Business without passion is not a lot of fun; business without profit is not a lot of good!
A common theme amongst my clients in the healer, therapist and coach worlds is that they are more motivated by changing people’s lives than by making money. Sometimes it’s the ‘starving artist syndrome’ (or perhaps in this context, ‘starving saint’) – that feeling that somehow receiving money for the work you were born to do somehow tarnishes its motivation, and makes it less pure. And sometimes it’s the idea that in order to get paid lots of money, you have to be taking it away from someone, that somehow you would have to be cheating the principle of equal exchange of value (actually, it’s *never* an equal exchange of value, but more on that in a later post).
Both of these attitudes miss one very important point: you can quite simply do more good in the world if you are getting paid lots of money! Dain Heer, co-developer of Access Consciousness has a great way of putting it, when he asks: “If you had a hundred million dollars, how would that change the world?” Note, he doesn’t ask how that would change your world (though of course it probably would) – he asks how would it change THE world. You see, someone with good intent armed with that amount of abundance really couldn’t NOT change the world for the better!
So how do you make sure you are going to be able to make enough money to make a real difference? Let’s do a quick calculation – it’s one I get all my clients to do, and sometimes it’s a real wake-up call for them.
Start by deciding how much money you want to have to spend each month – on yourself, and on other people. That’s your target income. But it’s not your target revenue – now add to that any fixed costs your business has – that might be your phone rental, your internet access, maybe an office if you don’t work from home or pay by the session. And include things like networking costs, and the cost of getting to them – that’s something a lot of people forget. And while we’re talking about getting out there and letting people know about what you do, we had better include a marketing budget each month too – whether that’s for Google Adwords or Facebook Ads, or maybe traditional advertising. Here’s a tip: if your marketing budget isn’t at least 20% of your revenue, it’s probably not enough. So now we have a target gross profit figure – out of which you pay all your ‘overheads’, including your personal income.
Now work out what profit you can make, on average, per client session. Make sure you allow for any costs that are specific to the session – so massage oils, room hire, travel if you go to them, that sort of thing. And then divide your target gross profit by your average gross profit per session – that’s how many sessions you need to do each month.
Let’s run through an example:
Sally wants to have $5000 going into her bank account each month. That will pay for everything non-business in her life – rent, food, bills, socialising, sport, hobbies and donations to charity. On top of that she has fixed business costs of $2000 (most of that is her marketing budget, 20%+ remember?) So Sally needs gross profit of $7000 a month.
Sally charges clients $150 a session, and she has to pay room hire of $25 – leaving her a gross profit per session of $125. To get her desired $7000 profit figure, she needs (7000 ÷ 125 = ) 56 client sessions each month – 14 a week. With decent marketing (there’s $1400+ available, 20%) and a great service leading to repeat clients and referrals, that’s highly achievable.
But what if Sally wasn’t comfortable with charging $150 per session – what if she could only bring herself to charge clients $75? Well, take off the $25 room hire that is still needed, that means just $50 profit per session. Now to get to her $7k requirement, she is going to have to do (7000 ÷ 50 = ) 140 client sessions a month – 35 a week. I’m not sure when Sally is going to find time for marketing and networking! (OK, I know, networking IS marketing, but you know what I mean).
So here’s my challenge to you: how many clients will you need to serve, for what amount of money, for you to truly make your difference in the world?