Are You Charging Enough For Your Time?

Are You Charging Enough For Your Time?

One of the biggest costs within any business is the cost of labor – and for most in the wedding industry, a large percentage, if not all, of the labor cost in your business, is your labor.  Thus, it is important for you, and your business, to not only understand what you are doing for your couples, but how much time you are spending doing it.   This allows you to evaluate your pricing per couple vs. the time spent per couple, and determine if you need to raise your price and/or cut back on the time you spend with each couple.  In addition, since figuring out the cost per couple must include time spent in and on your business, but outside of a particular booked couple, it allows you to better evaluate your systems and processes.  For example, when should you outsource, how targeted your marketing needs to be, and whether or not a marketing vehicle is working well enough.

The first step to making changes is to know your average time cost per couple.   If you are brand new to this business, estimating how much time you are going to spend per couple can be imprecise.  You may be able to get some information from industry groups and by sitting down and talking with others in the industry, but your initial estimate will probably contain some guess work since what you plan to do for your couples, and the customer journey you will take them on, is something specific to you.  I guarantee that it definitely contained guesswork for me, as the process that I thought I would have my couples do was not what I ended up refining it to.  That is why it is recommended that you initially base your pricing on a combination of industry averages for your area and your expected costs.

Whether you are new to the business, or someone who has been around a while but doesn’t have a good idea of the number of hours spent per couple, you can create a system to figure it out.  Of course, to do this, you must spend some time, as you need to track your time.  The way I would recommend is to create a time budget spreadsheet or journal and use it for your next certain number of couples… let’s say about 10 couples.  The reason you can’t just do it for one or two couples is that, although the process each couple goes through might be relatively the same, some couples require less effort than the average and some couples require more.  The idea is to average the hours out across a good sampling to get an accurate amount.   That way, the extra hours you may spend with a more difficult couple is averaged by the lower hours you spend with an easy couple.  In this spreadsheet, you want to record all the time you spend on a particular couple – you might want to do it in 15 minutes increments, and even if something doesn’t take an entire 15 minute block (e.g. simple response to an e-mail), you are covering the time to “switch gears”, the time it takes to get the mind from whatever you were doing before to whatever you are going to do next.

This spreadsheet will give you a good idea of the time you spend on the actual client, but you also need to factor in time spent not specific to that couple.  This includes bookkeeping, marketing and social media posts (not the play time, of course), networking, and, also of course, the time that you spend on inquiries that don’t become bookings.  For inquiries that don’t become bookings, I would track that in a spreadsheet, similar to one that you are using for booked couples.  And I would track it for about 10-15 inquiries that did not book to give you a good average.  For the other “fixed time” areas, you can add them to the spreadsheet as you do them and/or go from past experience.  For example, monthly bookkeeping takes about 3 hours per month; you average one networking event per month at about 4 hours; etc.  Calculate these time costs across the number of expected bookings for the same period to get a time cost of that item per booked couple.

So, yes, it will take time to figure it out, but the process itself can give you a better realization of how long each task takes – and to know that you are spending 30 hours per booked couple vs. the 20 hours you were assuming it was can lead to changes necessary for a more successful business.

Are You Charging Enough For Your Time?

Thinking Outside the Box – Point/Counter-Point

If you have been in the business world for more than 10 minutes, you have probably heard the phrase, “think outside the box.”  And when you heard it, it probably was in the context of how your business will be, or what you do for someone else’s business will be, more successful if instead of thinking like everyone else and doing what has been done before, you are unique and figure out a new way or path.
Well, there is no doubt that figuring out a new or unique approach, or plan, or product, or service, can sometimes lead to huge success.  However, before thinking and then stepping outside the box, you need to understand the box, what stepping outside of it means, and if you going to be comfortable doing it.   I could spend many pages writing about this, but here are a few quick points to think about.
1) It seems there are two main times when out of the box comes into play: in developing something completely new (product or service); or when a market is so crowded, you look for a new way to do something within the crowded market – this could be a new way to attract engaged couples to your service, a new service no one else is offering, etc.   Thus, doing anything outside the box tends to require an elevated understanding of the potential market, usually a bit more research when planning it, and usually a bit more resources (time and/or money) than if you were doing more for your business, but still doing it within the box.
2) Even if you have a better understanding of the market, and have done a bit more research, thinking and then stepping outside the box is higher risk, offset with the potential for higher reward.  However, not everyone is cut out to take the plunge, to deal with the stress while trying, and to accept failure if it comes.   Also, if you have others who are helping you, you also have to consider if they are ready to be risky and will there be full support (not blame) when things are tough.  Inside the box, things are easier to plan and implement, and thus life is a bit more comfortable.
3) Outside the box can become inside the box quickly, based on the barriers to entry (or lack thereof) of whatever you are doing.  If you are going to be the first to try something, make sure it more than pays you back before it becomes the norm.   If you figured that you will take small steps outside the box to test the water, know that your competitors are probably going to notice, and based on your success, or perceived success, some of them will probably follow – and quicker than you would hope.
Thinking and then stepping outside the box can be a tricky thing, but if you have an idea, have done the research to feel comfortable that it will work, and you can handle the risk, go for it!
Just Say No to Money?  WTF?

Just Say No to Money? WTF?

One of the toughest things in business is to turn away money, yet, it is something that we as business owners need to be prepared to do, especially in such a personal business as weddings.  How many times have you left a meeting with a couple saying to yourself, that couple is whack (or something similar), yet you send the couple a contract and you let them book you?   To be honest, I have done it, and I will say that most of the time I do regret my decision.

Don’t get me wrong, I understand that our businesses don’t run on fairy dust or even all perfect-for-us couples.  However, working with a couple that clearly doesn’t at all fit, just to put extra cash in the bank, can hurt you and your business more than help.  It comes back to two business concepts that we often discuss: 1) ideal client and 2) business passion.   When talking about the ideal client, there is the proven concept that if we focus our limited time working with our ideal clients, our expectations of the relationship and the reality of the relationship between us and the couple matches, and their expectations of the customer journey with us and the reality of the customer journey with us matches.  These matches produces a happier couple and a happier business owner.  And usually fantastic reviews and referrals too.

Speaking of happier business owner, most of us started our own passion-driven business because we either didn’t enjoy doing something else, or didn’t enjoy working for someone else, or a combination of both.  So, if we are going to work long hours and be completely responsible for our business, risk and all, shouldn’t we aim to work with as many of our ideal couples as possible?  I know, I know, not every couple will be all peaches and cream, even if they are our ideal couple, but the more couples we work with that we enjoy, the more positive we will be, and thus the more positive our business, and thus the more positive we will be, and so on…  It is a vicious cycle, but in a good way.

If you and your business need money, I understand not turning it away, but when you can turn it away, and you should turn it away, don’t fear saying no and don’t look back.

Well, It’s Only My Time

Well, It’s Only My Time

When thinking about a project that needs to be done, how often have you said, “I am going to just do it myself, that way it doesn’t cost me anything”?   To be honest, we have all said it at some point and yes, there are times when doing it ourselves is the way to go.  Yet, we need to always be aware that although something may not cost us money, there is time involved, and to be aware that time is not only a valuable currency, but it is a currency in which once used, you can’t get it back (unlike money, as more money can be earned).

Understanding that your time has value, and more importantly, knowing its actual value, is so very important to you and your business.  Because, until you understand the actual value of your time, you are making quite a few business decisions without a very important piece of information – and thus there is no way you can properly allocate your time to produce the best return on its investment.

For example, when evaluating whether a wedding show is worth doing, I first breakdown the costs that go into a show – including the cost of my time, which usually includes the hours to sign up and get the booth content and materials prepped for the show, the show setup, the actual show, and then the tear-down and show follow-up.   Once I know that cost, plus my other physical show costs, I can properly evaluate whether the show will be worth it or are there other things I could be doing with my time that will produce better results.   Obviously, there may be other factors that I need to weigh into the equation to make the final decision, however, at least I have the entire, and proper, picture to evaluate from.

The above example focuses on marketing but knowing the value of your time is important in all aspects of your business including:
• Pricing – helps you determine how much you need to charge for your services.
• Daily Processes – helps you determine which daily processes need to be adjusted, and which can be completely removed.
• Task Allocation – helps you determine which business tasks you should do yourself, which you should outsource, and which you shouldn’t do at all.

And maybe the most important factor of understanding the value of your time is sanity, since some things just aren’t worth it and sometimes we should just need to take the time off and enjoy it.

Are You Charging Enough For Your Time?

Business Decisions & Understanding Consequences

Although there are a large number of specific business decisions we could spend days and days discussing, I wanted to use this blog post to talk about the process of making business decisions, more specifically, the part about the understanding of outcomes.  I hear way too often, “I didn’t expect that” or “why did that happen” and in most cases the outcome, although maybe not preferred, should be something that was factored into the decision-making process, and thus, not a surprise.    

A simple example – I recently had a couple cancel my services.  Per the contract, they owed me the final payment anyway, but I wasn’t sure, based on the initial cancellation e-mail, if they were going to actually pay it.  So, I began to think about what I was going to do if they didn’t.  Would I send them “pay or die” e-mails, would I take them to court, or would I just let it go?  All are viable courses of action and all have different costs and different sets of potential outcomes.  For example, if I sent them “pay or die” type e-mails, it would cost me the time of writing and sending the e-mails, with no guarantee I would get paid.  Also, it could have led to a bad review and/or them talking badly about me to others, including other wedding vendors.  All are negative potential outcomes to my business, even though technically, based on the contract they signed, it is pretty cut and dry, and they owe me the money.  However, as we know, it is not always so simple, especially when emotions around weddings are factored in.  I had to think about if I was willing to accept the negative potential outcomes or would it be better for my business to just let it go?  

Turns out that after a couple more e-mails in regards to the contract, they did pay me on the payment due date.  But it could have gone all sorts of ways, and I had to be ready for them all.  I am often reminded that even though our blood, sweat, and tears go into our businesses, we need to make decisions not on emotion alone or even what is technically right.  We need to evaluate each decision and make the choice that is right for the long-term health of our business and ourselves.

Well, It’s Only My Time

When Saving Your Business Money is Bad

In my 1st quarter newsletter main article, I made a reference to reactionary cost-cutting and how it can hurt your business more than help it.  And in this blog post, I wanted to explore that statement a little further.  When I talk about cost-cutting, I tend to lump it into two categories: researched vs. reactionary.  To me, researched cost-cutting is where you have evaluated your systems and processes, or your marketing or some other part of your business, and based on that evaluation, you have figured out that certain things that cost you money are either not necessary and can be cut or they don’t have enough of a positive ROI to be worth continuing.   It could be that you are tracking your leads and bookings and figure out that a certain marketing vehicle is not working, or you are reviewing your systems and processes and notice that something isn’t necessary or important to your ideal client.  These are situations where you have evaluated and figured out that the cost-cutting will save your business money without hurting future income potential. 

On the other hand, reactionary cost-cutting is when you cut costs on things you shouldn’t, and because you feel you need to save money now or in the very near future.  I have seen way too often where a business owner realizes they are falling short in near-term bookings and reacts almost immediately by going into cost-cutting mode.  And don’t get me wrong, it is a natural business response, but it is one that usually is not the best decision.   Let’s look at a simple example – Disco Donnie the DJ just had two cancellations and was already lower than normal on bookings for the next few months, so he reacts, and to save money he tells his setup assistant that he is not going to need him for the next few months.  The problem is that Disco Donnie has a lot going on in his life and a few of his upcoming booked jobs will be tight on setup time (even if he had help from an assistant).  In this example, Disco Donnie will get through the few slower months and will have saved a little bit of money, but it is also possible that he may receive a few not-so-great reviews and will lose some referral business due to not being able to be set up in time and therefore not delivering on everything he promised his clients.  

Don’t get me wrong, there are times when you should cut costs, and there are times when you have to cut costs, but the goal is that in the long run, the cost-cutting you do helps your business, not hurts it.