You probably don’t LOVE doing your accounting and finances. I KNOW, I KNOW. I hear it all the time.
But, if you aren’t taking the time to learn the very basics of your business finances, you’re leaving out a MAJOR component of creating a successful business. Your numbers are the only quantifiable metric for whether your business is thriving, or merely surviving. Passion may drive you, but the numbers are what keep your business alive (or not).
I am a NUMBERS GIRL. And, I have a way of making the super-complicated seem easy-peasy. I want to help you avoid (or fix) some of the biggest mistakes I see:
Top 3 Financial Mistakes You’re Making in Your Wedding Business
1.) Your prices are TOO low.
If a wedding business isn’t earning enough it’s usually because their services are priced too low. Pricing (and the related profit margin) are the biggest contributors to financial sustainability in the wedding industry. This can be a challenge to newer wedding businesses who are simply trying to create a portfolio and some clients on the books. But, every little bump you can make to your pricing can go a long way. Even a small boost of 10% on your pricing can lead to big results. When I test things financially – it’s always pricing that is the culprit for a business’s small profits.
Now, keep in mind: pricing is a marketing decision. Your price needs to match your market strategy (your target market, your niche, your level of service, etc.)
2.) You’re making investments based on ego.
Here is my rule of thumb with investments in your business: ONLY do it if you can afford it. Don’t go into debt for your wedding business. I can share from personal experience – and from working with hundreds of wedding professionals over the years – business debt is SO DIFFICULT to overcome if you have a service-based business.
So – you know that print ad you can’t quite afford but really want to do because it’ll make you look good? You know that office space you don’t really need but feel like you have to do because “everyone is doing it”? There are so many decisions we make based on ego – or the desire to elevate ourselves, our image. This is ‘keeping up with the Jones’ wedding-industry-style. Don’t do it unless you can legitimately afford it.
3.) You aren’t tracking your sales and expenses.
Tracking your sales and expense transactions is called bookkeeping. And – bookkeeping is the most boring thing you’ll do in your business. (I’m not here to sugar coat.) However, the power of bookkeeping is not in the data entry but in the information it gives you. Over time you’ll be able to see patterns in your business. And, it’s in these patterns that you can start to make intentional decisions with your dollars.
I recommend starting with a simple spreadsheet and listing all your sales and all your expenses. And, once you’re up to ~30 transactions per month, it’s time to move onto accounting software, like Quickbooks. Once a month, sit down and look at your totals. What are the numbers telling you? Are you profiting? If you’re not achieving your financial goals, this is where you need to make changes. (I teach accounting 101 for wedding pros here if this is making you panic.)
Here are 3 action items I want you do now:
- Create an “Accounting Day” one day a month to track and analyze your finances.
- Examine your pricing. Can you make a 10-20% bump?
- Examine the investments are you making based on ego. Cut those out.
Want to manage your finances better? Start with my Accounting 101 course: http://sageweddingpros.com/make-money/