Kathy Hendershot-Hurd

Steps to Starting a Small Business: #6 Setting Your Rates

November 17, 2008 by Kathy Hendershot-Hurd

A fast easy way to start a small business is to sell your services. If you’re good at writing, you can become a freelance writer. Have a knack for selling, you can freelance your services as a sales person or a telemarketer. Think you know a thing or two about selling without meeting people in person (marketing), then you too can be a freelance marketing consultant. The list goes on and one.

If you’re a service professional, then the big question you must answer before you begin practicing your craft is to decide HOW you’ll get paid for sharing your wit and wisdom with others.

Setting your rate is the biggest issue you’ll face in launching a service based business.

Unfortunately, setting your rates is not a simple matter of “set your rates too low and you’ll be swamped – set your rates too high and you won’t make any sales.” Ah, if only that were true!

Unfortunately, it’s far too common for people to evaluate your expertise by the rate you charge. For example, I know of two Virtual Assistants – one charges $25 per hour and one charge $45 per hour. When you hear what their rates are, do you automatically assume that the one who charges $45 an hour is “better” than the one who charges $25 an hour?

Setting your rate is a lot more complicated than picking a pie in the sky number and setting that as your income goal. Your rates HAVE to be based in reality if you want to succeed.

There are TONS of bullsh*t articles out there which will tell you to set your rates with the following formula:

How Much You Want To Make / 50 weeks (two weeks of vacation)/40 hours per week.

So, if you want to make $100,000 a year you simply divide and divide again to come out with $50 per hour.

OOPS!!! This little formula tends to neglect that if you’re spending 40 hours a week on billable work, you’re probably putting in more than 60 hours a week at the job. (This is a bitter pill to swallow in a world that buys into the idea of earning six figures in the course of the 4 Hour Work Week.)

So let’s “fix” this formula by substituting 30 for the 40 in the figure above so we can spend 10 hours marketing and promoting our services and 30 hours “working” at practicing our craft. Now the rate is $66.67 per hour.

It’s better – but still not good. The flaw lies by starting from starting at the end (what you want to make) and working your way back to the beginning (what you need to charge to make what you want).

If you’re a Virtual Assistant and your income goal is $100K per year, you’re going to need to charge $67 per hour to hit the mark.

Here’s the “fly” in that ointment. Remember when I told you that I know TWO Virtual Assistants – one charges $45 per hour and one who charges $25 per hour? Did you notice how “similar” those rates are. Now, if you’re a VA and you’re planning on charging $67 per hour – well, you’d better be able to do something those other two Virtual Assistants can not do!

In other words, you’d better have a Unique Selling Proposition or USP. That means you better be able to provide a REASON for the rate you’re charging.

The first business coach I hired took me through this whole bullsh*t process. We picked a pie in the sky number – did the math and VIOLA! It worked great – on paper. However, when I went out to drum up business, prospective clients would ALWAYS ask how much I charged. I would reply by quoting people my “hourly” rate.

Invariably, the next question out of the prospective client’s mouth would be, “So how many HOURS will it take for you to do this?”

See, people didn’t care what my hourly rate was – they just cared how much their website was going to cost.

Oh, and by using the bullsh*t formula, I put myself in DIRECT competition with the hundreds of thousands of high school and college kids who created websites in between beer bong parties. Fifteen years of successful advertising experience didn’t play a part in that calculation and the fact that I was fast wasn’t reflected in my hourly rate.

Since I’ve been doing this for a LONG time, allow me to share what I’ve learned about setting the rates for your services.

No one cares about your hourly rate except you. All your client cares about is how much this is going to cost.
In the end, your prospective client is going to mentally measure whether the cost of the project outweighs the benefit.
Your hourly rate should reflect not only the value of your time, but the value of your expertise as well.

The final advice I have on setting your rates is this: When you’re starting out – aim low.

The biggest struggle you’ll face as a beginning freelancer or service provider is filling your practice. Set your rates too high and you’ll struggle to land clients. However, if you price your services on the low end, you’ll fill your practice with clients who are DELIGHTED with the high quality of work you’re providing at a bargain basement price. Before long you’ll find yourself in the position of having to raise your rates to keep your waiting list reasonable. Meanwhile you’ll have a STRONG portfolio of work and testimonials to share with other potential clients.

Then, when you raise your rates – you can either raise them across the board or “selectively,” meaning, you can grandfather in your favorite clients at the old rate and the “pain in the ass” clients will find themselves faced with a rate increase. Personal note: A rate increase is the most satisfying way to fire a pain in the ass client!

In closing – the absolute WORST thing in the world you can do is to doubt your own worth. If you don’t believe you’re worth $X per hour – then your clients certainly won’t think you’re worth that either.

Why would you think it’s easier to win [insert name of sporting championship here] than to build a successful blog?

November 17, 2008 by Kathy Hendershot-Hurd

The subtitle of this post should read: “Everyone wants to be a winner -but not everyone is willing do to what it takes to BE a winner.”

The Indianapolis Colts have over the past three weeks restored hope for a chance at the playoffs thanks to three back to back wins including yesterday’s defeat of Houston. (GO COLTS!) I’d love nothing better than to taunt my neighbors (most of whom hail from the land of the Giants, the Jets and the Patriots) this February with a garish display of Hoosier Pride. I’ve still got everything perfectly preserved from the Colt’s 2006 Super Bowl win, hoping for the chance to bring it all out again. ( I also had to endure the drunken near rioting of some of my other neighbors when UF won national titles in both football AND basketball!)

Not too long ago, the Phillies won the World Series. In order to achieve that accomplishment, they had to play 162 games in the regular season just to make it to the post season. They had to WIN more often than they lost just to make it to the playoffs. In order to achieve that feat, every member of the team had to work hard – physically AND mentally – to even have the opportunity to play in the World Series.

This is the way the goal setting works. First you define or set a goal and then you work towards ACHIEVING that goal. However, if you don’t DEFINE the goal first, it’s almost impossible to put into action a plan to achieve the goal!

I’m not a baseball fan, but my son is. Twelve years ago, my six year old baby boy would be so excited about playing coaches pitch baseball that he would bounce up and down in left field through the entire game. Fortunately, no one could hit the ball that far because it’s my observation that bouncing up and down is NOT the preferred stance for outstanding performance in the outfield.

Years passed and my son’s love of baseball continued and fortunately, his skill as well as his concentration improved. When he was 11, his All-Star team finished 1 game shy of competing in the Little League World Series regional play. Watching that game was one of the most painful experiences of my life. You could LITERALLY watch the wheels fall off that wagon as the final game progressed – and the saddest part of all was it seemed to be the COACHES who were determined to make sure their team didn’t advance to regional play!

Tom Volkar writes in Clarity Empowers Progress

The clarity of exactness and preciseness increases the probability of intentional manifestation. Maybe that’s what keeps many from choosing. A couple of participants on a recent group coaching call, supporting our community leveraging experiment, admitted as much.

When we definitely state what we want, in stark specificity, we have chosen, haven’t we? Perhaps that’s why folks choose to remain confused and general because you can’t really commit to a generality, can you?

Try dedicating yourself to excellence in vagueness. Yes you can develop the inspired confidence to move mountains but you’ve got to identify the damn mountains! If you don’t commit then you can’t fail but you can’t succeed either. Without clarity and inspired commitment your only choice is to remain safely frozen in whatever waiting hell you’ve created.

As I read Tom’s entire post (check it out, this is just one golden nugget of many in the post!), I can now see – almost a decade later – what was going on back then. (Hindsight really is 20/20!) It hit me like a ton of bricks: those coaches had achieved their goal when they reached the state finals. Once they achieved that goal, they ran out of gas. There was no new goal – new vision. They had already achieved all they thought was possible – and we wereall forced to remain frozen in the hell of what MIGHT have been that year!

However, this recognition extends beyond ancient history and fading memories of a Little League team that couldn’t – it’s also shined a bright light onto a dark area in the realm of building a business.

One of my biggest frustrations with clients is when they refuse to declare their intentions. The three words that will keep ANY service professional poor are , “I HELP EVERYONE.”

When you strive to target everyone with your marketing message – in essence, you’re targeting no one!

I love Tom’s choice of words in the paragraph above – “Yes you can develop the inspired confidence to move mountains but you’ve got to identify the damn mountains!”

The Indianapolis Colts have identified the mountain they’d like to move – just as every other team in the NFL is targeting the mountain named “Super Bowl.” Every game they win or lose is translated into their “chance” for a playoff berth.

Every professional sport has its own mountain. Every game that is played is played with the goal in mind of getting the opportunity to ultimately move that mountain and claim it as the team’s own. There is no greater hell than to be a fan of a team that obviously has not defined their season goal as winning the ultimate championship. (I live in Miami Dolphins territory – believe me, I’ve seen the pain of that dilemma over the past few seasons!)

What mountain are you attempting to climb with your blog? If you haven’t identified one you’d like to own -you’ve still got a few weeks to make it your 2009 New Year’s Resolution!

Steps to Starting a Small Business: #5 Marketing Strategies – AGAIN

November 14, 2008 by Kathy Hendershot-Hurd

This is the fifth installment of the Steps to Starting a Small Business and it’s really an extension of the previous Steps to Starting a Small Business: #3 Promotion. However, I’ve addressed this twice via email and phone over the past seven days, which is always a sign that I need to blog about a topic. Here it goes.

A marketing strategy is different than a marketing tactic. A blog is NOT a marketing strategy. Believe it or not, a BLOG is actually a marketing tactic.

Marketing tactics are how you achieve the marketing goals established in when you created your marketing strategy.

If you have a product or service of interest to bloggers, then by all means, a blog is a WONDERFUL marketing tactic for your business. However, it’s possible that your target audience doesn’t know a blog from an online bulletin board. If that’s the case, then a blog IS STILL probably a GREAT marketing tool but it may not be a marketing tactic to take your business where you want to go. (Blasphemy – I know!)

Creating a marketing strategy is like planning a trip. When you’re planning a trip, you must first identify where you are, “I’m in Philadelphia, PA” and then you identify where you want to go, “I want to end up in Miami, FL.”

When you’re creating a marketing strategy, you begin with where you are. “I provide coaching services to women who are divorced and want to create a new life after divorce.” Then, you identify where you want to end up. “I want to have a coaching practice where I have 5 coaching groups with 7 members in each group.”

GREAT START! You know where you are and you know where you want to be. Now all you have to figure out is how to get there! Part of planning your trip is figuring out where your target audience (divorced women) are spending most of their time and what has their attention.

Marketing is a numbers game – pure and simple. You have to determine how many people need to be exposed to your message to keep your business afloat.

The numbers game translates into an easy to represent funnel. The first question to ask is how many website visitors do you need to get 35 clients into your group coaching programs?

The illustration to the left shows a “typical” sales funnel. For every 1000 website visitors, 100 (1 out of 10) of those visitors signs up for the newsletter. (If you don’t HAVE a newsletter – you’re missing an important step in the sales conversion process.)

Out of those 100 newsletter subscribers, 10 “bite” when you offer your coaching group.

With this information in hand, you now know that you need 3500 unique visitors to your website to get the 350 newsletter subscribers to get the 35 group coaching members.

This is why it’s so important to tightly target your audience and then do the keyword research to find out what WORDS your target audience is using to find solutions on the internet.

See, if our coach above didn’t define her target audience as “divorced women” then she wouldn’t have any idea of where to start when it came to looking for the keywords her target audience may be using as they search for answers to their problems via the web.

HOUSTON WE HAVE A PROBLEM:

a) It’s very possible that divorced women are not SEARCHING the web looking for a divorce coach.

b) The search engines aren’t going to be delivering tens of thousands of visitors to her brand new website any time in the near future.

Does that mean that you should scrap the idea?

DEFINITELY NOT!

If you’re offering solutions to people’s problems – and those people are willing to PAY to have those problems solved – then you have a viable business. However, you may not be able to sit back and allow the search engines to drive the traffic you need to your website to build your business.

What it does mean is that she needs to look at using other methods to drive traffic to her website.

One way around the whole “oops I need more traffic” conundrum is to use Google Adwords. Google Adwords is SOOOO amazingly easy to use, but I’ve got to warn you – it’s some of the most expensive advertising on the planet!

And for those of you who wonder what I do to pay the bills – here it is. I come up with creative ways to build your business. Sometimes it’s via the web – sometimes the web is just a “gathering basket” for traffic driven via other means.

In the client’s case above, we came up with a “vertical marketing strategy” of sorts. See, my client really isn’t a blogging kind of a girl, so we had to brainstorm new and different ways for her to fill her sales funnel.

So I asked, where is the one place you can be sure to gain access to newly divorced women? Answer, “Divorce attorneys offices.”

At first, my client was resistant. After all, why would divorce attorneys help her build her business? That’s where the hard work began. I helped her to “frame” her services in a way that it was actually a benefit the divorce attorney could offer his clients – with no additional cost to him/her.

If you’re getting a divorce and your choice is between two attorneys – one of which offers not only access but a substantial discount on a program to help you get back on your feet in a matter of months instead of years after your divorce and the other doesn’t – which attorney will you choose?

The first ten attorneys she approached JUMPED at the chance to sit down and discuss this with her and now, instead of paying Google tens of thousands of dollars for a PPC campaign, she’s going to buy lunch for ten different divorce attorneys. If each attorney sends her 4 clients, her practice will be full AND she’ll have access to a constant stream of new clients. Oh, the “tough” economy is exactly WHY those ten attorneys are looking for something to give them an “edge”.

What’s your marketing strategy? Who’s your target audience? How are you planning on reaching them?

Steps to Starting a Small Business: #4 Naming Your Business

November 12, 2008 by Kathy Hendershot-Hurd

When you’re starting a business, one of the steps to starting a small business is naming your business. While a rose by any other name may indeed smell just as sweet, the name you choose for your business is one of the most critical decisions you will make.

Your business name is the foundation of EVERYTHING in your business. It will affect every aspect of your business from customer perception to the domain name you use for your web presence. Make a mistake in naming your business and, trust me – it will haunt you for years to come.

This post is obviously a “do as I say, not as I do” kind of post. I am the QUEEN of choosing horrible names for my adventures. Case in point – Virtual Impax. I can admit it – it’s a TERRIBLE NAME for a business! The “fun-n-funky” hooked on phonics spelling just makes it worse.

How do I know it’s a terrible business name? The first clue I had that the name Virtual Impax was a horrible business name was when first question most people ask is, “What is that?” or “What do you do?”

Another horrible choice – Acumen Web Services. Do you know what the word “acumen” means? If you don’t, you’re in good company. Naming my alter ego business Acumen Web Services is clearly a case of “Who talks like that?”

The answer – me and only me.

With this said, there is a school of thought out there on naming your business that would tell you that I’ve been BRILLIANT in naming my business ventures. See, these unique and unusual names means that my web presence is a GUARANTEED NUMBER 1 listing with the search engines.

People who SUBSCRIBE to this school of thought are idiots.

I say this with all the love and affection possible, but these people truly do NOT understand search.

WHO CARES IF YOU HAVE A NUMBER 1 SEARCH PLACEMENT ON A TERM NO ONE IS USING TO SEARCH?

You put yourself at a huge advantage if your business name is also your domain name.

“But wait,” you may be thinking, “Xerox is a made up name and they’re a house hold word now!”

Ah, yes my Padawan learner (veiled Star Wars reference) Xerox, Kodak, Kleenex – even Google are all “not real word” names that have come mean something in our daily lives but the path those “brands” have taken have literally been paved in gold. In each case (except for Google), the path to creating a brand name that becomes a household term is achieved through extensive and relentless advertising.

One of my early web development clients was a local Tru Value store. This was way back in the 1990’s and my client had recently purchased the store. While the storefront was barely breaking even, the previous owners had started selling lighted Christmas lawn displays out of the back room. Now THAT was a business worth buying. My client had decided to take the business “to the web”, which was VERY cutting edge thinking way back in 1998. Unfortunately, the name he chose was Holiday Silhouettes. The only reason I can spell silhouettes is because of the time I worked with him. He took a pass on the easy to spell, easy to remember domain name “Christmas Lights.com” Is it a coincidence that the company who chose the easy to spell domain name is still in business and he’s not?

So if choosing an obscure hard to spell word, a nonsense jumble of letters or purposefully misspelling common words are all LOSER business naming strategies, what are some WINNING business naming strategies?

The following advice is for those who don’t have a lot of money to spend on either a branding consultant or a naming service.

A great small business name tells what you do.
A great small business name communicates your business’ unique place in the universe.
A great small business name uses words that people can easily spell.
A great small business name uses words that people are using to search for solutions to the GDP (not Gross Domestic Product but rather Goals, Desires and Problems).

A rose by any other name may indeed smell as sweet – but you can make the climb to the top easier by choosing the right name for your business.

Steps to Starting a Small Business: #3 Promotion (a.k.a. “marketing”)

November 10, 2008 by Kathy Hendershot-Hurd

This is the third in the Steps to Starting a Small Business series and I’m assuming you’ve cleared the first two steps to starting a small business, which are of course the HARDEST hurdles to overcome.

The first step to starting a small business is you’ve got to come up with a GREAT idea that you’re passionate about. The second step to starting a small business is to figure out a way to package this idea into a product or service so that people are actually willing to write a check and PAY you for providing this valuable product or service.

Now, the third step to starting a small business is to let the world know about your business, also known as marketing.

Marketing is simply communicating the solutions you offer with the people who need your products or services.

People have problems – people have goals – people have desires. If your product or service doesn’t help people solve their problems, achieve their goals or satisfy their desires – then go back to the drawing board and start over again. After all, why else do you think people are going to whip out their credit card or check book and give you their money?

Begin your marketing strategy by asking yourself this simple question, “Who needs my product or service?”

If you answer, “Everyone,” then smack yourself across the face- HARD! “Everyone” is the answer that will doom your small business to failure.

When you try to target “everyone” you are in essence targeting NO ONE!

Akemi of the Yes to Me blog interviewed Tom Volkar. From the interview at Coaching The Freedom Of Self-Employment: Tom Volkar

In my coaching business the challenges were more internal and consisted of trusting myself and working through the underlying fears that developed around the lack of time and money. In chronological order here were my biggest challenges.

Not completely following my core values, allowed me to be lured by projects that looked financially promising but were not authentically aligned with who I was.

I fought prevailing wisdom to niche myself for far too long because I thought it would limit the work I’d receive and cause me to earn less.

I allowed my fear of learning technology to get in the way of my business growth.

The emphasis above is my own.

Time and time again, small business sucess stories usually start at the moment the business owner defines a target audience, known as a “niche market”.

Long ago and far away, I worked with a tiny bakery located in the basement of a former office building in a dying downtown area of a rust belt community. The location was horrible, the product was expensive and probably not the best fit for a town populated by unemployed factory workers. Yet those two ladies created an incredibly successful business in a relatively short period of time.

The secret to their success was simple and began when they tightly targeted their niche market.

In the early days of their business (before I was working with them), they ran ads in the newspaper – declaring themselves to be a bakery. Ho-hum. Wal-mart had a bakery. The local grocery chains had bakeries and those bakeries were not only cheaper, they were a lot more convenient!

However, when they began talking to a specific audience – working women who didn’t have TIME to create home made goodies for their friends and families – their bakery business literally exploded.

We began running ads that talked about the extravagant cheesecakes and unique cookie platters. We described them as the kind of “treat” that every woman would love to create – if only we had more time. We placed those messages in places where working women would be exposed to it and the change in focus was like adding a match to gasoline fumes.

Did we alienate men as customers with these messages? If we did, it certainly didn’t show on the bottom line.

Did we alienate stay at home mothers with these messages? Again, if we did, it didn’t hurt the business.

By targeting WORKING WOMEN in this tiny community – we unleashed an avalanche of business upon that tiny bakery.

Even though there were only 63,000 people in the community – by tightly targeting the message and the audience, we were able to deliver more than enough customers to make this bakery a success. They didn’t need 63,000 customers – they needed 300 customers and by tightly targeting their message, they surpassed that goal with ease.

By targeting a niche audience, we were able to create an effective marketing message AND find the right places to deliver that message to the right people. Blogs are one way of delivering that message, but believe me – they are NOT the only way!

What is your defined “niche” audience? What solutions do you offer and to whom do you offer them? Take this opportunity to toot your horn and declare your niche (or your intended niche)!