Transcript provided by Otter.ai.
Hello, and welcome back to That Podcast Ysmay Hosts, I’m Ysmay, and today I want to talk to you about Q4 2019. Today, October 1 2019, marks the beginning of the final quarter of the year.
And I’ve noticed in a lot of business groups I’m in that entrepreneurs are met with frustration and happiness and sadness, and many of them are kind of freaking the fuck out right now. Because Q4 brings with it some relatively scary connotations and some emotions that maybe we don’t want to be dealing with. Q4 is the time of year where you look back at your business, and you see how things have progressed up until this point, because I don’t know about you, but this year has just flown by. I can’t believe that we’re already in October. And I know just speaking from my own business, that it is completely different than it was at the beginning of the year, my focus has changed, my clients have changed everything.
Okay, they haven’t changed, I still have the same clients. But my clients themselves have gone through transitions, and they’ve gone through some growth, which means the services that they need for me have changed. And with all of these changes that we’ve seen in the first three quarters so far, 2019, it is common to hit Q4 and go “Holy shit, there’s all these things I wanted to do that I didn’t get done,” and then you kind of freak out. But I want to encourage you to instead use q4 as a time of reflection, and at a time to plan 2020. Because here’s the thing, q4 is a very challenging time of year for business owners.
If your calendar year is in alignment with your fiscal year, then this is going to be even more emotional for you because of taxes. Now, this isn’t the case for everybody. So a lot of C corporations operate on a different fiscal year. But if you’re an LLC, if you’re an S corp, your fiscal year is tied to the calendar year for tax purposes, which means q4 rolls around, and you may be looking at your balance sheet going, “Oh, I need to spend some more money so I don’t have to pay as much in taxes.” Or “I am so not going to hit my revenue goals for the year. What can I do now in order to make that happen?”
But q4 is sort of a funny time in that regard, because we’ve got the holidays. Here in America, we have the holiday season, which kind of feels like it’s starting to kick off with Halloween even though we’ve got a few weeks between Halloween and no and, and Thanksgiving.
In fact, this year, I think we’ve got about four weeks. So basically, we’ve got a month, but people start to get out of the hustle mode, and they start to kind of wind down. They start to spend more time with family. If you are still holding down a career, this is a time where maybe you want to take some vacation time before you lose it on December 31.
So with all of these different factors that are influencing decisions right now, q4 can be a very challenging time to launch a new offer, especially if in the following three quarters, you haven’t actually done any prep work to make that offer a reality, especially if your offer is not tied to making the new year a better year. So this is a good time to launch for yoga teachers, for wellness coaches for life coaches, for business growth programs for productivity.
But this is not necessarily the best time to launch a program about Twitter ads, or Pinterest, for example, because people’s priorities are shifting. As the year is wrapping up, as people are becoming more and more reflective, they’re looking ahead at what can be done differently in the next year. How can the next year be better than this one. And buying decisions for products and programs and mentorship tend to revolve around those key things.
So unless you’re able to prove that your Twitter ads program, or your Pinterest program is absolutely going to change their 2020, this may not be the best time to go ahead with that even if you’re looking at your balance sheet, and feeling depressed about how much revenue you have yet to earn this year.
I like to use q4 as the time to do a couple things.
I like to look at my offers, I like to look at my packages, my services. And I like to see if they still resonate. Invariably, I learned so much working with clients throughout the year. And q4 comes around. And it’s the perfect time to look at the services I’ve been delivering the price that I’ve been charging the value that my customers have been getting. And see if the packages and the specific offers that I have put together are really in alignment with those three qualities. It is also a time where I like to take a hard look at my clients and see if they are still the clients that I want to be serving. Now this is something that’s very emotionally charged for anybody who gives a shit about doing a good service.
So if you’re interested in doing good work, if you’re interested in being effective, and being impactful, and changing the lives of your clients, looking at your client roster to see whether or not some of them are still a good fit, can be very emotionally taxing for you. Because the reality is there may be clients that you absolutely love, but are objectively holding your business back. And when you come to these realizations, you need to make a decision, do you change the terms of engagement?
Do you set new boundaries? Do you raise the rates? Do you change the packages? Or do you just sit down with the client explain to them what is going on that is not working for you.
All of these emotions come up. And all of these fears of, “Oh, I’m going to lose the client if I’m confrontational,” or “I’m going to lose them if I change the terms of engagement or if I raise my rates.” And we start to feel this fear bubbling up. And so we withdraw, we go into scarcity mode. And we go, “Oh, well, you know, they’re actually they’re not that bad. And I believe in their mission.” And we make all of these excuses for the client who is someone that we like personally. But for a bad client, we make emotional excuses to justify what is objectively bad behavior. And so when we’re going through this process in q4 of looking at the client roster, there’s going to be a moment where that comes up. But I want you to really think about how this person is treating you and your business on an objective level.
And here’s the thing, your number one priority has to be your health. Your number two priority has to be your business.
And a bad client can destroy your health because it increases your stress, it increases the cortisol levels that are flowing through your body. It affects your sleep, it affects your anxiety, it affects your emotional, and mental stability, which then spills over into the health of your personal relationships with your family with your friends.
And it affects your business because when you are so wrapped up in that one client who is impossible to please, when you’re going above and beyond, because you want to do good work, and you really like them, but they’re just never happy…
And they’re taking more and more and more out of you. That’s bad for your business, because it is taking your energy away from the clients who do love you, the clients who want you to be well taken care of the clients who are not just trying to use you for every single penny that they have paid.
So looking at that client roster, try very, very hard to put your emotions on the backburner. Now I know this is going to be a challenge. But I really want you to look at the client relationship as an objectively as possible.
And go through that list and do this with every single client on the roster.
Is this the work I want to be doing?
Does the client treat me well?
Am I being paid fairly for the work I am doing?
Now being paid fairly is another the big one that is emotionally charged for us. Because there’s all of this talk in the business world, especially online business world, where we’re encouraged to “charge what you’re worth.” But we are also the participation trophy generation, right.
So in grade school, in Little League, everybody who showed up and played got a trophy just for showing up. So we have this message coming at us from our early early childhood, that we get rewarded just for showing up. And then we have this message that’s being spouted by gurus saying you need to charge what you’re worth.
And when you put those two messages together, what you often get is a combination of bad pricing and bad service. Because we have people — and you are probably not one of them, because you’re taking the time to tune into business podcasts…you’re actually probably interested in that doing a good job.
But we’ve got people who don’t have any business being in business, they do shitty work, they are horrible at dealing with clients… who feel like they deserve to get paid just for showing up. And they deserve to get paid a lot because they believe that they are unique, special snowflake, and they’re worth more than whatever the client is paying.
Now, as I said, you’re probably not one of these entrepreneurs, and that’s a good thing. But if you have any of those messages from your youth or from other gurus that you’ve been listening to, where you deserve to get paid for showing up and you deserve to get paid a lot of money, what you may end up with as you’re doing this inventory of your clients is in regards to the third item of being paid fairly… What you may end up with is feeling like you’re not being paid fairly, but only that emotion is coming up because of this messaging that you’ve been receiving throughout your life. So fair has to be quantitative and objective.
One of the ways that you can get an idea of whether or not what you’re doing is fair is by doing market research and looking at what your competition is doing. Now, I’m not saying you should price your work based on your competition, because there are going to be people who are at different stages of the journey, and you just have no way of knowing. If you just go on over to their website and see what their prices are, you don’t know whether or not they actually deserve the high rate that they’re charging, because they’ve got a lot of experience, they get great results for their clients, their efficient, whatever metric you want to base the notion of deserve on.
You don’t know if they are just getting started. You don’t know what their journey has been like you don’t know if they’ve been in business for 10 years, but they also work a full time job. You don’t know everything about everybody. I mean, that’s the hard truth of the internet.
So I don’t want you to base your pricing on what your competition is doing, but do some research to get an idea of where you fall in the marketplace. There are always going to be service providers who are at the lower end of the spectrum and at the higher end of the spectrum. And you can price yourself any way you want. But if what you’re delivering to the client is not objectively reasonable for the price that you’re charging, then it’s not necessarily fair to the client.
If on the other hand, you are charging the client very little and you’re over delivering on the value, then the price is not fair to you. So you need to take a hard look at what the market is doing the work that you’re doing (in regards to) the quality of your work, and you need to really be open to the concept of objective pricing, which again, with this participation trophy generation, and “charging your worth” messaging can be a challenging thing to do. So in Q4, as you’re going through all of this, what you may find is that some of your rates need to be adjusted because they’re just simply out of whack.
And this is something that I have actually had to go through, I sat down with a mentor of mine, and had a hard talk about my packages and my pricing. And even though I have been doing this for a ridiculously long time, and I have scads of experience and I’ve got happy clients…I have some clients who’ve been with me for 15 years, which is just unheard of.
Even though I’ve got all of that I have still been undercharging.
This has been an emotional thing for me because I don’t believe that I should get paid just for showing up; I believe that I should get paid for doing a good job. But that is not something that I can objectively measure.
So pricing needs to be based on the value that you’re giving to the client. And if you don’t know what that is, I’m going to share with you in a moment how you can find that out.
What I had to do was look at all of my products, my programs, my services, then digital products are a little bit different. And I had to go through each individual service and go, “Okay, what is the value to the client?”
And this means going in and seeing what the return on investment is for this one thing. And then I had to adjust my pricing based on that.
So let me use an example for you of web designers, because that’s what I am; that’s the business model that I know best.
Let’s say you’re selling a website, and you get on the phone with the client. And the client says, “I need a website, how much is that going to cost?” And you say $1,000, the client says, “awesome!” and you get to work.
And then after a few days, the client still doesn’t have every single thing over to you that they needed to said. So you have to push back that timeline.
You send the client some examples, and they don’t get back to you, you’ve got another delay all of these things, that extend the duration of the project and make it very difficult for you to take on new projects.
And it also can be very emotionally draining frustrating. But you just threw that number of $1,000 out of the client because in your head, you think that all the client wants is a good price. And in your head $1,000 for a website sounds like it’s a pretty good price. It sounds like it’s fair to you. And it’s fair to them. But if you break it down, and if you look at the hours that you spend building that website, you’re probably going to find that $1,000 is not nearly enough money.
So what you should do, if this is the place that you’re in, whether you’re selling websites or OBM services, is take a look at the hours invested, and your hourly rate, and also set an objective for how much you want to be earning from each project.
Now I know there’s this whole thing about, “Oh, you don’t want to price hourly, because that bad for business.” However, as a service provider, the work is done hourly. So you need to price your packages hourly based on a minimum internal hourly rate, even if that’s an hourly rate that the client never ever, ever sees.
You need to have it for your own edification. You need to know whether or not you’re actually hitting your goals. And this hourly rate is something that you should get an idea of what’s going on in the market. But also you need to look at what’s your tax burden?
What’s it costs you for contractors and employees? What’s your overhead? You need to factor all of that into your hourly rates. And then you look at the project that you’re being presented with. And you go “Okay, well, this little website,”… let’s say it’s a small five page website… “this website will take me about 20 hours,” you multiply that 20 hours by your hourly rate, and then that is the minimum price that you charge for your client.
So here’s the other thing that you need to factor in. When you are on the phone with the client, don’t just say this is the price. Because every client is different. Every client has different goals and objectives that they have for the website itself. No client gets a new website, just because they think the other one is kind of blah. Yhey get a new website because they want to make more money. They want to grow the business. And they know that a better website is one of the ways that they’re going to be able to do that.
Instead of just asking the client, “what do you want your website to do?” You need to ask your client, “what is the website worth to you? What is the value of this website?”
Then you base your price on that value. The price should always be between your floor, which you determined by the hours multiplied by your internal hourly rate. And then also the value of the project to the clients business. So clients, you need to remember here, usually have money. Anybody who’s running a legitimate business has money to invest back into the business. And they know that they need to invest into the business to grow the business because, well…they’re in business. And that’s how it works.
But we forget that in the online business space when there are so many people who are just winging it and not investing in anything. Your package, that website needs to fit with what their expectation is of value, and what your minimum internal hourly rate should be for that time invested into the project.
And I’m going to do a whole ‘nother episode about how to go through a sales call with a client to actually figure out what what that value rate is. We’re going to get pretty clear on how you can do this. And you know what I might even…I might even write up a script for you that you can sort of fill in the blanks. And you can rehearse so that you can practice this on your own.
But for the purposes of this episode for your Q4 inventory and planning, I just want you to get clear on the discrepancies between what you’re currently charging, and what is an actual fair and reasonable rate.
The fairness factor is going to come in on your end, more often than not, because I’ve never known a service provider who overpriced their services. I’ve never met one. I’ve always met service providers who are under charging. And that is not fair to you, it is not fair to your business. And your business has to be your number two priority after your health.
Here’s the thing, when you’re making more money, you can do things like take time off and get more sleep and buy better food, and take a weekend off and go to a spa. You can go get a massage in the middle of the week. When you’ve got money from pricing yourself fairly, you’re going to be able to do those things.
The other thing that q4 is best for is your future planning. After you go through looking at your client roster, you see if it’s a service you like providing, if they treat you well, and if the pricing is fair, then look at the future of your business. Look at the year ahead.
What do you want to be doing a year from now? Imagine yourself in q4 2020. What has happened in the last year? And how do you feel about tha? If you stay on the path that you’re on right now, where will your business be?
I’m willing to bet you a vanilla soy latte that if things stay exactly as they are now you’re not going to be thrilled because business owners rarely wants to maintain the status quo. We all want to grow, we have ambition.
That’s why we do what we do. Because we don’t want to work for other people. Maybe we’re really bad employees like I am. And we want to have an impact. And we want to change the world. And we’ve got these dreams and plans. And we’ve got these ambitions that are driving us.
So if a year from now, q4 2020, you’re exactly in the same spot, I bet you’re going to feel a little depressed, and a little resentful. Now is the time for you to make sure that that is not going to happen.
And it starts by looking at the packages and the services that you’re offering. At the end of the year…, excuse me, the beginning of the new year, is the perfect time to roll out new packages, and to close down old ones. Because everybody knows that January 1 is a time of rebirth and growth.
Your clients will understand that effective January 1, here’s what’s new, here’s how shit’s going to work. Look at the year ahead of objectively and we’re going to start off with that by just looking at how much money you want to make in 2020.
So if you want to make, let’s say $60,000 a year, then you need to make sure that you’re bringing in $5,000 a month from your services. If you want to make $120,000 a year, we’re looking at $10,000 a month, and so on. Just do the math, come up with a number that feels comfortable for you, but is also a little bit of a stretch. Because if it’s something you’re going to be able to achieve in the first two months, you may lose motivation.
Look at how much you want to make in 2020. Look at how much you need to make every month in 2020. And then revisit your packages and the hours that you have available to do client work and see if the math adds up.
If it doesn’t, then something’s gotta change. You either need to raise your rates, you need to hire cheap contractors, or you need to just change the direction of your project, excuse me, of your products and your packages entirely.
This again can be a very emotional decision. If you have a service that you love offering, but it’s not making you any money, it’s still going to be hard for you to let it go. Because this is something you love doing. You may not have to let it go, it may just need to be reconfigured. Maybe there are pieces of that offer that can be automated. Maybe you can use a tool like Dubsado to handle all of your client onboarding and go through a mostly automated work flow. So all you have to do is sit down and create the thing that you are being hired to do, you don’t have to deal with any of the administrative aspects of managing that client. There’s a lot of options here.
The other thing that you can do is you can hire contractors. If you’re a web designer, for example, there is absolutely no reason for you to code the website yourself. You can do the design, create the elements, and then hand it off to someone to do the actual coding.
Or, if you’re better at code than you are at visuals, hire a graphic designer. You could hire both. But again, you’re going to have to price yourself fairly so that you’re able to pay them for each project and still make a profit.
Q4 here, as hopefully you’re beginning to understand is the perfect time to be reflecting and planning, reflecting on the past year and planning for the year ahead. And I want you to spend some time, and really think about what is going to be coming up for you. And what you can leave behind what is no longer serving you what can get left in the past. Maybe it’s an old social media account that is not helping you get clients, maybe it’s a strategy that’s just not working anymore. Whatever it is, spend some time this week and get clear on that. Because as we get closer and closer to the holidays, you’re going to feel like you have less and less time to do this.
And I want you to hit 2020 at with as much enthusiasm and excitement as you can possibly have for the direction of your business. And that starts by having a really good plan and having a good inventory, what’s already going on, and what needs to stop going on.
Thank you so much for tuning in to this episode. As I mentioned earlier, I’m going to do an episode about how to have a sales call where you actually get to the price of the value of a web design project. I think that’s gonna be really valuable for you. So pay attention that’s going to be coming up in the very near future.
I’ve also got some really great interviews booked today I recorded an awesome episode with a man who starts professional soccer teams for a living. He is a professional soccer team creator. And he’s a very experienced businessman, we had a great conversation, I cannot wait to release that for you, and have some other fascinating episodes already on the books that are really going to help you take charge of your business, get some inspiration gets motivation and hopefully start 2020 on the best possible footing. So if you’re listening to this somewhere and you’re not already subscribed, make sure you hit that subscribe button and get notified every time I’ve got a new episode. Thanks so much for tuning in and I will see you soon.
If you’re ready to make big moves in 2020, I’d like to invite you to join my private membership, Balanced + Bankable. This program is designed for entrepreneurs who are averaging $5k/mo or less in their business, and want to hit that 6 figure mark. Click here for more details.