Starting a Business Changed How I Think About Income

Let's talk money.

I’ve owned my own businesses for about a decade and without fail, one of the most common topics people wonder about is how things work financially. Every step on my entrepreneurial journey was thought through and planned for, but that doesn’t always mean that everything will work out or that your finances and salary will steadily grow. Look at innocent Jen here in 2019 before the world changed…

Here, I’m pulling back the curtain on how my business works: how I do outreach for new business, how I think about my income, and some of the costs that come with keeping things running. (Curious about the costs around Third Coast specifically? I wrote all about that in this post.)

Businesses cost more than you might think

When you think about starting a business, depending on what the business is, you might think you know what kinds of costs will come along with taking that leap. Maybe you’ll need to pay rent, for renovations and design, for stock and inventory. But if you’re starting a business based more on services than products, and especially if you’re going to work from home, be a solo-preneur (aka work alone), or work with freelancers and contractors, you might think that any costs would be minimal.

And it’s true that running that kind of business has different costs than a product-based business, particularly if you have a storefront, but you have to think about all of the little costs here and there.

Everything feels like it’s a $10-20 charge and it adds up quickly. Email, Meta verification for Instagram, auto-posting tools for social media, business insurance. It all has a cost. Before I had a team, I would say the business cost me about $1,000 per month and now my costs are around $2,000 per month when I factor everything in. We have so many tools for SEO, blog post writing, AI, and other analytics. There are fees to everything and it can be really hard to keep costs down.

I’ve found that when it comes to figuring out how to cover the cost of doing business, tying the cost of different tools and fees to income can help keep the math simple. For example, if I make $500 incrementally, I can invest that in a virtual assistant. That way I can track where the money for everything is coming from.

How I manage stable business and income for my business

One of the scariest parts of leaving a corporate job and striking out on your own is having to be fully responsible for drumming up business and keeping yourself (and your team, in some cases) afloat. I went full-time in late 2018 and, at the time, wasn’t entirely sure how I’d create my income. I did OK the first half of 2019, but I signed my first corporate client in late summer 2019 and that ultimately made my year.

My first year in true business consulting was 2020 when Jessie and I started The Marketing Greenhouse and that was… well… weird. The world was crashing out, everyone was watching their spending in all the uncertainty, and I was asking if they’d like to take a chance and invest in me and my services. I learned a lot that year in how to anticipate people and their needs. Those lessons really came in handy, even after the height of the pandemic.

My first few years in business, I tracked my hit rate. Your hit rate is how many emails you send or calls you take to sign a client. My hit rate has consistently been 10%, so when times are quiet, I’ll send out 20 new business pitches to businesses that I like. It’ll often be products I use or Instagram accounts I’ve found where I naturally have ideas of what we could do for them. I’ll send out pitches and I know that I’ll get a handful of solid leads from them, probably 3-4 calls that lead to signing 1-2 new projects for The Strategy Studio.

Signing a new client can take 3-6 months, so I’m always mindful of that, planning ahead of time when I sense change might be coming. Though I proactively send out new business pitches when things are slower (or more turbulent), posting to social media helps keep the pipeline full. When business is busy, it’s easy to fall off but the best thing I’ve done is stay consistent. Even if I scale back, consistently posting makes a huge difference in terms of getting inbound leads that can turn into future clients.

As with anything, you learn as time goes and the longer you’re in business. I joke with my team that I can call within 3 months when I know a client relationship will be ending. Sometimes there are natural transitions or sometimes you can tell their budget or needs are shifting. Other times, we outgrow one another. Like with any relationship, it’s always evolving!

How starting my own business changed how I think about income

Starting a business has really made me think differently about income. Instead of thinking about a general number I want to hit, I get a little more strategic about it all. When I was starting out, I always picked something (or multiple things) that I would be responsible for so that I had a goal and a way to focus my income.

In 2019, I started with focusing on 2 days of childcare, which was $1276/month at the time. I knew that if I could hit about $1300 per month, I could cover those 2 days of childcare, hitting my goal.

It’s important to remember that you also have to budget 20-30% for taxes so that there are no surprises come tax time. That’s a big adjustment, too. Most people don’t think all that much about how much money is taken out of their paycheck in taxes, and since you have to pay them on your own when you work for yourself, it’s important to intentionally budget for that.

As my business has grown, I’ve focused on several buckets I pay for for our family. While we personally treat our income as one big bucket, it helps me better understand what good looks like. I find for most entrepreneurs, it’s not making enough money that’s the true concern, but it’s knowing when to stop and take a break so you don’t burn out.

My income has also gotten a little more complicated over the years because now I work to make additional income so I can pay for trainings, any advertisements I want, starting new businesses (like Third Coast) and perks for my team. There’s probably about $10,000 a year now that I strive to make to just reinvest into myself, my team and the business.

I feel fortunate that my business and income has grown consistently over the years (with the exception of 2020), but it took a lot of hustling to make that happen. And while I know I have learned a lot and put plans and systems in place to keep that going, I’m still always looking ahead, trying to anticipate any potential hiccups.

Working for myself is my dream job, but there’s a lot to manage. If you’re trying to figure out how to make your business work best for you or considering starting something new, book a call with me. I’d love to chat.