Here's the thing: Authenticity in business

authenticityEvery Friday I post a “here’s the thing” blog. “Here’s the thing” is something my mum (and many other wise people) like to say when they’re about to make a good point. Hopefully these posts are also good points.

Earlier this week, I tweeted about authenticity, asking whether it was something anyone thought about. That tweet came up after I chose it as my word for the week this week, because I needed the reminder that being authentic is important to me as a person, and to my work and business.

But what does that mean? Well, for me, it means working with clients I really connect with – I don’t have to pretend to like them or their products or their businesses: I actually do like them. It means being real, and that means being honest about what I can and can’t do, or about the fact that I’m also a flawed human being who sometimes puts off doing the washing up for way too long.

Being real, being honest, being true to who I am – that’s really important.

And I know from working with some incredibly talented, ambitious and skilful clients that authenticity is something that’s valued by the small creative business community. Authenticity is somehow implicitly linked to the practice of being creative and selling your craft.

How do you sell your products without being “salesy”? How do you talk about yourself and your business up without appearing arrogant or pushy? How do you present the best of yourself, without appearing fake, but also without revealing a bit too much? How do you stay true to your craft, passion, talent, without selling out in the name of money, popularity or competition?

Is your ambition authentic to your craft, or will you go after anything in the quest for more sales? I get asked a lot whether a particular brand can expand into a new product area or market. The answer is almost always yes, but does it still feel authentically like you, like an extension of your brand? That’s the thing that can be challenging, but ultimately makes you feel like your business is still your business.

At a basic level, the idea of a false conversation with someone, or pretending to be someone I’m not, makes me want to tear my hair out. Actually, it makes me lose enthusiasm, passion, energy just thinking about it. Bleurgh!

So here’s the thing:

To grow your business in a way that’s sustainable and stable, it needs to include authenticity. It needs you to be honest about what’s imperfect, what’s real and what’s not.

If being authentic feels important to you, work out what that means. What makes you feel most like you? What makes your business feel like your business, and not someone else’s? What’s so unique to your brand that you can’t do without it?

And an important note: being authentic doesn’t mean you share every single thought you have on social media. It doesn’t mean you purposefully hurt someone because you don’t like them. It means saying no, steadily and surely, and walking away from the things that don’t resonate.

This week, in all the crazy school holidays, Christmas planning and general life, I hope you’re able to find a moment to think about authenticity and the part it plays in your business.

Here's the thing: Winter is coming

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Every Friday I post a “here’s the thing” blog. “Here’s the thing” is something my mum (and many other wise people) like to say when they’re about to make a good point. Hopefully these posts are also good points.

Do you watch Game of Thrones? Or have you read the books?

I have a love-hate relationship with the TV show. Except it’s more like a mildly-enjoy-it-when-something-less-terrible-happens-HATE relationship. I mostly sit there hiding from the TV.

I mean, it’s violent, desolate and has horrific treatment of women. And everyone else. But it did have Sean Bean being all nice and northern for a bit. And today is Yorkshire Day (woohoo!) so a good time to celebrate my fellow northerners.

 

ANYWAY, I digress.

Game of Thrones has given us something that feels apt – a foreboding and doom-filled adage they’ve coined so well: Winter is coming.

Because when you sell online, winter is always coming. Christmas always looms. And the first of August only really means one thing – you’ve got about a month to get it together.

And I mean that in the nicest, kindest way. Christmas is a huge opportunity for small creative businesses to make the bulk of their annual trade, to get their name out there, and to grow. It’s a time when we all get warm and fuzzy about our family and friends, we want to do something a bit special, and – more and more – we want to find lovely, personal, unique gifts to give.

You have that. You can provide. You can get people through the winter!

But are you prepared? While Christmas can bump your business up a couple of levels, it can also overwhelm and take it out of you. I’ve heard it from loads of small business owners over the years: they don’t want to do another Christmas like that. They really struggled to keep it together. They’re still recovering.

Now is the time to get your survival plan together. You need to fortify your own Wall to keep the white walkers out. (Okay, Game of Thrones analogies end here.)

So here’s the thing:

Start your own Christmas survival handbook. Get a notebook or start an Evernote list or whatever works for you, and start writing down your processes and contingency plans.

Here are a few ideas:

  • Write down how you make, package and post every item, with all the variables. This will help you to clarify your process for yourself, but will also help you train someone else if you need to.
  • Calmly, maybe with tea and cake, list out your worst case scenarios. What will you do? What’s your equivalent of an emergency evacuation plan in case of fire? Step 1: don’t panic. Step 2: update customers, and so on.
  • Research and list some alternative suppliers. When you rely on other people, you never know what might happen. Even if no one makes exactly what you need, you might find yourself offering something slightly different if necessary.

I know I’ll be writing way more about Christmas planning and preparation. And I’m going to run a supportive e-course in the Christmas months – more about that soon.

But right now, today, while we’re in the middle of a glorious summer, it feels like the right time to just nudge towards having a survival plan for Christmas…

Profit: how much is enough?

You know you’re making enough to pay the bills because, well, you’re paying the bills. But do you know whether you’re making a profit on each order? And how much is a good profit margin for a small creative business, anyway?

In this brave new world of online selling, especially for designer makers and small creative businesses, there isn’t much out there about what makes a good profit margin. It’s a bit like the salary question – not many people talk about it.

And just like when talking about salary, a “good” profit margin means different things to different people. Big enormous retailers, for example, look for 40% profit, if not 60-80%. There’s the widely known fact that popcorn is one of the most profitable products ever, with about 97% profit margin – the cost of corn and the heat to pop it being so small.

Anyway, for small creative businesses, I’m going to come out and say it: if you’re not making at least a 25% profit margin on each product, you need to increase your price or decrease your costs. Let me repeat that:

25% is a great minimum profit margin. Aim for that.

So how do you calculate profit?

In simple terms, profit is the total price the customer pays, minus all your raw materials, packaging, postage costs, commission charges, and – where applicable – VAT. I recommend doing this for every single product, so that you’re confident that you’re making a profit on each order.

For a more detailed spreadsheet and approach to calculating your pricing, register for Pricing for Profit (and Sanity!) here.

Other considerations

One of the things I feel really strongly about is adding in the cost of your time to your profit calculations. Even if you’re not paying yourself, and simply take profit as your payment, it’s really important to know whether your products themselves are profitable, with your time factored into the price. Checking this will ensure your profit is true profit, and it’ll help you to decide whether to employ someone – you’ll know how much their time should cost, and whether it’s worth it.

And there are other costs you’ll need to factor in beyond your per product costs, such as rent and bills. I prefer to do this after you’ve calculated the per product profitability – keeps it simple. So make sure you look at how many items you’ve sold this year, how many you’re likely to sell, and times that by your per product profit. Then take off your annual bills, rent and other costs, and see your final profit for the year.

Need more help?

Pricing and profitability are absolutely key to your business success. Check out Pricing for Profit (and Sanity!) – my mini course on pricing. The course includes loads of resources to help you find your best pricing bracket for your products.

You may also find ongoing group coaching helpful, which is available via Progress not Perfection. You’ll receive Pricing for Profit totally free when you sign up!

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