My wife and I started Twisted Willow Design with only Rachael’s floral skills, my business skills, and our house. As the company (and our family) grew, we recognized the need for full-time help beyond just freelancers. Thanks to several steps we took from 2016 to 2017, we increased our net profit by $30,000—enough to hire our first full-time team member. These are the two things we did that made it possible for us to hire an additional employee:
1. Think like a big business
We realized about a year into starting our company that if we wanted to be an established business, we had to start acting like it. Our friend Sarah Campbell teaches business intensive classes and has a phrase that best encapsulates what we had to do: we had to “Think Like a Big Business.”
For us, this meant investing in software that helped us cut down wasted time calculating what we should charge, virtually eliminated the time spent ordering, and gave us better financial reporting. Before that, it had been taking us forever to creating accurate proposals that calculated our COGS (Cost of Goods Sold), and we were losing clients because of the delays.
In short, we found tools to optimize our processes, which cut down on wasted overhead time, and were able to use that time saved on designing and booking more clients.
2. Price what you’re worth
Seriously, you do a lot of stuff. From the initial consultation through the final strike, you pull together the thousands of pieces that go into creating unforgettable events.
In 2016, we started using a COGS management software and were able to see the honest numbers laid out. We realized that with everything we were doing, we were charging way below what we were worth. Here are five things we did to start charging what our true value was:
- We rejected the idea that we had to live by someone else’s “industry standard.”
- We calculated the net profit we needed to make for our family, then worked backwards to calculate what our margins should be.
- We raised the prices of our rentals to reflect the profit margin we desired (rather than just aiming to break even on that moongate arch).
- We changed our labor from an hourly estimate to 20% of the event. An hourly projection certainly works for some businesses, but we found that we were able to more simply calculate an appropriate charge for labor. We actually have it automatically factored into our invoice items so clients only see the final price of the item.
- We reduced our COGS on florals from 36% to 33% of our revenue; or, said another way, we increased our floral markup from 2.8 to 3.
Yes, making these changes was hard and a big investment. But learning to think like a big business and charge what we’re worth turned out great for our family and our business.