Mindset Shifts Every Entrepreneur Needs
You already know that I am incredibly passionate about financially empowering black women and other women of color to live life on their own terms. It’s been shown time and time again that one of the easiest ways to build substantial wealth in a single generation in through entrepreneurship.
However, in my day to day, I see so many female entrepreneurs insecure about their personal and business finances. No one is teaching them how to go from employee to entrepreneur, how to manage their business finances and how to consider your personal financial goals and price for profitability.
That’s why I’m bringing you TEN DAYS worth of content specifically to serve my people and get you started on getting your business finances working for you instead of stressing you out.
I’ll be doing daily blog posts and IG lives at 12pm EST from November 11-20 on these same topics. Be sure to follow me so you won’t miss out!
Installment #1: Mindset Shifts Every Entrepreneur Needs
Business income =/= personal income
Especially as you’re starting out., the top line income from your business doesn’t equate to your personal take home pay. It isn’t all for you to spend as other inputs need to be considered:
What are your costs of goods sold as a product-based business? Do you know exactly how much it costs you to produce each unit you sell?
What trainings would help you command a higher rate as a service or knowledge-based business? Make sure you’re considering that cost as you review your business income.
You will need to pay for a lot of other things besides lifestyle expenses(more on that later).
2. Top line revenue is not a true indicator of financial health.
There is so much talk out there about six-figure businesses or five-figure months. The truth is that does not take into account profit margins and how much of that the entrepreneur can actually take home. From my experience, you can see a business than earns $75,000 and one that earns $200,000 which has similar net cash flow. Don’t shoot for your top line revenue only as it doesn’t tell you how financially healthy your business is. Shoot for net income or a certain profit margin to be sure you’re hitting the right targets.
3. Your pricing does not just include direct costs
Pricing is one of the factors that entrepreneurs agonize over. They worry about what the competition is charging, whatever number comes to mind first or what they once heard was reasonable. None of that is the way to go! You need to operate from a measured, quantifiable number in order to make sure you don’t go broke, burn yourself out or put yourself in a stressful, scarce position.
The rough formula you should follow for pricing as a service-based entrepreneur is: