Useful stuff to know when selling wholesale and setting your wholesale price

By Julia Bickerstaff - Sunday, May 19, 2013

Recently we've had lots of questions about wholesale pricing. Here's a question from Emma that pretty well sums up what everyone has been asking.

"I make jewellery and sell it myself mostly via my website and occasionally at fairs. Recently a couple of small retailers have offered to stock my pieces. The trouble is I can't work out my wholesale price.

I usually sell my jewellery for twice what it costs me to make. The profit bit is to pay for my time. The retailers asked my what my usual wholesale price is but as I don't have one they asked my what my retail price was and said they'd work out the wholesale price for me.

That seemed like a good idea until I told them I sell my pieces for $150 and they said they'd buy from me for $75. How does that work? Each piece costs me $75 so I won't make any money.

I'd like to sell to the retailers but how do I make it work for me?"

Oh pricing! Gosh it's tricky to get right. Best digested in small bits I think, so here are ten little thoughts about selling wholesale.

1. As a rough guide, retailers usually double the wholesale price to get to their retail price. In other words whatever Emma charges the retailer, the retailer will double to get to the price it will charge the customer. Sometime retailers mark-up by more than 100%, selling stuff at three or four times the cost!

2. Retailers aren't doing this to be extortionate. Retailers are selling-machines. Their biggest challenge is finding customers, and finding customers is expensive. It's a bit annoying that they work on a formula ("double it") but that's the way it is.

3. Most retailers don't end up getting the doubled - up price. On average retailers are lucky to sell 60% of their stock at full price! This is because some stuff doesn't sell (customers don't like it) and some stuff can't be sold (get's broken or goes off).

4. When you sell to a retailer you are effectively paying them to sell your stuff for you. The mark-up that they charge - the difference between the retail price that the customer pays and the wholesale price that the retailer pays you - is much easier for to swallow if you think of it like that. And it turns out that it's not such a big price to pay because……

5. …..When we sell directly to the customer, our sales and marketing costs are higher than we think! Most of us are pretty hopeless at working out how much it costs us to sell our stuff. A lot of the sales and marketing work we do is about spending time rather than money and we tend not to track that. Even when we do spend money few of us really compare the cost of the advert (or whatever marketing we did) with the number of products we sold and work out a dollar price for each sale. If we did do the work on our sales and marketing costs we'd find that they are pretty high. It's not unusual (though it is infuriating) to find that it cost as much to find a customer as it did to make the product. Sigh!

6.When we work out our pricing based on costs - like Emma did - we need to include all the costs. That includes sales and marketing costs too! It's likely that Emma isn't really making much money at all because her pricing covers just her cost of product and time making it - not the time and cost of finding customers.

7. When it comes to pricing it's important to know what your costs are because you want to make sure you cover them. But once you've done that you can ignore your costs and focus just on what customers are willing to pay. If you've got a good product you can often sell it for much more than it "cost" you to make. Yes, there's a bit of work (and a bit of trial and error!) in calculating how much customers will pay, but don't limit yourself to thinking along the lines of 'twice cost'.

8. You want to find a retail price (the price the customer pays) which is high enough to cover your "making" costs and your "selling" costs. It doesn't matter whether it's you doing the selling or a retailer doing the selling, the retail price must cover all the costs.

9. Emma's retail price is probably a bit low. Her costs including her time (but not including selling) are $150 per item. So she shouldn't sell to the retailer for less than $150. The retailer would then look to on sell it at $300. Yes $300! Yikes! That's double the price! Will customers buy it for that? Well, you'd be surprised. Retailers are very persuasive.

10. So if the retailers are selling Emma's stuff for $300, how should she price the pieces that she sells herself on line? Well retailers hate it (and may refuse to stock your stuff) if you sell at a price that's cheaper than theirs. That's understandable. So Emma should match (or almost match the retailers). Can she justify that? Well if a customer is happy to pay a retailer $300 they should be happy to pay her too. And it's not pure profit. She still has to find those customers…..

Has this helped? Pricing is such a tricky subject and there's lots to it. Too much in fact to cover in our blogs. In July our Kitchen will open (yeah!) and pricing is one of the things we will cover there in a fabulously simple way. Want to know more? Email me julia ‘@’ thebusinessbakery.com.au

Comments are still off on the blog off *sigh* because of the spammers but you can comment on Facebook or just email me: julia ‘@’ thebusinessbakery.com.au. (Our fab new website will be here 1 June and hopefully all this will be fixed!)

And, and and......if you don't want to miss our blog we can send it straight to your inbox (together with our weekly round up of stuff to help you make a healthy income from your business.) Just sign up here (blue box)

Comments (0) | Trackbacks (0) | Permalink

Two more super easy productivity tips

By Julia Bickerstaff - Monday, May 13, 2013

Back on the theme of getting more done in less time here are two super-easy productivity tips. As I’ve mentioned before I’m on an ongoing quest to be more efficient. My two big hiccups are distractions (Facebook, email, tidying my office) and boring stuff (paperwork and home stuff like putting the washing away!). Anyway, I think I’ve found a solution! And I

thought you might like them too.

1. Three songs

This tip came from my friend Emma Bell. Emma runs Fairy Footsteps Ballet for pre-schoolers and does a ton of other stuff too. She uses the three songs trick to fit in exercise (details at the bottom if you’re interested in how to make this work for exercise) but I’ve morphed it into a trick to fit in boring tasks.

It’s this simple. Keep a list of boring tasks. Twice a day (or more often if needed) pick 3 songs, start them playing and do your boring tasks for as long as the music lasts. Then, like musical chairs, dash back to your desk/kitchen/workspace when it stops.

It’s that easy. But it’s so fun it works!

2. On the hour

This is a good one if you need to wean yourself off a distracting habit.

Lots of us find it hard to concentrate for long stretches. Because of that we often stop whatever we’re doing and flip onto something else. I guess we’re doing that ‘change is as good as a rest’ thing. Anyway, the trouble is that that ‘something else’ quickly becomes addictive and before we know it we’re flipping onto our distractions every 10 minutes or so. No wonder *sigh* it takes us forever to get anything useful done!

My Dad’s distraction was making tea. He’d be writing reports and making a cuppa every 20 minutes! When I worked in an office mine was chatting. After about 30 minutes I’d be desperate to find someone to chat to. Oh hello email, facebook and phone, maybe I’ve not changed that much.

If you also get distracted then have a go at this:

First of all work out what your distraction is (yes, I know that sounds obvious by my Dad didn’t realise he had a tea-habit until someone told him*). You can do this really easily by just keeping a piece of paper handy and noting down each time that you have a break in concentration and what you do in it! You probably only need to keep this record for about four hours, by that time you’ll have all the information you’ll need!

Once you know what your distraction is allow yourself to do it on the hour, every hour for five minutes max.

At first you’ll find yourself doing your distracting habit without realising. That’s ok. Stop as soon as you notice and make yourself to wait until the big hand is on the 12.

After a couple of days you’ll notice that you stop wanting to do your distraction so often and that on-the-hour is comfortable enough. You’ll also notice that you don’t need a very long distraction. Five minutes will feel like eternity. You might only need 30 seconds.

After a week or so even the hourly distraction will feel too often. When this happens, stretch it out a bit. Don’t give it up altogether though as I found that if I didn’t have a scheduled distraction I quickly crept back to my old habits. And another tip: don’t go longer than 90 minutes without some sort of distraction. The human brain is programmed to focus for time periods of about 90 minutes. Much more than that and it's too tough.

And that's it. Two tips that worked overnight for me. Fancy giving them a go?!

Do you get distracted? What’s your top distraction? Got any tips you’d like to share?

Comments are still off on the blog off *sigh* because of the spammers but you can comment on Facebook or just email me: julia ‘@’ thebusinessbakery.com.au. (Our fab new website will be here 1 June and hopefully all this will be fixed!)

And, and and......if you don't want to miss our blog we can send it straight to your inbox (together with our weekly round up of stuff to help you make a healthy income from your business.) Just sign up here (blue box)

* Turns out he just made the tea, he didn’t drink it. Otherwise he might have noticed a few extra trips to the bathroom!

Emma’s exercise tip

Pick 3 songs in the morning and 3 songs in the evening. So simple. Just do targeted exercises/weights/stretches runs on spot or whatever to 3 songs. You'll be able to fit it in and you actually won't even notice the time spent and you'll kick your 20-30mins needed per day if you don't have time to gym/swim. Simple and better than nothing at all!

Comments (0) | Trackbacks (0) | Permalink

Lots of stuff on pricing

By Julia Bickerstaff - Friday, May 03, 2013

Not the usual type of blog post today. I’ve had lots of questions about pricing. In particular where to find pricing articles on our website. Yes, our website is a schmozzle. Sorry about that. The good news is our NEW website will - fingers crossed and a quick prayer to the Gods of technology and web designers - go live on 1 June. But some of you need the stuff NOW. So to save you digging around in a mire of blog posts, I thought I’d do a quick summary of what we’ve written on pricing with where to find it.

I’ve grouped the blog posts under headings to make it easy to follow. It’s obviously not a complete ‘how to price’, just useful stand-alone tips. If you’re interested we do have a whole “How to Price” series coming very soon (June!). It will be in our Kitchen (details at the bottom of the post) and forms part of our Healthy Income Program.

Until then, here’s the pricing stuff:

1.Getting started

Why does pricing matter so much? Here’s a short article I wrote over at Flying Solo as part of my “Pricing for Wimps’ series. It explains a bit about why pricing is so important for a healthy income. And it also explains why we suck at it!

So to get you started here are 8 quick pricing tips.

And if you’re still dithering, here’s what happens when you price too cheaply

2. Practical tips on setting prices

Most of us are terrified of pricing our products too high so we price too low. While it feels safe to price low it actually means we have to work super-hard to cover our costs. So here are four tips to help you price for profit!

For those of us who make stuff, our time is one of the biggest costs. But we rarely charge enough for it. Here are four steps for costing your time. And if you want more here’s another way of looking at it (from my Flying Solo “Pricing for Wimps” series).

Delivery fees! Such a conundrum - do you charge them or do you say it’s free? Here are seven steps to making the right choice.

If you’re having trouble with your pricing maybe you’ve got the wrong customer. Here’s an article about pricing handmade. In a nutshell it’s about selling to people who love handmade rather than people who are looking for a bargain!

And on that, some customers just don’t understand the work that goes into your product. That’s not their fault. It’s ours. We don’t tell them! Here’s a way that you can help them understand what you do. And here’s another. And guess what? When customers see the effort you go to they’ll most likely be much happier to pay the proper price!

Cripes if you’ve ever bought flowers on Valentine’s Day you’ll have know all about premium pricing but should you do it too? Here are six steps for making the most of a premium ‘opportunity’ but doing it without the YUK factor!

And finally, what about the problem of your competitors’ pricing. Should you charge the same as them? Can you charge more? Here are some thoughts.

3. Practical tips on expressing prices

The funny, weird and sometimes annoying thing about pricing is that the way a customer feels about your price often has more to do with how you express it than the number itself. Take this for example: one price 13 ways.

Or this one: a funny little pricing you can do today!

Or this one: about keeping pricing simple.

Or maybe this one which is about how you can make project work customers (like design, bookkeeping etc) feel more comfortable about the price.

4. Discounting

Do you discount your prices? Here’s an article about discounting and why it doesn’t usually work. There’s a bit of maths in the notes. Don’t be put off, it’s just to show your number-wise why discounting is a disaster.

Of course ‘don’t discount’ wouldn’t be a rule unless it had exceptions. And one of them is quantity discounts. This article talks about people selling their time (consultants, coaches, health practitioners and the like) but it’s just as applicable if you’re selling homemade.

5.Raising prices

Here’s some general stuff on raising prices. Why you should do it etc

And now that you are convinced here are 11 tips to help you do it.

Plus a way to do it nicely

And here’s a reason not to do it at all.

6. Finally

Here are eight really fabulous pricing ideas from the restaurant industry which everyone can use.

Has this helped? What are your top pricing problems? Got any pricing tips you’d like to share?

Comments are still off on the blog off *sigh* because of the spammers but you can comment on Facebook or just email me: julia ‘@’ thebusinessbakery.com.au. (Our fab new website will be here 1 June and hopefully all this will be fixed!)

And, and and......if you don't want to miss our blog we can send it straight to your inbox (together with our weekly round up of stuff to help you make a healthy income from your business.) Just sign up here (blue box)

******************************************************************************

The Kitchen

I promised a quick note about the Kitchen. I guess it’s our club. It’s where we get together to cook up profitable little businesses.

Inside the Kitchen we’ve got lots of stuff including the super-practical Healthy Income Program, Healthy Income cookbook, Business Recipes and Kitchen-Table get togethers. All designed to take you step-by step through through the very best stuff you can do to make your business really profitable.

It’s nutrition for your business. And it’s fun.

If you want to know more just email me - julia AT thebusinessbakery.com.au

Comments (0) | Trackbacks (0) | Permalink

Nine steps to get you out of your day job and into your business

By Julia Bickerstaff - Monday, April 29, 2013

We popped a question on our Facebook page last week from Gemma. It went along the lines of

“I have been making cakes for 3 years at home, my plan was obviously to go global (no point in dreaming small) then I had a baby and I'm now working 25 hours a week behind a desk to have some sort of income and am struggling to make the leap back into the cake world. I have plenty of ideas and passion to do it just seem to be stuck making the odd few cakes at home trying to work it round bedtimes. "

It’s such a tricky situation and lots of you have emailed in with stories similar so I thought I’d pop my thoughts down on the blog.

I had a similar-ish start to my business. The quick version is that I was a partner at Deloitte (global consulting and accounting firm) with three small children and I desperately wanted out. I couldn’t just give up my sizeable salary and pay for childcare while I built the business so I did it bit by bit. My starting point of all things was writing a book. Blimey that was hardwork! I wrote it in the evenings and we were all so incredibly sick of it by the time it was finished! Anyway there’s lots more to the story but the guts of it is that four years on I’m full time-ish (working around what is now four children) at The Business Bakery.

After talking to lots of other business owners, and reflecting on what worked (and didn’t work!) for me, I’ve sorted my thoughts into a nine step method to help you get out of your day job and into your business!

1. Decide you really want to do it

I’ve been trying to think of a gentle way of saying this but I can’t. So I will be brutal. Some of us like the idea of having a business more than the reality of actually doing it. That’s ok. It’s like people who want to write a book but have yet to type a single word. (Or exercise! See this article on decoy habits for more of what I mean.)

There’s nothing wrong with dreaming about having a business unless the fact that you’ve not started yet is stressing you out.

So I think you need to consciously decide to start your business today or consciously leave it on the do-one-day list. Just making that decision will free you from a lot of angst.

And starting doesn’t mean doing anything too onerous. We’re not talking about big investments of time and money. You can do as little or as much as you want, provided you do the next 8 steps.

2. Have a goal

It really helps to have a goal. Not a super-detailed one but something that puts into words what you want to achieve. One of the easiest ways to do this is to imagine what you would like the business to be in 3 years time. You goal could be as simple as “In three years time my business enables me to work school hours and earns me enough to pay for half our family running costs”. Or whatever. Goals are personal. Pick one that you really want to happen.

It also helps to have a mini goal too. Best way to do this is to do the same as above, but change the time period to one year.

3. Work out how much time you can give to your business right now.

Let’s be really honest. How much time can you give to your business each week? If you have a day job and kids, the answer is probably ‘not much’.

Have a think about how many hours you can reasonably spend on your business every week. So this isn’t about working 20 hours (in the middle of the night) one week and do nothing for the next month. It’s about what you can do every week.

It’s better to be practical and set aside a small amount of time than it is to be over optimistic and then find it’s all too much.

4. Work out how much money you will need to be making before you can ‘buy’ more time

Ok the big problem right now is that you need to work on your day job to be able to pay the bills (and childcare). So the next step is to work out how much you would need to earn from the time you have in Step 3 to enable you to give up one day of the day job (or add one more day of childcare.)

In other words you need to make enough in your Step 3 time to cover either a day’s pay or a day’s childcare. I know this might sound like a stretch but you can do it. More on that in Step 4.

Now you might have an all-or-nothing job. In other words you have to work 5 days or no days. There’s no scope for cutting back your hours. This is tricky but you can try asking. I worked as a partner in a big global firm that I thought didn’t do part-time. But it did. When I asked!

5. Plan out the best use of your time in Step 3 to make the money in Step 4

This is the super-crucial bit. You need to plan what you are going to do in the time you have in Step 3 to make the money you need in Step 4. So let’s say you have 10 hours in Step 3 and need $200 in Step 4. The question is “What can I do in my business in 10 hours to make $200?”

So this means finding the customers AND doing the work.

Think about how many customers you would need a week to make your Step 3 money. This will force you into thinking about the best way to get them. Nothing focuses the mind like this number!

Now there’s nothing wrong with working on a longer term plan of designing a nice website, writing a blog, joining networking groups etc etc, but if you really want to get out of the day job and into your biz you need to focus on getting money into your hands every week! Oh gosh, that sounds so bossy, but I think you know what I mean.

Finally on this point. You might just not be able to do it in your Step 3 time, in which case see if you can push the time up a little. Remember when you know you can make the Step 4 money you can free up another day to work on your business, so it’s worth it!

6. Get started

Right you’ve got your plan in Step 5. Now get started. Today. No time is the right time so you may as well kick off now!

7. Stick with it - be consistent, show up.

This is the bit that makes it work. And it’s really simple. Be consistent. Work on your business every week, do the hours from Step 3, the plan from Step 5 and keep an eye on how close your are getting to your money goal in Step 4.

At first it will feel quite fun to do this. Then there will be the dip where you feel like nothing is working. Stick with it through the dip - tough as it is - as you sort of need to go through the pain bit to make this work.

8. Change the plan not the commitment

It’s quite possible that the plan you hatched in Step 5 doesn’t work very well. That’s ok and happens almost all the time! A plan is just a starting point. Once you’ve got a few customers you’ll know more about what works and doesn’t work. So change the plan if you need to. But don’t give up. There’s often another way to get to where you want to go.

9. Unless you decide that it’s actually not so fun.

OK, you can give up. But only if you’re not enjoying it. Having your own business is meant to make you feel happy. If it feels like a drudge then this business idea isn’t the one for you. Maybe time to hatch another idea!

10. Repeat!

And once you’ve freed up one free day you can keep doing the same thing until you can free up another. You’ll have more Step 3 time - one day plus your original Step 3 hours - and you’ll work towards paying for two Step 4 days.

I promise, it does become more doable!

Has this helped? If you’re trying to start a business while working let us know. You can email us: julia ‘@’ thebusinessbakery.com.au or pop something on our facebook page. Comments are still off on the blog, sigh.

Or how about sharing a tip?! Do you have a tip for getting your business started? Email them to julia ‘@’ thebusinessbakery.com.au and we’ll share them with our community and give you a big shout out!

And, and and......if you don't want to miss our blog we can send it straight to your inbox (together with our weekly round up of stuff to help you make a healthy income from your business.) Just sign up here (blue box)

Comments (0) | Trackbacks (0) | Permalink

Timeboxing. What it is and why it makes you super-efficient

By Julia Bickerstaff - Thursday, April 18, 2013

Continuing my quest to fit a little more into my day (more on the quest here and here), I’ve been experimenting with timeboxing. And I love it.

Timeboxing itself is dead simple. You just:

Pick a task you want to get done

Decide how long you want to spend doing it

Set your timer for that amount of time

Start doing the task and stop when the timer rings

That’s it!

Hardly rocket science but BUT but, it’s really fab for making you super-efficient.

How? Well it’s down to this:

We have a choice. We can either work as hard as we can until a job is done or we can fix the amount of time we have available and do the ‘best’ we can.

By nature I sit in the ‘work as hard as we can’ camp. I think most small biz owners do. We want to do the best job possible and in the absence of a boss or other person setting our schedule, we keep on working, tinkering and perfecting until the job is well and truly done.

But I’m starting to behave differently and - through timeboxing - I’ve been living in the “fix the amount of time’ camp.

My goodness. It’s fabulous.

It wasn’t easy to switch sides and it’s taken me a while to fully embrace it. But it’s really helped me get stuff done.

Here’s how:

Procrastination

It’s nipped procrastination in the bud. Once I’ve decided what to timebox I set the timer straight away and get on with it. I think the fact that I can see a finish line to the task helps me get started!

Perfectionism

You might not believe this given the state of The Business Bakery website (!), but I’ve always struggled with perfectionism. I have trouble finishing stuff because I know it could be better. I can happily tinker with things forever.

With timeboxing I have to finish when the bell goes and although I still want the job done perfectly I’ve finally accepted that when it’s 95% fine it’s good enough.

(Just on the website: new one with lots more stuff coming 1 June. Would have been here two years ago if I hadn’t been so afflicted by perfectionism)

Predicting

I’ve worked out little timeboxes for recurring tasks. At the moment mine are mainly writing based - so I have a timebox for a blog post, an article, a business recipe (more on that when new website appears!). My friend who makes dresses for little girls has timeboxed the time for one dress - she does the whole thing start to finish in one timebox. My cakey pals are timeboxing different parts of the cakey process, another friend is timeboxing her daily marketing tasks. You get the picture.

When you’ve worked out your timebox for recurring tasks it’s easier to predict how much you will get done in a week. Rather than setting off on Monday morning hopeful of squeezing a lot in, I know what’s doable!

Prioritising

I like to start the day with a timebox task. There’s nothing like getting something meaty done to give me the enthusiasm to pack lots more into the day! Because I only timebox important stuff it ensures I start the day with something a little more productive than a play on Facebook.

What about you? Are you a timeboxer? Do you think you could give timeboxing a go, or are you a committed 'work- hard-until-the-job's-done' type?

Comments are still off on the blog off *sigh* because of the spammers but you can comment on Facebook or just email me: julia ‘@’ thebusinessbakery.com.au. (Our fab new website will be here 1 June and hopefully all this will be fixed!)

And, and and......if you don't want to miss our blog we can send it straight to your inbox (together with our weekly round up of stuff to help you make a healthy income from your business.) Just sign up here (blue box)

Comments (0) | Trackbacks (0) | Permalink

Seven things to do when you're tired, overwhelmed and fed up with you business

By Julia Bickerstaff - Monday, April 15, 2013

Here’s a snippet from an email that dropped into my inbox this week. I get so many questions on the same theme that I thought I’d pop my musings on here.

“I’m fed up, tired and overwhelmed. My business seems to have taken over my life. I’m feeling permanently anxious because there’s so much to do. I’ve got no time for the kids and haven’t relaxed for ages. I don’t know what to do. I don’t want to give up my business but I can’t go on like this” ~ Bella

I’ve sorted my thoughts into seven activities - stuff you can go and do right now. And I think that’s super-important because action puts YOU back in control of the business rather than the business, erm, in control of you.

You don’t have to do all seven, in fact just doing any one of them will help. And you don’t have to be overwhelmed to give them a go. They are also fabulously good things to do to help you manage ‘busy’.

First of all, and before you do anything rash, take a day off.

I know, I know. You can’t. If you could you wouldn’t be in this pickle.

Believe me here - just sort of have to. It’s impossible to think clearly when you’re tired, grumpy and overwhelmed.

A day off now and a bit of clear headed thinking will save you loads of time and angst in the long run. As they say: just do it. Pop a voicemail on your phone, an autoresponder on your email and tell the world you’re sick. Turn off all your electronic devices and go for a walk, have a sleep or watch some crappy tv.

Once you’re feeling just a little refreshed, grab a pen and paper and answer these questions

(Weird but true: writing the answers down works way better than just thinking about them):

Do I still love the core of what I do? (so for example if your business is making dresses, you’d ask yourself “do I still enjoy making dresses?’ or if it’s helping kids to read it’s “do I still enjoy getting struggling kids reading?”)

Do I still want to have my own business? You might be a bit 50/50 on this, that’s fine

Why do I still want to have my own business? List all the reasons you can think of.

Is my business making you enough money (even though it’s working you to the bone?)

Now on a new piece of paper write down what your ideal business would look like.

Use some of these questions to help you but add your own thoughts in too:

How many hours would you work a week?

When would you work those hours?

What would you mainly be doing? (Eg icing cakes rather than bookkeeping, say, if you’re a cakey type)

How much income (profit and salary) would the business make you each week?

What tasks would you not do (for example: filing!)

Stick the list you made in step 3 on the wall in your workspace.

Just having it there to glance at will motivate you to change stuff (see step 5) and remind you that you’re not going to be in this overwhelming gloomy state forever. Every day take a look at your step 3 list and ask yourself “What can I do today to get me closer to my ideal business?” Please just give this a try. I know it doesn’t sound very practical but actually it really works. The combination of having a picture of how you want your business to be plus actually asking the question over and over again somehow (and I’ll leave that to the brain scientists to explain) unleashes creativity and ideas you never thought you had!

Do the one week challenge

Try this, it’s awesome:

Bust a gut to get through a ton of work on the next three days, so you can clear the decks a bit.

For the week following the manic three days allow yourself to only work the number of hours you want to work (in step 3)

See how this changes the type of tasks you do

At the end of the week, look at:

what you stopped doing - can you stop doing that forever?

what work you prioritised - did you get more of the important stuff done than you expected?

what didn’t you get done that you wished you had got done? How do you feel about it?

You’ll finish the week knowing some practical stuff YOU can do to change YOUR business

And here are a few very practical things to do:

Relax your turnaround time a little - make sure you make this super-clear to customers but if you need a little longer to fulfil orders, take it.

Don’t check email (and Facebook messages) all the time. Set yourself three times a day to check-in and put an auto-responder on your email to tell people when you expect to be able to reply to them. Most people don’t need an urgent response but they do like to know when they will hear from you.

Turn your electronic devices off at certain times during the day and after, say, 6 pm. You will feel better not checking in - even ignoring facebook etc!

Make a list of stuff that someone else could do (filing, bookkeeping, sewing, whatever!) and see if you can buy just a couple of hours of someone else’s time each week. It’s amazing how just moving a few things off your to-do list and on to someone else’s can help lift that awful fog.

Finally I’ve written about the smile file and the good things jar here.

They won’t make your weeks any less busy but they they will lift your spirits!

Has this helped you? I’d love to know. Let us know, on Facebook, if you don’t mind. Comments are still off on the blog off *sigh* because of the spammers. You can also email me if you've got a question: julia ‘@’ thebusinessbakery.com.au

And, and and......if you don't want to miss our blog we can send it straight to your inbox (together with our weekly round up of stuff to help you make a healthy income from your business.) Just sign up here (blue box)

Comments (0) | Trackbacks (0) | Permalink

How I keep a Business Journal and why I do it

By Julia Bickerstaff - Thursday, April 04, 2013

(image http://theberry.com)

Here’s something that I’ve been doing for about six months and am loving. It’s easy and useful and I think you’ll like it too.

It’s keeping a business journal.

I sort of alluded to this back in January in this post where I mentioned Day One. But I didn’t go into much detail then ‘cos I was still only 3 months into having a go myself. Now that I’m an old timer (having been doing it all of six months) I thought I’d share what I’m doing with my business journal and how it’s helping me.

What is a business journal?

Well it’s is a little like the 5 year diary you may have kept as a kid, except this version is punchier, more purposeful and (hopefully) less angst ridden. I hope that’s not put you off. I’ll explain why it’s so useful in a minute but first....

Here’s how I keep mine.

1. I use an app called Day One to keep my journal. There’s no need to get this - I only do it because it keeps it handy and I can fill it in on my phone at the end of the day. A paper diary with half a page for a day would work just as well. Or you can just keep a log in a word document. On that note though, the thing I like about a diary (paper or online) is that it’s very noticeable if you miss a day - and that alone forces me to write it!

2. I don’t write much each day. I quickly found that if I set myself too much to write I don’t bother at all, so now I just jot down the following:

a. Three things I’m pleased I’ve done

b. One thing that’s gone really well

c. A smile

d. A whinge

e. Something I’ve learned

3. The ‘three things I’m pleased I’ve done” is usually just three things off my todo list. I try to make sure they’re the important todos, the ‘right’ work - rather than just processing stuff. But they’re not massive things - so one of my ‘three things’ for today will be writing this blog post. Sometimes I don’t have three things. That’s fine. Sometimes one good thing is enough.

4. I try to find one thing that’s gone really well in each day. Some days there are many to choose from and other days it’s a little more of a stretch. But there is always something!

5. So while something that has gone really well means ‘really well’ in my opinion. A ‘smile’ is when I get some type of affirmation from someone about my business who is a little less biased than me! It’s the sort of stuff that goes in the smile file and the good things jar. Of course these don’t necessarily happen every day but it’s good to look out for them, and again, these things don’t have to be momentous - they can be as simple as the way a customer says thank you.

6. There are plenty of times when I’d like to have a good old whinge about something (or somebody!) but I try not to do it. Much. Anyway I’ve found it really useful to write my whinges down in my business journal. Gets it off my chest without burdening someone else’s. I certainly don’t have a whinge for every day - I just pop it down if there is one.

7. I’d be lying if I said I learned something notable every day. I don’t. But most days - if I look hard enough - I can find a little something that I’ve learned. Writing it down - however small - helps cement it in my mind. Otherwise, and I hate to say it, I can quickly forget the useful info I’ve gleaned.

So that’s what I do. Why do I do it? Well this is what I get out of it:

A sense of accomplishment. Even when I can only think of one thing in a day that I’m pleased I’ve done, I feel good that I’ve done it. I also love flicking back over the last few months a the “three thing” and then I get a real sense that yes, I am actually getting stuff done!

Doing stuff. Just knowing that I need to write down three things I’m pleased I’ve done forces to me work on those things rather than, say, playing on Facebook for an hour.

A view on what’s working and what’s not. I’m not a natural reflector - I tend to get on with stuff and keep moving forward but I’m not very good at stopping and thinking about whether what I have done, worked. Having to write down, daily, something that’s gone really well and something I’ve learned has really helped me to actually stop and think about what I’m doing rather than just charging on ahead regardless.

Pride. Writing about a ‘smile’ in my business journal is like being able to tell someone about it without having to worry about it sounding like a brag.

A record of useful stuff I’ve learned. As I said above, my memory is a bit iffy so having the lessons in my journal is a good reminder.

Persistence. I think we all have days when we ask ourselves “Why am I doing this?!” and when I have those I find a quick flick back through the journal is a great cure for the wobbles.

What do you reckon? Do you fancy keeping a business journal? And if you do start - how about letting us know how it goes?

Comments are still off on the blog off *sigh* because of the spammers but you can comment on Facebook or just email me: julia ‘@’ thebusinessbakery.com.au. (Our fab new website will be here soon and hopefully all this will be fixed!)

And, and and......if you don't want to miss our blog we can send it straight to your inbox (together with our weekly round up of stuff to help you make a healthy income from your business.) Just sign up here (blue box)

Comments (0) | Trackbacks (0) | Permalink

How to cost your time, work out your hourly rate, and avoid the big mistake we all make

By Julia Bickerstaff - Thursday, March 28, 2013

(....and we're all artists)

Last week I wrote about Pricing for Profit and the fab thread over on The Cake Makery Facebook page. Lots of you have been in touch about pricing homemade, especially about what hourly rate to use, so today I’ve got four thoughts on doing it properly.

1. This is about costing your product, pricing comes afterwards

Before I get stuck into the detail of calculating hourly rates I want to take two seconds to clear up a really common misconception. I’ll breathe more easily after this and so, I think, will you.

When it comes to working out your price it’s not just about calculating your costs and sticking the answer on your price tag. It’s also about looking at what your competitors charge for similar-ish stuff and what your customers are happy to pay.

I’ll save the chat about Competitors and Customers for another blog post. All you need to know today is that working out your cost doesn’t tell you what your price should be. Rather it tells you the lowest price you can charge for your product.

In other words you can price at more than your cost but you shouldn’t price at less.

This is why it’s so bloomin’ important to get the cost right. If you don’t work it out with the right costs in - say you forget ingredients or undercharge for your time - then you’ll set your bottom price too low.

And let’s be honest. Because most of us work out the cost, lower it a bit (*sigh*), and call that the price, we’re working for nothing.

Today then, let’s get the hourly rate right!

2. How much do I want to earn per hour that I work?

If you’re serious about making some money out of your business then you need to give yourself a healthy hourly rate. Remember from (1) above, if you don’t put in a proper cost for your time then you’ll set your ‘cost price’ too low. I know, I know I’m labouring the point. But truly, costing too low is the reason we work so very hard for so not very much!

Right then, how do we work out our hourly rate?

Well the first step is to work out what we want to earn per business hour that we work. This is not the hourly rate we pop in our costings- as we’ll see in (3) below - but stay with me because this is important.

A quick and easy-ish way to work out what we want to earn per hour is to ask ourselves:

How much do I want to earn this year?
How many hours will I be working in/on my business this year?

So let’s say you wanted to earn $30,000 (£20,000) and expected to work 1500 hours then you’d want to be earning 30,000/1500=$20 per hour (£13.33). Remember ‘hours’ is all the hours you work in your business not just the ones you spend ‘making’ or ‘doing’.

Have a go at working that out now.

3. So what hourly rate do I put in my costings?

This is the bit that mostly gets forgotten.

I hinted at this in (2) above, when I got you to think about how many hours you work in/on your business in a year. Fact is that you work many more hours in your business than you do on making/doing.

All small businesses are different but I wouldn’t be surprised if you spent 50% of your business time on making/doing, 35% of your time on marketing and 15% of your time on other stuff (admin and the like).

If you want to make a healthy income you need to include in your costings an hourly rate that soaks up the time you spend running the business too. Eh? An example will help me explain.

Let’s say you want to earn $30,000 a year and work 1500 hours. That means (point (2) above) that you need to earn $20 an hour for every hour you work. You spend 50% of your time making/doing and the other 50% is in marketing and admin.

Your business is cake making and each cake takes 10 hours to make. You make 75 cakes in a year.

Scenario A - This is what most people do:

You want to earn $20 an hour so you use $20 an hour in your costings. As each cake takes 10 hours to make you includes a time cost of $20*10= $200.

At the end of the year you’ve sold 75 cakes so (if you priced at ‘cost’) you’d have earned 75*200=$15000 for your time.

Um? You wanted to earn $20 an hour for all the hours you spent working but you actually earned just half of that. You worked 1500 hours and earned $15,000. That’s $10 per hour. Sound familiar? It’s because your hourly rate is too low.

Scenario B: This is what the savvy pricers do

You work out that each year you spend 750 hours making cakes (that’s 1500 *50%). So, as you only get paid when you’re making cakes, you take what you want to earn a year ($30,000) and divide it by the number of cake making hours. In other words you know you need to charge 30000/750=$40 an hour.

Each cake then includes a time cost of $40*10=$400

At the end of the year you’ve sold 75 cakes and (if you priced at ‘cost’) you’d have earned 75*400=$30,000.

Yikes that’s quite a price hike! Yes, and we’ll worry about that in a minute. But first, remember tip 4 of last week's post? I mentioned how some people on The Cake Makery thread said they were charging £15 an hour and other people on the thread thought that was ridiculously high.

Can you see now that It’s not?

£15 probably earns the business owner about £7 an hour if you factor in all her time. And that’s precisely 81p above the minimum wage . Hardly ridiculously high.

4. But I can’t charge that much per hour for my time

I know this calculation of hourly rate can be a bit confronting. It seems like a lot to be charging so I understand you might feel a bit wobbly about it. And no doubt redoing your costings using this rate will hike your prices up significantly.

The thing you need to decide is whether you really want to make a healthy income.

I popped some thoughts on Last week’s blog about getting paid the proper price so hop back there if you need a confidence boost or a reminder. Especially have a think about whether you are selling to the right customers. That’s another whole topic, but keep in mind that there are people who value what you do. And you’re better off spending time finding them than in making stuff for people who don’t appreciate the work you do. Agree?!

Has this helped you? I’d love to know. Let us know, on Facebook, if you don’t mind. Comments are still off on the blog off *sigh* because of the spammers. You can also email me if you've got a question: julia ‘@’ thebusinessbakery.com.au

And, and and......if you don't want to miss our blog we can send it straight to your inbox (together with our weekly round up of stuff to help you make a healthy income from your business.) Just sign up here (blue box)

Comments (0) | Trackbacks (0) | Permalink

Four tips and some useful thoughts about Pricing to make a Profit

By Julia Bickerstaff - Thursday, March 21, 2013

I was going to write on a completely different topic today but as I sat down - pen poised - last night I got completely distracted by a marvelous thread on the Cake Makery facebook page.

I’ll tell you about the thread in a moment but first of all some background.

Cake Makery have developed an App for costing cakes. The idea is that you pop the cost of all your ingredients, plus your time, into the App and it totals it up for you and tells you what you should charge.

(Aside: Of course if you’ve heard me warble on about pricing you’ll know I say that ‘cost’ is but one of three things you need to look at (the others being your customer’s attitude to price and your competitor pricing) but still the App is a fabulous little gizmo which helps you work out “cost price”. And if you don’t know your costs you’ll never know if you’re pricing for a profit.)

To demonstrate the App the ladies from Cake Makery posted a picture of a cake they had made on Facebook and asked Likers to guess the price of the cake. Later they followed this up with a picture of the costing calculation as done on the App and revealed the actual price of the cake.

Here’s the price calculation:

What followed were 226 comments about cake pricing - most people thought the cake price was way too high, a few thought it was about right and loads of people commented on how bloomin’ hard it was to make a decent income from cake making.

And I should add, by 'decent income' about 80% of the people who mentioned it said they would be happy to make the minimum wage of £6.19 (about $9 in Aus and US). One was earning as little as 20p (30 cents) an hour.

Holy Moly!

We’re in business to make a Healthy Income and an hourly rate of less than the minimum wage is so not healthy.

Because proper pricing is such an important part of making a Healthy Income I thought I’d share with you some of the pricing themes from the Cake Makery thread. I’ve added thoughts and suggestions of my own, so that if you’re in a low priced pickle you might be able to find a way out. And although the debate was about cake pricing this stuff applies just as well to all small businesses.

1. Customers just won’t pay that much

The biggest theme on the thread was that customers just won’t pay that price. Here’s a couple of the comments

“No way I could charge that much”

“I’d have no customers left if I charged that much’

“I don’t think people would pay that where I live”

Just so you know: the price in the calculation was £138 and lots of people thought the top price they could charge would be £50. That’s a big variation.

My thoughts:

This is at the heart of the handmade pricing dilemma! I’ve spoken with so many people who, when they’ve (finally!) worked out what it costs them to make their stuff, say “But my customers won’t pay that much”

It’s true, and it’s fair enough. Sometimes when a customer is faced with the proper price of a cake (or any other item for that matter) they decide they don’t really want it.

That’s disappointing and pretty disastrous for business, so what do you do?

Well you have three options:

1. Find customers who do value your work
They are out there! They might not live in your local area and it might take a bit of effort from you to find them. But if you do amazing bespoke stuff you will find customers who will pay a proper price for it.

You will probably end up with less customers than you have now, but if they pay you properly for your work you will make more money and feel more appreciated!

2. Change your work to suit your customers
If you want to stick with your current customers give them something that fits their budget. On the Cake Makery Facebook thread Debbie Brooke mentioned how she’d been told to always ask first “How much do you want to spend?”. It’s great advice.

3. Do as you’ve always done
You don’t have to change anything. If you’re happy doing the work and getting paid what you’re paid. Stick with it.

2. Customers don’t appreciate (and pay for) the skill and effort that goes into a cake

This wasn’t really a theme on the thread but I do think it’s one of the underlying problems. Most people who buy special/celebration cakes have no idea about the effort that goes into making them. It’s why customers look so aghast at the price.

My thoughts:

It really helps if you explain the cake making/decorating process a bit. You can do this with a series of photos and a timeline that you show customers. Or if you keep a blog you could do a storyboard about the cake making process. You can also find a way to drop into the conversation with customers some reference to cake decorating courses so they can see just how tricky some of the work is!

3. Hobbyists versus businesses

One of the main issues on the thread was that of competition. This was a popular comment:

“If I raise my prices my customers will just buy from some who will do it cheaper”.

A particular problem for the business cakey-types is the fact that hobbyists are happy to do a cake for no profit at all. As one hobbyist who prices her work very low said “I’m sitting at home anyway, it gives me a chance to do something I love and cover my costs”

Yikes!

My thoughts:

This is a tricky situation but not as bad as you think.

The truth is that most customers have no idea how to find the hobbyists who make cakes at a very low price. Truly! I know you know everyone in your industry but we don’t!

My Mum does flower arranging for weddings in her local church. She does it as a hobby and prices it to just cover the cost of the flowers. She does no marketing and is both delighted and surprised when someone actually asks her to do flowers! She does about 4 weddings a year and they are mostly friends of friends. She’s certainly no threat to any of the local florists!

What you do need to do though is decide whether you are in this as a hobby or a business. And if it’s business you must yank yourself out of the hobbyist “cheap” mindset. Not easy I know, but do it you must!

4. Hourly rate

Well, a huge dilemma over at Cake Makery was what hourly rate to charge. The ladies at Cake Makery charge £15 an hour and there were plenty of comments saying this was way too high. As one commenter said “Paying yourself £15 an hour, that’s just not practical”

Sigh.

What’s not practical about £15 an hour?

My thoughts:

A big part of this dilemma is valuing the work you do. Many of us have a problem with that. However if you want to have a business which makes you a Healthy Income then - and I’m going to be blunt here - you’ve just got to get over it.

Fact: if you don’t charge your time at a proper hourly rate you will never make a Healthy Income from your business.

But can you justify your hourly rate?

First of all, you don’t actually tell customers your hourly rate, so you don’t need to justify it to anyone. It’s there to help you work out your price, not defend it. Explaining the level of skill and time involved in a cake (see 2 above) is enough to help people understand the price. That’s as far as you need to go.

Another point is this. Say you charge £15 an hour for your cake work. That doesn’t mean you’ll earn £15 an hour from you business. Why? Because you don’t get paid for the time you spend on admin and marketing. If you want to earn £15 an hour for every hour you work in the business you’ll need to charge a higher hourly rate on the cakes. I’m happy to explain how to do this if you’re interested, but not here, (email me!)

If you’re a learner then by all means charge a lower hourly rate. Use the customers as practise. But don’t forget to gradually put those prices up as you become more skilled.

Finally, to help you feel better about your hourly rate, pull together a portfolio of all your work and get as many testimonials as you can. Flick through it just before you do a price quote. It will help you to remember you’re worth it!

4. I wouldn’t have the nerve to charge that

Finally you’ve done the calculations, picked the right customer, added in an appropriate hourly rate, got your price and, shucks. You bottle it. As someone on the thread said “I just wouldn’t have the nerve”.

My thoughts:

If this happens to you (ie you know what price to ask for but you don’t actually ask for it) try running this story through your head:

Picasso was painting over on the Left Bank in Paris one day when an American tourist spotted his work. “Wow” she said “Can you paint me?”
“Why of course” he said
The tourist posed and just five minutes later Picasso showed her the completed picture.
“That’s amazing” she said “How much do I owe you?”
“2000 French Francs”
‘2000 Francs?” she said “But it only took you 5 minutes”
“No it didn’t my dear, it took me 40 years”

So value your skills, it’s taken you a bloomin' long time to get them!

Got any thoughts about pricing? What else would you add? Let us know, on Facebook, if you don’t mind. Comments are still off on the blog off *sigh* because of the spammers. You can also email me if you've got a question: julia ‘@’ thebusinessbakery.com.au

And, and and......if you don't want to miss our blog we can send it straight to your inbox (together with our weekly round up of stuff to help you make a healthy income from your business.) Just sign up here (blue box)

Comments (1) | Trackbacks (0) | Permalink

What to do when people use your online shop for ideas but buy elsewhere.

By Julia Bickerstaff - Thursday, March 14, 2013

(image sty-lized.tumblr.com)

Oh gosh, Hannah sent in a good question. I get asked it a lot so thought I'd share my suggestions here. I certainly don’t have all the answers so please chip in with your thoughts too.

Hannah wrote:

“I’m an online retailer of speciality clothes for children. I work hard to curate a really good collection but I find that people use my site for ideas and then they go and buy elsewhere (for cheaper I guess.) I’m a really small business so I don’t get great wholesale prices, if I dropped my retail price to compete I’d be stuffed. What can I do?”

I think the best place to start is with 5 more questions. Here they are:

1. Where does your website traffic come from?

This can be a rather painful place to begin. But I always think it’s better to get the tough stuff out of the way first! So here's the rub:

If most of your website traffic is coming from product searches on Google then people aren’t coming to you for ideas, they are using you as the price guide.

I know, I know, you’ve worked hard on your marketing and are curating a fabulous collection. They should be coming to you for that. But if they’re not you need to know.

You can get the info you need from your website’s back end or Google Analytics. Get a techie person to help you if you need it. It’s really worth finding this stuff out early on

2. Do you offer a unique collection?

I don’t need to tell you that customers are funnyosities about delivery fees. They’ll do anything to avoid them. Including of course buying more to get it free.

If you sell a unique collection (ie they can't buy all the same pieces at another retailer), and it’s stuff that people want, then they’ll be more inclined to buy it all from YOU (and hit the magic ‘free delivery’ shopping basket total) than buy from multiple retailers (and pay delivery on each purchase).

So make sure you've curated a truly unique collection.

3. Do people trust you?

Have you ever had a bad online shopping experience? Most of us have, and doesn’t it just put us off small unknown businesses?! Sigh. This makes life tricky when you are, er, a small unknown business.

So you need to do a few things to help people trust you. Here are four easy ideas:

1. Display a contact phone number on your website. I know it’s not convenient having people call you but customers feel much safer if they know they can get hold of you if they need to.

2.Pop testimonials on your website. Get your customers to write a few words about the quality of your service. Include a photo if you can. Video testimonials are the best, but that might be pushing it!

3. Write a blog on your website with useful info but make sure it sounds like you. People buy from people and if you sound real they’re more likely to trust you.

4. Have a Facebook and/or Twitter page so potential customers can check out how real you are (and know they can contact you in a public way, should things go wrong - that sounds awful, but it’s true.)

4. Do you have repeat customers?

Having lots of repeat customers speaks volumes. Among other things it tells you that they enjoyed the experience of shopping with you, like your stuff and trust you.

if you’ve not got many repeat customers it’s telling you the opposite.

So if you’re loyalty is a little low think about the buying experience from the customer’s point of view. Did you send the stuff quickly? Was it nicely packaged? Did it arrive safely? Did you pop a nice little note in? Did you send the right product?!

You might find that improving the buying experience alone stops people using your website as a suggestion box.

5. Do you have a tribe?

If you source great stuff for your shop, provide interesting info on your website, and do it all for a purpose (like finding products for anaphylactic kids) you can create a tribe of followers. And this is where you want to get to because this tribe becomes so loyal they would sooner dance naked down the high street than buy from someone other than you.

They're my thoughts. What else would you add to the list? Let us know, on Facebook, if you don’t mind. Comments are still off on the blog off *sigh* because of the spammers. You can also email me if you've got a question: julia ‘@’ thebusinessbakery.com.au

And, and and......if you don't want to miss our blog we can send it straight to your inbox (together with our weekly round up of stuff to help you make a healthy income from your business.) Just sign up here (blue box)

Comments (0) | Trackbacks (0) | Permalink

The Daily Juice

Comments

Post a Comment

Comments

Post a Comment

Comments

Post a Comment

Comments

Post a Comment

Comments

Post a Comment

Comments

Post a Comment

What is a business journal?

Here’s how I keep mine.

So that’s what I do. Why do I do it? Well this is what I get out of it:

Comments