I recently came across an Instagram post that said, “The prices you start your business with aren’t the prices you can sustain your business with.”
Completely true!
Some new business owners feel guilty for having a profit-first mentality because a lot of us weren’t taught to think this way. But the reality is, in order to stay in business we need to operate at terms that are favorable to us and our longevity.
Implementing a Profit-First Business Model not only helps you scale your business faster but also provides you with financial security and peace of mind. Having that cushion of protection allows you to better navigate times of uncertainty and serve your customers and clients at the highest level possible.
Here’s How To Implement A Profit First Business Model To Grow Your Business Faster
1. Value-Based Pricing
Charging based on the value you are adding is becoming extremely popular. The biggest companies in the world can afford to sell based on price because they have economies of scale. This means that even at a low price, it only costs them a fraction of what they are charging you, due to how large the company is and the length of time it has been in business.
But if you are a small business and you are adding tons of value to your customers and clients, you have to charge at a rate that is fair to both you and your customers.
Ask yourself:
In what ways are their lives better? Are you saving them any money? Are you helping them make more money? What kind of results do you help your customers or clients achieve?
This is something that is worth keeping track of. Knowing all the financial, health, and emotional benefits people get from doing business with you helps in your marketing, sales, and on those tough days when you question everything.
2. Don’t Be Afraid Of Your Numbers
Shockingly, about 60% of business owners do not understand the financial and accounting side of their business. And 70% of all small businesses don’t have an accountant. This is mindblowing because each year around 80-90% of small businesses fail due to cash flow management issues.
Numbers can be scary, but they are the lifeblood of your business, not the boogeyman. Having this area of your business organized and optimized will save you so much pain, sleepless nights, anxiety, and stress. Also once you know and understand your numbers, then you also know what your prices should be. Without this knowledge, you are putting your business and your future at risk.
A price isn’t just a number. Your prices cover both your living expenses and your business expenses. You have to know exactly how much it costs you to stay in business and grow your business.
3. Don’t Be Afraid To Talk About Money
I once heard that people who make a lot of money, are comfortable talking about money. This is a major mindset shift anyone can make with enough practice.
If you need help in this area, don’t just think about the money. Think about all the value you are providing to your clients and customers.
4. Plan For Growth
At some point, you’ll want to grow your business, or your business will grow so fast that you have to keep up with all the demand. This is a good thing, but it is something you have to prepare for or manage really well if your business is growing faster than you anticipated.
The best way to plan for growth is to think of how your business will change and how that will affect you. Will you have to hire more employees? Think of the type of employees you will have to hire and what their day-to-day tasks will be. Also, how will growth change and evolve your responsibilities as a business owner? What will you have to delegate? How will your day-to-day operations change?
Being a part of coaching groups, having a mentor, and investing in business books and online courses will help you stay knowledgeable and better recognize the needs of your growing business.
5. Stick To Your Prices
You can’t let your customers and clients determine your prices. You definitely set your prices based on the type of clients and customers you serve, but once you set your prices you have to stick to them until it’s time to raise them.
The future of your business and your emotional well-being are non-negotiable. One of the best ways to grow your business and avoid burnout is to love your business and operate it in a way that is satisfying to you. Lowering your prices because a customer or client is trying to negotiate you down will only leave you feeling drained and depleted.
The best way to profit first in your business is to understand your expenses and anticipate your goals. The more you understand the value of your products or services, the less you will underprice yourself in business. Your business isn’t supposed to drain you. It is supposed to inspire you and give you purpose.
Savohna Reid is the Founder and CEO of Reid Bookkeeping & Business Solutions, which helps business owners build a less stressful and more profitable business by keeping them organized and lowering any stress or confusion around their money. Click here to get her free guide if you’d like to better manage your expenses and maximize your profits.
