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We spend a lot of time trying to simplify our businesses, but how often do you think about simplifying your life? In this episode, we discuss tips for simplifying your life.
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Episode 86: Finding your daily focus: https://www.smallbizlife.com/blog/episode-86-finding-your-daily-focus
Episode 33: Quick dinner tips: https://www.smallbizlife.com/blog/episode-33-quick-dinner-tips
The Life-Changing Magic of Tidying Up by Marie Kondo: http://amzn.to/2sH2jhT
72 ways to simplify your life by Zen Habits: https://zenhabits.net/simple-living-manifesto-72-ideas-to-simplify-your-life/
Dyson cordless vacuums: http://amzn.to/2rsYwB3
The Miracle Morning: The Not-So-Obvious Secret Guaranteed to Transform Your Life (Before 8 AM) by Hal Elrod: http://amzn.to/2sMyBrI
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There have been some significant updates to email list managers in 2017. In this week's episode, we'll discuss what to look for in an email list service and what the major small business providers are now offering.
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When you set the rates for your services, how much did you think about it? How did you come up with that figure? In this episode, we discuss how to set a rate for your services that allows you to achieve your goals and plan for the future.
Are you a price taker or a price maker?In the area of pricing, there are two types of companies: price takers and price makers.
If you have ever studied accounting, you probably know that revenue - expenses = profit. This is a commonly taught formula and is the basis for the income statement (also called a profit and loss statement). Unfortunately, this method also encourages us to think of profit last. This is a misguided strategy which causes many small business owners to stay broke or never achieve their dream of full-time, self-employment.
There is a better way. Rather than settling for whatever profit is left over, we need to determine how much we want to make and develop a plan to get there.
Price takerIf your company is a price taker, you should be thinking about your expenses as your bottom link. Your formula looks like this:
Revenue - Desired Profit = Expenses
Since price takers have little control over what they charge, they must work hard to keep their expenses in check or else profit will disappear. By staying in the mindset that expenses must be paid with what is left over after you get paid, your business will become more profitable immediately.
Price makerHopefully, you have created differentiation in your business to become a price maker, even if most of your competition are price takers. Your formula looks like this:
Desired Profit + Expenses = Revenue
In this case, you will use profit and your expenses to determine how much you will charge for your services.
Know your expensesIt's important to understand how your expenses behave as your revenue increases. There are four different types of cost behavior:
Knowing how your costs behave allows you to plan better as your sales increase. It also allows you to more accurately set your hourly rate.
How much do you want to make each month?Have you ever asked yourself this question? Maybe you've thought about how much you would like to make to replace your income or pay off additional debt, but have you really developed a plan?
When setting your rate you must ask yourself two important questions:
Most business owners just work, work, work without a plan to stop. Other business owners have no plan for how many hours they need to bill out each month and therefore can't understand why they aren't hitting their goals. Answering the questions above will create a lot of clarity in your life and your business.
Let's say you want to take home $5,000 per month and have 25 billable hours per week. That's approximately 100 billable hours per month.
$5,000 / 100 hours = $50 per billable hour for profit
This does not mean that you will bill $50 per hour. This $50 is just to pay yourself. You must add expenses and other items to get your full billable rate.
What about taxes?if you want to bring home $5,000 per month, you need to make more than that to pay your taxes. To calculate the total amount of profit needed to take home the amount you want and pay your taxes:
Desired Take Home Pay / (1 - Effective Tax Rate) = Total Desired Profit
What is your effective tax rate?
Your effective tax rate is the percentage of your income you pay in taxes, both federal and state. Typically, you can get this off a summary or comparative report on last year's tax return. Add your federal and state effective tax rates together to determine your total effective tax rate. Typically for a small business owner, the effective tax rate is 20 to 35%.
Calculating your total desired profitLet's use our $5,000 per month tax home pay and an effective tax rate of 30%. Let's plug these numbers into our formula:
$5,000 / (1 - .30) = $5,000 / .70 = $7,145 rounded
If you want to take home $5,000 per month, you will need $7,145 in profit. By building your hourly rate with your taxes included, you should never be short to pay your taxes again.
If we divide this amount by our 100 monthly billable hours, we need $71.45 to cover profit and taxes.
How much are your expenses?Most of your expenses are probably fixed costs, which makes this much easier. Calculate your average total monthly expenses. To do this, look at all of your expenses each month and add them together. Don't forget to budget for your annual expenses as well. You can also look at your total annual expenses and divide by 12 to get your average monthly expenses.
What about variable expenses?There are two ways to deal with variable expenses. You can either directly bill client-based variable expenses to your clients (like software fees or mileage) or you can calculate the average annual amount and add this to your fixed expenses.
Let's say your average monthly expenses are $3,000. If you bill 100 hours per month, you must add $30 per hour to the $71.45 we calculated for profit.
So far, we have an hourly rate of $101.45 but we need to add one more thing to get our final rate.
Allowing room for growthAll small business owners need to set money aside for upgrades, education, and new equipment. Imagine what you could do with $10,000 per year to improve your business. Does that seem impossible? It's a lot easier than you think.
$10,000 / 12 months = $833 per month
$833 per month / 100 billable hours = $8.33 per billable hour
That's right. If you want to save an additional $10,000 per year for upgrades, expansion, and education and you bill 100 hours per month, adding $8.33 per billable hour will get you to your goal. If you only want $5,000 for growth, it's a little over $4 per billable hour. It sounds much more reasonable now, huh?
Adding it all up$71.45 + $30.00 + $8.33 = $109.78 or $110.00 per billable hour.
This would be your hourly rate based on the numbers we used. This would allow you to take home $50 per billable hour, set aside $21.45 per billable hour for taxes, pay your monthly expenses, and set aside $10,000 per year for growth and education.
Do you think this is something you could do? Frankly, it's something you can't afford to not do.
But it's too much...When we do this calculation with new businesses, we often hear, "But I can't possibly charge that much!"
Before you go there make sure that is really the case and it's not just your fear. Often, we undervalue our services. Jeff tells an awesome story about how a fellow author increased her sales by raising her prices.
If you do find that your rate is too high, there are ways to still achieve your goals:
Make sure you know what you are worth and what others are charging. You might be surprised that you are charging far too little which may be hurting your sales. Don't set your rate low in the beginning. It's hard to raise your rates later.
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When selling products and services, we often spend lots of time focusing on the technical aspects of what we sell. However, we should be spending more time focusing on the benefits of what we are selling.
What are you really selling?Every product or service we sell benefits our customers. When you look at Maslow's Hierarchy of Needs, everything we sell fits into one of the five categories:
Where do your products fit into these needs? Are you using these needs to sell your products?
In this week's episode, we discuss how to use benefits in your sales process and some companies that do this well.
Other linksHow You Decide: The Science of Human Decision Making (Great Courses)
DotCom Secrets: The Underground Playbook for Growing Your Company Online by Russell Brunson
IT Professionals of Iowa
Listen nowListen to the show on iTunes, Stitcher, YouTube, Google Play Music, iHeart Radio, or with the player below
Most of the business owners I have met start thinking about their website in the wrong terms. They worry about how modern or "beautiful" their website looks.
However, this is the wrong thing. We start creating the site our first concern should be how our visitors can find the content, product, or service they are looking for and then focus on how it looks?
Build your website for the audience you want to attract.I do believe that the style of a website is important. I have left sites that look hideous. However, I mean hideous, not less the perfect or because it looks old.
The most common reason I leave websites is that I cannot find what I am looking for or it is not usable. As soon as I am confused and annoyed, I bounce.
It is not too late for your siteYou do alone if you want your site or be modern and pretty. I far too often do not think about what the user will experience will be on my site. Check out the episode below and learn about the navigation of your site. Start getting considered with the user experience.It will level your site from average to great.
It will level your site from average to great.
Listen to the show on iTunes, Stitcher, YouTube, Google Play Music, iHeart Radio, or with the player below.
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Keyword planner https://adwords.google.com/home/tools/keyword-planner/
Internal links best practices https://www.orbitmedia.com/blog/internal-linking/
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People want to do business with people they like and trust. The only way to create those relationships is to build connections. In this episode, we discuss the 5 keys to creating connections.
How can we create meaningful connections?Many small business owners struggle with customer acquisition. Traditional advertising doesn't work and many are leery about social media or just don't know what to post.
Today, people want to do business with brands they like and trust. However, many small business owners are waiting for a prospect to become a client before attempting to build relationships. When you start relationship building earlier in the process, it is more likely that a prospect will become a long-time customer.
In this week's episode, we go in depth on the 5 key components to building connections. These components can be used online and in live networking scenarios.
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Most small business owners state that focus is one of their biggest daily struggles. In this episode, Jeff and Kristin discuss why we struggle with focus and how we can achieve more of it.
You aren't the only one strugglingIn a 2005 study of workplace efficiency, the average employee was able to focus on a task for just 11 minutes before becoming distracted. Once distracted, it took an average of 25 minutes to get back to the original task; sometimes, the employee never got back to that task! The most shocking stat for us: on average, we switch tasks every three to six minutes.
This explains a lot when you understand the effects of distraction.
Why are we so distractable?Our brains have not evolved as quickly as technology has. As part of our survival mechanism, we were programmed to respond to stimulus. Today, there is so much stimulus that our brains get easily overwhelmed. We are also overconnected. According to David Rock, author of Your Brain At Work: Strategies for Overcoming Distraction, Regaining Focus, and Working Smarter All Day Long, always being connected has the same impact on your IQ as not getting enough sleep or getting high.
If we are programmed to respond, then clearly, we must be doomed. Well, not really. There are things we can do in order to strengthen our focus and get more done.
How to stay focused throughout the day Start the night beforeKristin is a huge fan of reflection before bed. Each night, she pulls out her journal and writes down 4 key items:
This seems like a lot, but usually, this is less than one journal page. This exercise should take about 5 minutes each night once you get the hang of it.
Starting your day off rightEach time we switch tasks, we must refocus which burns a lot of energy. This is why we get burnt out quickly when we are trying to accomplish many different things on the same day.
Each email or social media post you engage with requires you to refocus. That means you might refocus over 100 times before you even start your work in the morning burning through most of your energy. This is why we suggest avoiding email and social media until your most important task of the day is completed.
Since focusing requires a lot of energy in the form of glucose, it is important to make sure to have a healthy breakfast. Skipping breakfast will start your day with a focus deficiency.
We start each work day with a planning session using our Small Biz Daily Focus Planner (free download). This allows us to figure out our most important tasks and to plan our day. This is the first thing we do when we arrive at our desks. When planning, start your day with the tasks that require the most focus.
Keeping your momentumYou are off to a great start, but distraction will tempt you throughout the day. Here are some tips for staying focused.
Creating more focus is just like learning any other skill. It takes practice and there will be times when you slide back into your old routines. Don't beat yourself up. Just try again tomorrow.
Other MentionsThis post contains affiliate links for some of the products discussed.
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Daily Focus Planner http://smallbizlife.com/focus
SMALL BIZ HQ https://www.smallbizlife.com/store/5CQukiiy
Great Course Plus https://www.thegreatcoursesplus.com/
My Pillow https://www.mypillow.com/
David's Cold 911 tea https://www.davidstea.com/us_en/cold-911-37
David Rock's article from Psychology Today https://www.psychologytoday.com/blog/your-brain-work/200910/easily-distracted-why-its-hard-focus-and-what-do-about-it
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Being a small business owner can be stressful. Sometimes, our businesses can add conflict in our relationships with significant others. In this episode, Jeff and Kristin discuss ways to minimize this conflict so you can start building dreams together.
Even if your significant other does not work in your business, conflicts can exist. These conflicts usually stem from a lack of understanding between the business owner and non-business owner significant other. Creating more understanding between the two of you will allow for more joy and less stress.
Understanding yourselfConflicts often arise because the business owner does not have a clear vision for her business and how it will affect her life. Here are a few questions to ask yourself if you are in this position:
We also recommend that you take the 5 love languages assessment. This will give you some interesting insight into what acts make you feel loved. We recommend that you also ask your significant other to take the assessment. For more in-depth information about the 5 love languages, consider purchasing the book.
Listening and learningNow that you've gotten some clarity on your own life, it's time to get some clarity on your significant other. Often, we complain that our significant other does not understand our point of view, especially when it pertains to our business. However, how often do we ask if we really understand our significant other's perspective?
We often assume that those around us understand our business and our plan. Is that really true? Do we know our loved one's goals and dreams? Here are some tips to start the conversation:
Understanding your loved one's drives and concerns can help open a dialog to aid in building your dreams together.
Minimizing conflictWhen conflicts do arise, we need to step back from the emotion and look for valid concerns. Opening up a dialog makes it easier for your significant other to voice concerns. Unless we are willing and able to hear those concerns in a rational manner, your loved one will not be willing to share. This causes resentment and small things blow up into huge arguments.
It is difficult to hear criticism; however, if we are not open to our loved one sharing honest concerns, this will lead to conflict. Don't let your first response be defensiveness. Ask yourself if there are valid points in those concerns.
Holding yourself accountableOver the past 15 years working with small business owners and mediating conflicts between couples, many conflicts stem from delayed or broken promises. We often set deadlines for ourselves and watch those deadlines pass. When this happens repeatedly, your significant other will lose confidence in you, especially if you are not sharing reasons why these deadlines are being missed.
Sometimes we don't like to share what is going on in our business because we are disappointed in our own progress. We shut our significant other out because we don't want them to see our mess or our failure. This will just cause further conflict down the road. Would you treat your customers this way? We should never treat our partner worse than our own customers.
Holding yourself accountable, not only to yourself but also to your partner may help you achieve more. Ask your partner for insight in some areas of your business. If you are struggling with something, ask if you can run the problem past your partner. It may give your partner some important insight into how hard you are working.
Don't use this as an opportunity to have a complain-a-thon. Allow this to be a conversation that can help you complete something constructive.
If your conflicts involve money, check out Melissa the Coach. She teaches a money management system which is very similar to the one we used to pay off over $220,000 in debt. Without getting our financial house in order, we would have never been able to get Jeff out of his 9 to 5 and working full-time for Ingram Digital Media.
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Do you have an advertising plan? Do you have an advertising budget? Are you just throwing things at the wall to see what sticks? In this episode, we discuss steps for putting together an advertising plan and some of the best options for advertising no matter how big or small your budget is.
Most small businesses do not have an advertising strategy; they just throw ads out into the world hoping that something will work. If you want to stop throwing money out the window, you need to have a plan.
Five things you need to know before you start running ads What is the purpose of the ads?Why are you running ads in the first place? Don't automatically say it is because you want to sell people things. Depending on your price point, you may need to develop a relationship with your potential customers first. Not all ads are designed to sell. Some introduce you to a new client, while others start building a relationship. You can even run ads that provide value as a service to potential customers.
What is your budget?It's important to know how much you will spend on advertising each year. Businesses should budget 10 - 20% of their revenue on marketing and advertising, depending on the cost of providing their product or service. If your profit margin (price - cost of the product) is high, you can afford to spend a bit more on advertising. If your profit margin is lower, spend a smaller percentage of sales.
We always caution small business owners against spending money they do not have in the bank to run ads, hoping that lots of revenue will come in before the credit card bill arrives. That's an awesome way to go broke! Especially if you are new to running ads, there is going to be a lot of trial and error. Don't bank on your first few ad campaigns bringing in a ton of money, especially if you are running ads to build awareness or relationships or if you have a higher priced product. Spend smaller amounts to learn what works and perfect your message.
What do you want your leads to do?When developing your ad campaign, how do you want your potential customers to respond? Do you want them to sign up for a newsletter, visit your website, call you, watch a video, attend a webinar, or buy a product? Do you have a funnel in place to guide them through that process? When leads arrive at your website, will it guide them where you want them to go or as there so many options, they will leave your site quickly?
Making sure you have a clear call to action and a website that encourages them to respond the way you want them to is essential to your ability to convert potential customers into paying customers. Do not start running ads until you have a clear funnel in place to get the response you want.
Who are you targeting?Recently, Kristin was scrolling through her Facebook feed and saw an ad related to child behavior. If she saw this ad, clearly the targeting was poor (we don't have any children). Once of the awesome things about Facebook ads is that you can specifically target people based on geographic area, demographics, and interests. However, to do this, you must know who you want to target.
We have said many times that you need to know who your ideal customer is, especially if you are running ads online. If you don't know who your ideal customer is, you can't target them.
Do you know how to track your progress and improvise?When placing ads, especially on the web, you need to track how your ads are performing and make changes as needed. Even if you are running traditional advertising and you aren't getting the response you want, you should make changes to your ads.
Tracking performance is very easy on the web. All good advertising venues will give you statistics on clicks and your website stats can show you conversions. If you don't know how to do this, YouTube and Google are magnificent teachers. Also, most advertising platforms have great training programs (because they want you to spend money with them).
With traditional advertising, this becomes a bit more complicated, but it's still possible. You can purchase custom domains that you use in your ads or ask people to mention a code when interacting with you, allowing you to see how effective your ad is.
When making changes, change one thing at a time. Do not completely revamp the ad. Making a small change to the headline or image can sometimes cause a huge difference in response rates. We have even found that changing your font can make a difference.
Six types of advertisingIn this episode, we discuss six types of advertising and marketing that small business owners can consider. This is in addition to other forms of marketing you can do, like speaking, webinars, and free content.
Traditional advertising (print, broadcast, radio)
Online advertising (Facebook, YouTube, Adwords, Geofencing)
Affiliates
Guerilla (Gamification, flyers, giveaways)
Product placement
Referrals
We discuss each of these in the episode, including why some are better options than others and what to look for if you engage in any of these types of advertising.
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In today's episode, we will be talking a lot about the benefits of hobbies, and they are real. You can promote the increase of eustress, and decrease your distress. Essentially, help remove the bad stress and try and replace them with positive stress.
As this happens you will see less of that horrific morning and work fatigue. So much like sleep, hobbies are a great way to promote increases in productivity, improved social supports, and do it while having fun.
Want to be successful like Warren Buffet, try the ukulele
After all, don't all the gurus tell us to model successful people before they sell us a complex system on helping improve our productivity? And how many of them told us to spend more time having fun with hobbies.
I am still looking for that guru. I am so sick of trying to work smarter practicing systems that might help my productivity in about a month of intense practice. I have been looking for magic bullets for years which lead to more work, less fun, worse relationships, and finally burnout.
Do not look for productivity systems that ignore basic human needs
And at the same time, I had less time doing the thing that all humans need living life. It is the relationships that lead us to push to improve ourselves. It is fun and movement that give us the energy to not just get crap done, but live life to the fullest.
Put the credit card down today, stand up and scream with me, "I will not spend another dollar on productivity systems until I have some fun, sleep, and love my life."
Okay now if you have forgotten how to have fun, where should I start
Now, we have very similar views on this. However, our view might be work for you. If not check out what other people do that would interest you. Or check out this list of hobbies. Just be careful and seek out professional help when needed before starting out hobbies that might be dangerous for you. If they are really dangerous, it might also cause problems getting insurance. And for Pete's sake, have fun but be safe.
Kristin choice for people looking for hobbies is reading
It works the brain, and can educate and entertain you. If you can get a physical book, ebooks are great for backup access to reading, but there is nothing like an old fashion book in your hand.
However, do not read books to make you better at your business for a hobby. You need to keep it separated.
Jeff closes his eyes and suggest fantasy worldbuilding
Okay, this might be a bit self-serving since he also host's the Worldbuilder's Anvil podcast. However, there is more to it than the selfless self-promotion.
Worldbuilding is the portion of storytelling that builds the setting for stories. It ranges from interesting characters in any story, entire fiction world's like Gardul, or universes like in Star Wars. The can be strange, futuristic, or realistic.
The reason worldbuilding is a great hobby is it feed curiosity. It prompts people to learn more about how the real world works and exercise our creativity.
Join Kristin and Jeff as they look at the using fun to increase productivity.
Mentions
Dream catcher assessment (Free until
Gardul and the Worldbuilder's Anvil Podcast http://gardul.com/category/worldbuilders-anvil/
Famous people hobbies http://www.businessinsider.com/hobbies-of-successful-people-2015-11/#actress-angelina-jolie-collects-daggers-2
Hobbies that make you smarter
List of hobbies https://en.wikipedia.org/wiki/List_of_hobbies
Don't cause your loved ones to write letters http://www.goodtherapy.org/blog/dear-gt/help-my-husband-is-putting-his-hobby-before-our-marriage
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https://www.smallbizlife.com/dreambig Dream catcher assessment Free for a limited time
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http://www.businessinsider.com/hobbies-of-successful-people-2015-11/#actress-angelina-jolie-collects-daggers-2
Eustress Study https://www.ncbi.nlm.nih.gov/pubmed/26227991
http://www.cofcogroup.com/want-more-productivity-get-a-hobby/
Finding Hobbies
http://www.lifespan.com/7-hobbies-will-make-smarter/
https://en.wikipedia.org/wiki/List_of_hobbies
http://www.goodtherapy.org/blog/dear-gt/help-my-husband-is-putting-his-hobby-before-our-marriage
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