyalty and added to the lifetime value of that client. And… you have given yourself a raise.

To get a handle on how you might package your offerings instead of charging by the hour, ask yourself (or better yet, ask your client)

1. What problem are they trying to solve by having me do this for/with them?
2. What is their opportunity cost if they don’t do it or don’t do it right?
3. How much have they already spent trying to solve this the wrong way?
4. How valuable would it be to have this solution delivered in a way that meets their business/personal goals?

Nothing can truly be delivered in an hour. You are selling transformation – whether is a personal transformation involved in enabling another human being to step into their full potential in this lifetime, or offering a unique business solution that enables your client make more income, retain top employees, expand on a global scale… whatever the outcome.

There is a formula to your approach and your business that can, and should, be packaged and sold. Deliver your clients a roadmap to their desired outcomes with specific steps and milestones along the way.

Price your offerings based on value not time. Make sure you understand the time and resources that you will invest and that this feels like a fair and equitable trade, but the value sell is where it’s at.

Did this hit the mark? Comment below now and let me know if you just got a big aha, or if you have a specific question on pricing for your offerings.

Make sure you subscribe and tune in next week when I’ll talk about how to build out a tiered product architecture.

Here’s to your success!