The greatest learning curve happens during the first year of business. How could it not, right? You are tasked with learning customer service, search engine optimization, how to post products online, social media, and on and on it goes.
Your first year of business also sets the tone of how you are going to approach any problems that will undoubtedly pop up. Every situation is an opportunity to problem-solve, push through, or give up. There will be days that you feel like you’re on top of the world and there will be days that you wonder what the heck you were thinking trying to start a business. You may even have both of those thoughts in the same day. These are all normal and part of the process.
In an attempt to help you be as prepared as possible, here are the biggest things to make sure you have a hold on from the beginning.
HOW MUCH DOES IT REALLY COST TO MAKE YOUR PRODUCTS
A common mistake in the first year of business is not charging enough for your products. There is a lot more that goes into running a business than just the material to make a necklace. Other business expenses that you need to keep in mind include:
- Selling fees (i.e., Etsy or Paypal transaction fees)
- Time it takes to create the product
- Professional fees (fees paid to an accountant at the end of the year)
- Electricity to run machines
So, while the materials to make a necklace may be $6.00, it’s important to think of the other costs that will add up behind the scenes. Those extra costs can sneak up on you and take a big chunk of your profit if not added in properly.
How do you add these costs into your price?
Let’s say, your accountant charges $250 and you sell 500 necklaces a year. The goal is to divide the cost over the sales throughout the year.
$250 divided by 500 = $0.50
This means that you would increase your price by $0.50. So, your $6.00 necklace will now be $6.50.
You want to do this for each cost and add it into the price until each expense is covered.
Disclaimer: Discussions on price tend to bring up fears about customers not wanting to pay higher prices. If you have this fear, you definitely want to listen to my podcast episode “How to Stop Competing on Price and Start Charging Your Worth”. It’s my most popular episode to date.
SET OFFICE HOURS AND STICK TO THEM
The saying, “energy flows where attention goes” applies to your new business too. There are multiple coaches who will tell you that if you want your business to be full-time then you have to treat it like a full-time job. And, they’re right.
If you need to work a 9-5 and build your business as a side-hustle, there’s no shame. That’s awesome too! Just go into it knowing that it may take a little bit longer to build momentum.
When you’re self-employed, you have to be disciplined enough to make yourself work on your business when no one is looking over your shoulder telling you to get to work. More importantly, you have to be disciplined enough to work on building your business even if the money making part doesn’t start immediately.
You are putting in the upfront work for the long-term gain. The best way to do this is to schedule your day just like you would a “normal” job. Decide the hours you will work each day and stick to them. Using a planner or tools like Trello can keep you on track to plan tasks for the day.
While you are working the thankless hours in the beginning, it’s important to remember that completing tasks such as publishing listings or learning search optimization is progress, the money and sales will follow. In the beginning phases, sales are not necessarily the best way to measure the worth of how you have spent your time.
CREATE SYSTEMS THAT KEEP YOU ORGANIZED
As your business grows, it’s important to create systems that help you stay organized. More specifically, it’s important to make sure that you have systems in place that allow you to ship orders and communicate with customers efficiently. The system you choose will vary based on the type of product you sell.
I am more old school and like to have a dry erase board and planner where I can write down major deadlines and inventory alerts. I also use a digital planner in Goodnotes to keep track of daily tasks for social media posts, advertising, blog posts, etc.
Understanding your pricing model, sticking to a schedule, and developing a system that helps you to stay organized will provide a foundation for good habits in the future of your business.