Accounting is one of those tasks that many business owners leave on the backburner. I know it's not the most fun area to work on, but your financial strategy will dictate your ability to be in business or out of business.
If you aren't on top of your business finances, you are doing it wrong. Your numbers are the only quantifiable metric for whether it is thriving, or merely surviving. Passion may drive you, but the numbers are what keep your business alive (or not).
Here are three areas that wedding professionals are missing the mark:
1.) Your prices are TOO low.
If a wedding business isn't earning enough, it's usually because their services are priced too low. Pricing (and the related profit margin) are the most significant contributors to financial sustainability in the wedding industry. This can be a challenge to newly started businesses who are merely trying to create a portfolio and have some clients on the books. However, every little bump you can make to your pricing can go a long way. Even a small boost of 10% can lead to big results. When I test things financially – it's always pricing that is the culprit for a business's small profits.
Now, keep in mind: pricing is a marketing decision. Your price needs to match your market strategy, target market, niche, and your level of service.
2.) You're making investments based on ego.
Here is my rule of thumb with investments in your business: ONLY do it if you can afford it. Don't go into debt for your wedding business. I can share from personal experience – and from working with hundreds of wedding professionals over the years – business debt is SO DIFFICULT to overcome if you have a service-based business.
So – you know that print ad you can't quite afford but really want to do because it'll make you look good? You know that office space you don't need but feel like you have to do because everyone is doing it? There are so many decisions we make based on ego – or the desire to elevate ourselves and our image. This is what I like to call 'keeping up with the Jones' wedding-industry-style. Please don't do it unless you can legitimately afford it.
3.) You aren't tracking your sales and expenses.
Tracking your sales and expense transactions is called bookkeeping, and it is the most boring thing you'll do in your business. I'm not here to sugar coat. However, the power of bookkeeping is not in the data entry but in the information it gives you. Over time you'll be able to see patterns in your business. So it's in these patterns that you can start to make intentional decisions with your dollars.
Need to get started becoming more financially savvy? Here are 3 action items I want you to do now:
• Create an "Accounting Day" one day a month to track and analyze your finances.
• Examine your pricing. Can you make a 10-20% bump?
• Examine the investments you are making based on ego and cut them out.
With these things in mind and if you put the steps in place you will be in business for years to come!
Michelle Loretta is a business consultant and financial strategist for wedding and event professionals. As founder of Sage Wedding Pros she blends her past as an accountant for Deloitte, a sales and marketing manager for DDLA, a merchandiser for Coach, and a stationery entrepreneur to strengthen wedding businesses worldwide. Sage Wedding Pros is best known for Be Sage Conference, a summit for master-level wedding professionals. Michelle has been asked to speak at a number of industry conferences, including NACE Experience, Biz Bash Live, and The Special Event.