Archive for the ‘Money’ Category

Dear Danielle: What Is My Compensation?

Dear Danielle:

I am just starting my administrative support business. I have seven years of administrative expertise, but one thing I am unclear about is my compensation. I know that most charge by the hour or on a monthly basis, but how do I know how much to charge? And considering that I am just starting out so I am taking on side jobs that are here and there, how should I charge for smaller list items? Thanks in advance? –KT

My first caution is to always be conscious about the terminology you use. This is important because when you are communicating with others, and especially clients, the words you use in explaining things can have very real effect on how and what expectations are formed, as well as how and whether folks understand what you mean for them to understand.

Words like “compensation” have no place in your vocabulary as a business owner. That is a term used in the context of employees, which you are not.

As far as what to charge, ask yourself these questions:

  1. How much does your business need you to charge? That is, how much do all the expenses and overhead cost to run your business?
  2. How much more money do you need to set aside for incidentals and/or continuing education?
  3. How much do you need to charge to pay for your own time? How much do you want/need to earn each month/year to pay your own bills (not the business’s)?
  4. How much does it take to make something worth your while?
  5. How much would honor your skill, value and expertise as an administrative expert?
  6. What rate or amount would send the message that you are an expert, not an unskilled amateur, who has what it takes to improve the client’s situation?
  7. How much profit needs to be built in for you to achieve your own goals and dreams (e.g., for travel perhaps, or special family vacations, or buying a home)?
  8. What kind of cash flow do you need to operate with ease and not be stressed with bills and due dates? (Cash flow is a concept different than simply income; it’s the amount of money you reliably and consistently expect each month that you can use to plan and budget).
  9. How do you want to position yourself in the field? How do you want potential clients to look upon you? What “perceived value” message does your pricing send?

You can’t just work to be paying the bills. What you charge can’t just be enough to pay for your expenses and time in your present circumstances only.

In order for you to grow a solvent, sustainable business, you have to make sure your fee covers all the practical business considerations. It also has to be intentioned enough that you can plan, set goals and grow.

Pricing is every bit a marketing strategy as well.

How you price sends a message to clients. I can tell them that you are a top-notch expert who has real value to offer and can really help them or it can convey the idea that you are desperate (which isn’t attractive to clients) and/or not very highly skilled.

I would also add that it’s not your job to be “affordable.”Keep that word out of your vocabulary as well.

It’s your job to deliver a solution that helps clients move forward in their business and accomplish things. That’s your value and that’s where you want to keep your message focused. So if you consider all the ways that what you do helps clients, how your work ultimately helps them achieve their goals and dreams and make more money, what would you say is the value of that?

Have a look at the Free Resources page… we have a free automated Excel Income & Pricing Calculator that will help give you a beginning frame of reference about what it costs to run a business and what kind of fees you need to charge. It’s a great way to start becoming conscious and intentional about this area of business.

Never Place Cost Above Value in Business

Never place cost above value in business.

Successful people do not pinch pennies, and they certainly don’t pinch a loaf when it’s time to pay for something of value.

It never ceases to amaze me how people in our industry and other small business owners will waste hours and hours of time to save a nickel. It’s the height of penny-wise and pound foolish.

I’ve seen people mulishly refuse to part with $30, $15, even $10 a month on something that could literally save them thousands upon thousands of dollars in time, energy and labor. That’s just plain dumb!

God gave you a brain; use it. And don’t give me any excuses about not having any money.

First of all, business costs money (at least in some amount); get used to it. Only idiots will tell you any differently.

Second of all, when there is a tool or solution you can invest in that will elevate your business image, improve your operations and profitability, and free up more of your time to work with clients (and make more money), come hell or high water, you find the money somehow, some way to get that thing.

Complaining about money is for victims and people who shouldn’t be in business.

This is why I’m always preaching to never be a cheapskate.

If you are a cheapskate in your business, you’re going to attract cheapskates as clients. That’s just the law of the universe.

You’ll also deliver a cheapskate service. If you don’t understand value in the same way that quality clients do, you’ll never be able to sell it to them.

If a solution allows you to automate, operate more efficiently and profitably, get in front of more clients or make more moolah than it costs, THAT’S value.

And value doesn’t require that it necessarily be instant or on-demand.

Plus, something that is of value is an investment, not an expense (not to mention a tax write-off). An investment is something that adds to or enhances your business and service rather than taking away from it.

Not only do Administrative Consultants need to be looking at the tools they review for use in their businesses in this way, it’s also how they should be talking to clients about their administrative support. ;)

Valuing Yourself and What You Have to Offer

Mikelann Valterra shared the best quote in her newsletter recently:

“If you place a small value on yourself, rest assured that the world will not raise the price.” —anonymous

She followed this quote with one of her very astute observations:

“The true key to earning your worth is to believe you have worth to begin with. Not only do you have worth, you are WORTHY of good money. We all want other people to value us. But how highly do we value ourselves? Value and worth come from the inside out. When we know in our gut that we are indeed worth a lot, it is far easier to ask for good money. Don’t expect the world to pay you top dollar if you place a small value on yourself!” —Mikelann Valterra

Mikelann is one of my favorite authorities when it comes to helping women value themselves in business.

She has such a knack for clearly and eloquently ideas and concepts that aren’t always the easiest things to relate.

I can’t recommend her stuff highly enough.

Go to her website. Sign up for her newsletter. Subscribe to her blog.

Scam Alert – Todd Mayer

Our industry is now being specifically targeted by con artists and scammers.

A couple of the main cons they are hitting us with is laundering money and passing counterfeit checks.

What they try to do is get you to work with them as an intermediary, telling you some variation of a convoluted scheme involving “their client” being “interested in working with you” and ultimately wanting you to receive money on their behalf where you keep a share and send the rest to them, or you getting paid for both of them, but handling the funds through your account only, and sending the rest to them.

One who has been especially prolific is Todd Mayer, supposedly from the U.K.

I’m sure that’s not his real name, of course, and more than likely it’s actually a ring of con artists rather than one person.

Once “Todd” realizes we’ve all got his number, he, she or they will probably change it to something new (just like he’s now started putting an address in his emails after people weren’t biting because they had no way of verifying if he was really who he says he is. (Whether it was real or not is another story, but when people see an address, they automatically assume the business is credible, which is a mistake, but it happens nonetheless).

Anyway, “Todd” has been a very busy little beaver writing to all of us.

New people in the industry are especially vulnerable because they often are so desperate for clients they will jump at anything, and several have fallen victim to this con because of it.

But “Todd” obviously doesn’t realize just how small of a world our industry is, and how much we all compare notes.

If you receive any variation of this type of email from anyone, steer clear:

“Hello, my name is Todd Mayer. I run a consultancy firm here with registered address 6353 Cronin Street, SE15 6JJ. A client of mine who is due to arrive in the United States in few weeks time is interested in your virtual services. Can you tell me a little more about your mode of operation? If interested, please reply. Thanks, Todd Mayer”

See how he’s getting a bit more sophisticated in his con?

Colleagues weren’t biting because they are getting savvy to these cons. So now he’s trying to figure out how we operate so that he can devise his scam to fit into that pattern, basically to get better at tricking us into accepting counterfeit checks, cashing them and then sending him money.

He’ll be long-gone by the time your bank alerts you that the check you just cashed was counterfeit, and you’ll be stuck paying for not only the check, but also any bounced check fees that begin racking up. That’s how these con artists scam you.

So be smart.

Don’t let $$ signs cloud your judgment. This is how these cons get away with so much — by using people’s greed or desperation against them.

If something is too good/too easy to be true, it usually isn’t.

  • HAVE a proper client consultation and vetting process.
  • DO your homework and due diligence, and verify who and what a client is before you ever work with them. (Examples: Do they have a business website? Is there contact information easily found on it? Have you verified the address and phone number? What state do they operate out of? Are they sole proprietor or incorporated? Are they registered with their state? Do they have a business license? Have you Googled their name and the name of their business to check for complaints or anything else that’s questionable?)
  • NEVER let prospective clients rush your process (these are in place for their benefit as well as yours).
  • NEVER act as an intermediary or “middleman” when it comes to money. No legitimate business will ever need you to accept monies on their behalf, and in fact, it’s considered money laundering which will get YOU into hot water with the law.
  • BE selective about who you work with.
  • ALWAYS stick to your standards and policies.

Dear Danielle: Am I Charging Too Much?

Dear Gritty VA:

I have been scouting ads and looking for people who are looking for a Virtual Assistant, and I keep coming across ads where people are only willing to pay $12.00 an hour. Is this normal? No one charges $12.00 an hour do they? –MB

I’m curious about the ads you are looking at and where? In my area, Virtual Assistance is still basically an unknown commodity.

Are you really finding ads where business owners are specifically asking for Virtual Assistants? That would be awesome, but I have a feeling that the ads you are seeing are looking for traditional employees.

$12/hr is an employee’s wage, not the fee of someone who is in business as an independent professional.

And why are you scouting employment ads anyway instead of networking and building relationships with people who could be clients and referral partners?

When introducing people to the idea of Virtual Assistance, the biggest benefits we offer are the cost-effectiveness, the convenience and the high quality skill sets a Virtual Assistant is expected to have.

Employees cost an employer much, much more than their mere hourly rate. And they are making more than just that hourly rate when you figure in benefits such as Social Security, Medicare, unemployment, vacations, sick leave and any other perks offered.

They are paid for being physically present, whether they are productive or not, and we all know that there is all kinds of downtime in a job such as being caught up and having nothing to do, coffee breaks, watercooler chit chat, sick days and vacations.

But all in all, comparing employee wages to an independant professional’s service fees is apples and oranges—two completely different animals. You’ve got to get out of the employee mindset and start thinking like a business owner seeking clients, not employers. Network with people in your target markets. Emphasize the value, benefits, quality and cost-effectiveness of our services.

Set your rates with an eye toward what will profitably sustain your business and provide the income level you desire. I would worry more about your rates being too low because not only does that send a negative message about the quality and level of your services, low rates won’t allow your business to be profitable.

Otherwise, you won’t be in business long, and you’ll be back to the employment ads looking for a J-O-B.