Business Basics 2: Covering Your Costs
Welcome back to our weekly series Business Basics - last week we looked at whether we had a pricing strategy or just plucked a figure out of thin air when it comes to deciding what to charge for our product or services.
I wanted to share with you some advice that I was given when I first started out as a therapist. The accountant on my business course asked us to do 2 things:
Firstly she wanted us to add up all our start up costs. That included the cost of our training and then add to that any business costs that we had incurred setting up our practice eg. computer, stationery, a couch (Yes! Some people had bought a couch lol).
If we'd taken out a loan to cover all these costs, then the loan repayments HAD to be covered before we even paid ourselves a salary - otherwise we would be working for nothing.
Secondly, she asked us to make a list of all our expected overheads and ongoing costs for our first year in business- things like: insurance, supervision, books, postage, advertising, on-going training.
This was an eye opening exercise for a lot of us!
So, if you're starting up in business for the first time, take her advice. Before you just pluck a figure out of thin air that you think you'd be happy charging, write some figures down and get a real idea of what it's costing you - being in business.
Next week I'll share with you a great way for Mums to work out how to cost their time per hour, let me know your thoughts.