216: [new series] Small Business Reality - Is this a Business, Hobby or Charity?

Business, Hobby or Charity? Welcome to the first episode of the Small Business Reality series. Today I am going to share a training that I end up giving all of my coaching clients at one point or another… more on that in a moment It centers around how to deal with discounts, free services and generating revenue. One of the questions I often ask my coaching clients is do you have a business, a hobby or a charity? For some clients, this has come up as they struggle with what to charge for their product or service. For others, they are focusing on making their business look pretty to the outside world, but are not pulling in any revenue. If you are not making money in your business then you either have a hobby or a charity. Your hobby can turn into a business by making your first dollar. Once you have generated revenue, then you have a business. What Happened to Me I can be honest and say that for one solid year, BizChix was a hobby. I spent countless hours creating a podcast. I started off publishing new shows 5 times a week and did that until I reached 75 episodes. Then I scaled back to 3 days a week. This was all while I was pregnant with my third child and helping run ScheduleMAX.com which I co-founded with my husband Mark. To be honest, I had zero time or energy to think about how I might monetize the platform I was building.  Eight months after I launched the podcast, I gave birth to Baby Jett, moved my podcast to two days a week and enjoyed my maternity leave by airing episodes I had batched produced before Jett arrived. When those episodes ran out, I hit a crossroads. I no longer wanted to continue podcasting if it wasn’t going to connect to my income, but I LOVED podcasting and the community of women listeners and guests who hang out in my private Facebook group for female entrepreneurs. I decided that I wasn’t going to keep podcasting if I couldn’t see a direct link between my podcast and my income.  So I did two things. I started featuring ScheduleMAX.com (my other biz) as a sponsor of the show and I launched a paid mastermind. Over time, I have transitioned to 1 episode a week and now release episodes in a series format by publishing one episode a week for 10-12 weeks and then taking a 2-3 week hiatus.  This allows me to get refreshed and create other content for my business, like my upcoming mastermind course. (Hear how I almost quit podcasting.) I tell this all to you, because at the time I launched the podcast, I felt like I had a business. I was putting in a lot of hours. I was building up my presence on social media. I was hearing from listeners. I was building a platform from nothing. I was a member of the podcasting community and making friends all over the country. I was building a million dollar network of female entrepreneurs around the world that were guests on my show. But it wasn’t until I received my first dollar from my first mastermind client, that I really had a business. The Danger of Trying to Be Pretty I have worked with many clients that spend months or even almost a year making their business look pretty. They hire a designer and spend thousands of dollars on creating the perfect logo and website. They spend lots of time on social media and creating content, but still have not offered anything for sale. I know that for a lot of you this is very familiar. I have other clients that go for that minimum viable product. They invest as little as possible in creating a website and test the waters within a few months by selling an inexpensive product or service or offering to work 1/1 with people. These people have a business and not a hobby. I have watched product entrepreneurs literally invest their life savings into developing a product they are actually not even sure will sell, while others presell on kickstarter and prove their is a demand for their product. Those that have sales have a business and not a hobby.  Business vs. Charity Now if you have determined that you want to have a business and not a hobby, then you need to make sure you have a business and not a charity. This comes up most often for entrepreneurs when they are asked for discounts on their product or service offering. Many of the people I work with really struggle with what to charge for their products and services. This is normal and sometimes hard to determine. I had one coaching client that really struggled with having confidence in her pricing. She would try to guess with every new client that came to meet with her whether or not they could afford her services. Often she would get frustrated when she gave a discounted price for her services and would see that person posting pictures of themselves on an expensive vacation or taking their entire family to a theme park. She ended up with lots of different clients, paying lots of different prices. When she got a referral she had to look at what the referring customer was paying so she could quote a price for the new client. I asked her if she had a business or a charity. We worked through some of her issues emotional and confidence issues around her pricing. Most of this had nothing to do with the price she was charging, but her own self-esteem. She needed to believe that what she had to contribute was valuable. Her client testimonials and success stories were a great reminder of the amazing work she does and that what she offers is worth paying for. We came up with a pricing structure that felt like a great value for her clients but also honored the her time and her expertise. We talked about how it is really unfair to charge different people different prices based on what you think they can afford unless you are going to get their tax returns from the previous year. It is not our job to decide what our clients can afford. It is our clients job to decide if they can afford to work with us. Now this does not mean you cannot be charitable in you business. You can donate a percentage of your profits to a charity. You can offer scholarships for your services or donate your products to non-profit events. For this client, I suggested that she decide each year how many hours she “donates” to others. For example, she could work with one client a quarter for free or at a discount. This helps her feel like she is giving back, but doesn’t cause her pricing to fluctuate for each client. Boundaries in Business I have many women contact me and tell me they want to work with me but cannot afford to. My heart wants to work with each and every one of them for free. But, I am running a business. When I work, I am spending time away from my family. I am also paying for childcare. Thus, I am very intentional when and to whom I donate my services. The truth is that it is not to someone that asks for the help, but someone I feel inspired to help. I would love to hear from you if these comments resonate with you. We will be discussing this in the Biz Chix Coop, so I hope to learn more about whether you have a business, hobby or a charity or if you struggle with some of the issues I have presented today. Either way it is OK. We are all on a journey in this entrepreneurial adventure. Let’s Connect If you could use some clarity in your business, I have a great way to work with me that doesn’t require a long term commitment. It is through a 90 minute strategy session. During a strategy session we focus on three things you are struggling with and create an action plan for you to focus on moving forward.  You will be amazed at what we can accomplish in 90 minutes.  You can get more information on the strategy session, my 1/1 coaching program or apply to be part of an upcoming mastermind here. Book a Strategy Session Also, I am available to speak at your upcoming event, retreat or conference. I love to talk about the power of masterminds, what I have learned from interviewing over 200 female entrepreneurs or how to build a business from a podcast. You can share more about your event here. What is Your Answer? Let’s get back to the topic at hand. How would you answer the question I posed at the beginning? Do you have a business, or a hobby or a charity? If you have not generated any income yet, what can you do today to bring in your first dollar in the next 2-4 weeks. For service based businesses, that often means doing 1/1 work. Stop or reduce those activities that do not lead to a direct link to your income. For many of us that includes social media and checking email. Focus on doing things that will bring money into your business. Many of those things are scary because they can lead to rejection, but we’ve got to put ourselves out there and go for it.  I like to say…do it scared. If you tend to provide discounts to your clients or give away too much of your product for free, make a plan to add boundaries to your business.  What can you do to bring all your clients up to the same pricing structure? What decision making tools can you use to decide when you give something away for free? Make it on your own terms and timeline. Decide in advance what your discount policy is. Hold firm on your boundaries BizChix and go take some action. This episode is sponsored by my 2016 programs. Click below for more information. Strategy Session BizChix Masterminds 1/1 Coaching Program   If you are new here you might want to check out the Productivity Series, Mastermind Series or Social Media Summer Camp.