Okay- Here’s your first, last and only chance to turn back. This isn’t going to be fun. It’s like having to turn yourself in.
It’s time to face the truth about your business, expenses & prices. It’s gonna hurt. It’ll feel like standing in front of the poorly lit mirror in a Ross Dress For Less fitting room.
Shed those clothes and let’s dive in!
Knowing your margins means that you know you’re making a profit, you are priced well, and how deep of a discount you can offer before it hurts your bottom line. If you don’t know this information, you’re essentially running a business in the dark- no electricity- pre B.Frank!
Let’s just get to it.
Here’s the easiest way to explain it. Listen, even if you love math, this is going to make you want to hit your head against a wall.
My suggestion is to JUST DO IT! But if you must take breaks, at least get each kind of item on the books right away!
So— Now you’ve got a spreadsheet (or a cute wrinkled piece of paper & you know your material cost, your labor cost, retail price & your margins. Right!? (If not, go back to the top and try again!)
Let’s talk about what to do with this information!
1.) Bad margins show where you can improve.
- raise prices
- lower material cost
- lower labor cost
*for handmade products, this could mean simply not outsourcing, but please do not cut yourself short. You work hard, and if you do not compensate yourself, you’ll get burned out. QUICKLY.
2.) This shows you what you can outsource
3.) Proof of product
4.) What you should focus on more
*ensure higher margin items sell effectively and run with it*
*By now, we all know what the Dorie Effect is.
Running sales and lowering the risk for new customers to enter your “door” is vital to your businesses growth. High margins leave plenty of room to play that game while still being profitable.
That’s it! I won’t even go on anymore. This is going to be painful. You’re gonna want to cry. Grab a venti, throw some goldfish at the kids and GET IT DONE!